EU e-invoicing rules take shape
In the past few years, e-invoicing has not only become more popular from a business to business perspective, but has also seen an increase of popularity among government and tax authorities. In 2019 (and partially in 2020) all countries in the European Union had to follow EU Directive 2014/55/EU on e-invoicing. Due to this directive, most EU countries are looking into more extensive regulations when it comes to obligatory e-invoicing. This article explains more about the main e-invoicing models and the upcoming regulations in France, Italy, Germany, Belgium and The Netherlands
Until January 1, 2019, we only saw the post-audit model in the EU. This is a model we all know. Your company is free to decide how to send and receive invoices, and the original invoices need to be archived for several years for audit purposes. On January 1, 2019, Italy became the first country in The EU to introduce a clearance model. This model, well known in Latin America, obliges the originator to send each invoice in electronic format to the tax authority. The tax authority then validates the invoice and either delivers it back to you so you can send it to your client, or delivers it to your client directly.
The clearance model is becoming popular in other EU countries, as it will give them greater ability to reduce the VAT gap. However, one of the issues that many countries have already faced with B2G regulations is that small companies don’t have the technical capability to send e-invoices to government authorities. Fortunately, we can see that more and more e-invoicing providers are offering easy to use cloud solutions, that don’t require any implementation, to help smaller companies send e-invoices to public authorities.
Italy was the first country in the EU to introduce the clearance model. As of January 1, 2019, all companies in Italy are obliged to be able to send and receive e-invoices to the tax authority in Italy (SDI). SDI checks each invoice and approves it with a digital signature, before forwarding it to the end client.
Italy has since extended obligatory e-invoicing through e-ordering legislation. Since February 1, 2020, all public hospitals have been obliged to send their orders electronically through the NSO platform (Nodo Smistamento Ordini), and the suppliers of the hospitals should also be able to receive these orders
in electronic format.
France has gradually implemented B2G e-invoicing over the past few years. The main difference between France and other EU countries is that France legislated for B2G e-invoicing year over year, based on the number of employees per company. As of January 1, 2017, B2G e-invoicing became mandatory for companies with more than 5,000 employees. A year later it became mandatory for companies with 250 to 5,000 employees, and, since January 1, 2020, B2G e-invoicing has been mandatory for companies of all sizes.
As well as introducing B2G regulations, France has investigated if their government portal, Chorus Pro, could also be used for the implementation of a clearance model. The result of the investigation is that the French government will most likely mandate B2B e-invoicing using the Chorus Pro platform between 2023 and 2025.
Germany is one of the countries in the EU where it gets a bit more complicated when it comes to the regulations of e-invoicing. The current e-invoicing situation in Germany cannot be described without first explaining the administrative structure of the country. Germany is a federal republic, consisting of 16 federal states which are partly autonomous, especially with regard to legislative prerogatives.
The federal legislation referred to as the eBill Law was issued on April 4, 2017. It introduced some general key points with reference to the implementation of Directive 2014/55 EU, but also went beyond the principles of the Directive.
As of November 27, 2020 invoice issuers will be obliged (with some minor exceptions) to send e-invoices to federal public entities. Non-federal public entities are subject to local legislation issued by the federal states. Local legislation can be (but doesn’t have to be) different from the federal regulations.
Therefore, there are several institutions in Germany between which competences in the area of e-invoicing are divided – the federal Ministry of the Interior and all 16 federal states.
Several transmission channels are allowed in Germany. E-invoices can be sent through web forms, the upload of files, the use of web services, via DE-Mail or email, or through the PEPPOL infrastructure.
There are two web services created for federal public administration entities:
At the time of writing, there are no initiatives to mandate B2B e-invoicing.
While France is getting ready for mandatory B2B e-invoicing and Germany is mandating all suppliers to send electronic invoices to the government, The Netherlands has taken a more flexible approach. So far, it is only mandatory to send e-invoices to central public authorities, and only for contracts that are signed with one of these authorities after January 1, 2017.
The Dutch government has not implemented or drafted any other regulations for now, other then adopting the EU Directive and mandating all public authorities to be able to receive and process electronic invoices. The main portal for the government is Digipoort, but most companies deliver their invoices to the government via Peppol.
As you can see from this article, different countries in The EU have different strategies when it comes to implementing e-invoices. Italy already has a clearance model, France is aiming for a clearance model, and Germany and The Netherlands have only implemented B2G regulations. Other countries in the EU mostly follow the path of Germany and The Netherlands.
It seems a pity that The EU is not taking a leading role in mandating B2B e-invoicing by creating a directive which gives clear guidelines to Member States on how they should implement this model.