Updated on 21/02/2023
When we talk about the invoice in Italy, these days we’re inevitably referring to the electronic invoice, which has been the only mode of invoicing for almost all Italian economic entities since at least 2019, the year the electronic invoice obligation was introduced for B2B and B2C. The obligation to issue electronic invoices in Europe to public administrations (B2G) has been in force since 2015.
As is well known, Italy is currently the only country in Europe with mandatory e-invoicing in all B2G, B2B, and B2C areas (with a few exceptions, which in any case are destined to disappear in the short term). Non-European countries, on the contrary, have long adopted a similar approach to the Italian one, presenting themselves in many cases as forerunners in this area. But the situation in Europe and around the world is evolving rapidly, with several states introducing measures aimed at extending the use of electronic invoicing to all sectors. The European Union itself is moving towards this direction, having recently introduced a package of reforms which provides new obligations regarding the use of electronic invoicing, starting from 2028.
In this article, we will delve into the current situation and the upcoming obligations that European and non-European countries will introduce starting in 2023.
Why haven’t other European countries introduced electronic invoicing yet?
The question, “why adopt the electronic invoice?” has been answered many times. The benefits are diverse and cover a great many aspects. Countries that have adopted the electronic invoice have recognized the following benefits:
- VAT revenue recovery and more widespread control over transactions;
- Automation of business processes and improvement in the level of business digitization;
- Efficient relations between businesses and public administrations;
- Reduced payment times by public administrations, which benefit businesses.
The positive results seen in companies and countries that have already introduced the widespread use of e-invoicing are precisely what is prompting more and more states to introduce mandatory e-invoicing at various levels.
But what has held them back so far?
A first aspect is European Directive No. 2006/112/EC, the so-called VAT Directive, and in particular Articles 218 and 232. These articles provide that, within the European Union, invoices may be issued in paper or electronic format and that the invoice recipient must first consent for an invoice to be issued electronically. That’s why introducing mandatory electronic invoices requires the green light from the European Union, through a special derogation. Italy obtained this, first in 2018 and then again in 2021 and until 2024. The extension of the waiver, to which the extension of the obligation also to flat-rate payers as of July 1, 2022 was added, was motivated by the positive effects we mentioned above. Nevertheless, many EU countries have been recently requesting such derogation, like France, Spain, Germany, and Poland. Moreover, the new European proposal we mentioned above is going to delete this requirement, starting from 2024.
So let’s look at the current state of the art and see what developments await us in the short term.
The status of electronic invoicing in Europe in 2022
Currently, several European countries have extended the electronic invoicing obligation for public administrations, i.e., B2G, either partially or fully. Countries with a full B2G obligation include Spain, France, Portugal, Croatia, the Czech Republic, Poland, and Finland, Norway, Denmark, Sweden, Estonia, Lithuania, and the Netherlands. Some states have introduced this obligation through 2022, including Serbia and Luxembourg, the latter through a phase-in plan.
We also find situations where the B2G obligation is still only partial. This is the case in Belgium, Austria, and Germany. In the case of Austria, certain types of contracts and transactions remain excluded from the obligation, for example, insurance contracts and transactions with immediate payment.
In the case of Belgium and Germany, however, the bias is directly linked to the federal model of the two countries. In Belgium the B2G obligation only affects administrations in the Flanders region and in Brussels. In Germany, on the other hand, the electronic invoice is required by all central administrations, while the administrations of individual federal states have to refer to measures of individual regions, resulting in a situation that is very heterogeneous and fragmented. Most federal states, however, have either introduced the B2G requirement or plan to introduce it over 2023-2024, albeit through decidedly varied modes and technological solutions. But we will return to this point more fully later.
The roadmap of European countries: upcoming e-invoicing obligations in Europe, starting in 2023
As we have seen, while the B2G obligation is nearly fully in place, no country has yet introduced any constraints regarding invoicing in the private sector, that is, B2B and B2C. But things are about to change, and as early as 2023, those who need to invoice abroad will have to be able to comply with the regulatory and technological requirements of each country.
Through this short list, let’s look at the countries and upcoming dates to watch out for:
- France: starting in 2024, the B2B obligation will be phased in through a 3-phased plan that should be completed by 2026, involving first large companies and gradually all companies;
- Spain: legislation is currently being passed that will introduce the B2B e-invoicing obligation, again through two phased phases. Within the next 3 years, however, the use of e-invoice will be unavoidable;
- Slovakia: compared to an initial roadmap, Slovakia has postponed the introduction of B2G and B2B e-invoicing by a few months. The B2G obligation is scheduled for 2023, while for B2B, we will have to wait until 2025;
- Poland: the local KSEF platform has already been in use since January 2022, allowing B2B invoices to be handled electronically. Currently optional, its use is expected to become mandatory from July 2024;
- Bulgaria: consultations are currently underway, which should lead to the definition of relevant legislation and a plan to implement electronic invoicing from 2023;
- Finland: the goal is to introduce B2B and B2C e-invoicing by 2025;
- Romania: from July 2022, a partial B2B obligation comes into effect, linked to the sale of a range of goods considered most at risk of tax fraud. From 2023, the e-invoice mandate should be extended to the entire sector;
- Serbia: after introducing B2G and G2B e-invoicing during 2022, the plan is to introduce e-invoicing in the internal B2B sector in 2023;
- Denmark: according to when it was approved in May 2022, implementation of the e-invoice for B2B businesses will start from January 2024. Full implementation is expected to be completed by January 2026;
- Belgium: the Belgian roadmap also calls for the introduction of a B2B obligation, albeit with some changes from the original plans. New roll-out dates are being finalized, but implementation will likely in 2024.
Technology solutions and platforms for electronic invoicing in Europe
Another point to consider is the technological and infrastructural aspect that different countries have decided to adopt. Although there are some more or less shared standards, such as the PEPPOL network and the related UBL format, the approaches taken are extremely varied.
Most countries have decided to set up a national platform for managing e-invoices, more or less similar to the Italian SDI. France, for example, through its national PPF platform (formerly known as Chorus PRO), manages the transmission of invoices centrally, using specially created national formats.
In Germany, where we have already seen how fragmented the situation is, there is one platform dedicated to handling invoices to central administrations, ZRE, and a number of other platforms for handling invoices to federal state administrations. To invoice a local government, therefore, one will have to adapt to the current platform and format in use from time to time.
Other countries, on the other hand, have chosen to rely on the UBL format, which is managed by OpenPEPPOL and therefore widely shared, while adopting a national platform. Finally, Belgium, Norway, and the Netherlands have decided to rely on the PEPPOL network completely, with a view toward greater interoperability at the crossborder level as well.
Not only electronic invoice: other tax compliance mandates and the SAF-T protocol
In many cases, the adoption of the electronic invoice is accompanied by the introduction of other constraints and solutions such as CTC (Continuous Transaction Control), related to the digital management of tax compliance, again with the aim of achieving greater traceability.
One of the most widely used protocols used in different countries to manage the communication of tax data to the competent authorities is SAF-T. Through a structured path of various profiles depending on the country of reference, this protocol makes it possible to communicate the data required from time to time by the authority and according to the legislation of each state. That’s why, although it is the same reporting protocol, there may be differences in the layout, period (annual, semi-annual, monthly, or even only upon request of the reference authority), and type of data to be submitted.
The European countries adopting this type of protocol include:
- Poland, where it is known as JPK.
Other states, however, have decided to adopt similar solutions, but relying on national technologies and platforms:
- Spain, through a solution called SII;
- Germany, with the reporting of budget data through the E-Bilanz protocol;
- Greece, through the myDATA platform
The approach of non-European countries: what are the next steps?
We will close this article by recalling the situation outside Europe as well, because more and more countries around the world have seen the electronic invoice as a tool to be exploited to achieve their goals of monitoring public finance and making processes more efficient.
Here are some of the countries that are introducing relevant measures in this regard:
- In Saudi Arabia, B2B electronic invoicing has been mandatory since the end of 2021, when the first phase of implementation began. The second phase will begin in 2023 and will include integration with the centralized ZATCA system. Currently, nonresident companies and those that do not have territory-based subsidiaries are exempt;
- In the United Arab Emirates, a measure is being published (by 2022) that will make e-invoicing mandatory in the B2B sphere, through modalities similar to those adopted by Saudi Arabia;
- Egypt has made B2B e-invoicing mandatory since 2021, finalizing the implementation in early 2022. As of July 2022, e-invoicing will be extended to the B2C sphere;
- Australia has approved a plan to phase in B2B e-invoicing in three phases that will run from 2023, through 2025. The Australian plan is based on the use of PEPPOL infrastructure as the sole mode of exchange for e-invoices.