On the topic of electronic invoicing—for public administrations, businesses, and individuals—Italy has a well-established role as a leader within the European Union.
The obligation for electronic invoicing in Italy is a reality for the vast majority of entities since 2019, for B2G (thus for transactions with the PA), B2B, and B2C.
Other EU countries are further behind on this path.
But all of them, without exception, are accelerating. And they are doing so more and more decisively.
France already has a full B2G electronic invoicing obligation; starting in 2024, the obligation for e-invoicing will also be phased in for the entire B2B sphere.
Spain also already has a B2G obligation; over the next three years—through a series of regulations currently being approved—“e-invoicing” will be gradually extended to all other areas.
Among the countries that are moving most rapidly are Slovakia, Poland, Bulgaria, Finland, Romania, Serbia, Denmark, and Belgium. More recently, Greece and Germany have also shared their roadmap for introducing e-invoicing.
The turning point for this acceleration has a very specific acronym: ViDA (VAT in the Digital Age).
Published on December 8, 2022, this is the European Commission’s action plan. It provides that:
– from 2024, it will no longer be necessary for member states to apply to the EU for a derogation to introduce the e-invoicing mandate in their territory;
– also from 2024, it will no longer be necessary to obtain the purchaser’s prior consent to receive invoices in electronic format;
– as of 2028, electronic invoicing will become the default mode to be used and will be mandatory in intra-EU transactions.
– starting in 2028, it will become mandatory to report information on intra-EU transactions (excluding B2C transactions). This obligation will take the form of digital reporting requirements, (or e-Reporting)
We will not elaborate further here. However, we have additional resources for those who wish to explore the topic further:
– a blog post devoted entirely to the ViDA action plan
– a blog post that overviews electronic invoicing in Europe
In the remainder of this article, we will focus on international e-invoicing, especially for non-EU countries.
What are the adopted approaches and trends? What are the relative deadlines?
We will move from the states closest to Italy and the EU to the United States, South America, Saudi Arabia, Asia, and, finally, Australia.
The United Kingdom
In the United Kingdom, electronic invoicing was introduced in 2014 when the country was still part of the European Union.
As of April 18, 2020, the obligation to comply with the use of electronic invoicing covers all public administrations, both central and peripheral. It is voluntary for businesses in any other sector.
The British government’s strategy is definitely toward encouraging the adoption of electronic invoicing, specifically in dealings with the public administration and the health sector.
The model adopted is based on the PEPPOL network, although the administration has developed its own platform, called PECOS P2P.
We have focused on PEPPOL, its features, operation, and importance for the international e-invoicing arena in this post.
In our neighboring Switzerland the situation and strategies are similar to those in the UK.
Electronic invoicing was introduced in 2015. A federal law was then enacted in 2018 that established rules and procedures for sending and receiving electronic invoices. Currently, the use of electronic invoicing is mandatory for suppliers to federal governments.
E-invoicing is not mandatory in transactions between individuals, but it is encouraged by the government as part of the broader digitization strategy.
The United States
Moving across the pond to the US and a system that has strong ties to the European system, which is critical for global dynamics.
In the US, there is no one-size-fits-all regulation at the federal level but there are big differences from state to state.
In general, the most widely adopted model is the one defined by the U.S. Council on Electronic Commercial Relations (ECR), which provides for the use of common technical standards for the transmission of electronic invoices, ensuring interoperability among the various systems used by companies.
In recent news: the Business Payments Coalition together with the Federal Reserve is developing a pilot project with the goal of creating a standardized electronic invoice exchange system. This is an infrastructure that is very similar to the aforementioned PEPPOL infrastructure and can facilitate all procedures both domestically and internationally. This project sees the involvement of different stakeholders and collaboration with the OpenPeppol association.
In South America, not only is the economic and production ecosystem different from country to country, so are the social, administrative, and governmental situations.
Driven mainly by the desire to curb tax evasion and avoidance and, therefore, to monitor tax compliance by taxpaying enterprises more extensively, most of these countries have adopted electronic invoicing well in advance of the rest of the world. It is no coincidence that the e-invoicing models developed in the LATAM area are mainly based on a centralized approach, involving strong tax authority control over transactions. In this sense, the similarity with the Italian model centered on the role of the Sistema di Interscambio—known as the Interchange System—is immediate.
In Brazil, for example, electronic invoicing was introduced as early as 2006.
The government created a central system, SPED (Sistema Público de Escrituração Digital), to manage all electronic invoices. As of 2018, companies exceeding a certain turnover are required to only issue electronic invoices.
In Mexico, electronic invoicing was introduced in 2011. Since 2014, all companies are required to issue electronic invoices through the centralized CFDI (Comprobante Fiscal Digital por Internet) system. However, the situation is being updated with the transition to a new version of the electronic invoice, known as CFDI 4.0.
In Argentina, all businesses are required to issue electronic invoices, as well as in Peru, Colombia, and Chile.
Saudi Arabia and the United Arab Emirates
In Saudi Arabia (an increasingly important and interconnected market), B2B e-invoicing has been mandatory since late 2021, when the first phase of implementation began.
The second was launched in January 2023 and is integrated with the centralized ZATCA system. Currently, nonresident companies and those that do not have territory-based branches are exempt.
The United Arab Emirates is moving in the same direction, with the publication of a measure that will make e-invoicing mandatory in the B2B sphere through modalities that are similar to those adopted by Saudi Arabia.
From February 1, 2023, import invoices with a value of AED 10,000 or more (about €2,400) must also be attested by the UAE Ministry of Foreign Affairs and International Cooperation (MoFAIC) through the eDAS system.
China and India
The two Asian giants, with their huge and constantly expanding economies, have also begun to accelerate on the issue of electronic invoicing.
China launched a pilot project related to electronic invoicing (e-fapiao) in late 2021. The project was adopted by an increasing number of provinces during 2022.
For the time being, the use of electronic invoicing is mandatory only for new taxpayers in the B2C and B2B sectors and voluntary for all others. However, the project is set to consolidate until it reaches full coverage, which is estimated to be in 2025.
In India, The Good and Services Tax Council (GSTC), the body responsible for tax management in the country, approved the phasing-in of e-invoices for B2B business reporting in the Good and Service Tax system (GST System) in December 2019.
Here, there was an initial period where compliance was voluntary. From 2021, it became mandatory, based on a phased implementation linked to the average annual turnover of companies. From 2023, all companies with a turnover of more than 50 million rupees (about €550,000) are required to exclusively issue electronic invoices. All other companies with lower turnover will follow.
Australia has approved a plan to phase in B2B e-invoicing, which will unfold in three phases starting in 2023 through 2025.
The Australian plan is also based on the use of PEPPOL infrastructure; in this case it will be the only mode of exchange for electronic invoices.
In conclusion: a clear and very strong trend
Here we come to the end of our overview of international e-invoicing. However, this is not comprehensive and the situation in different countries is constantly being updated.
Beyond the micro and macro differences, one fact emerges: national regulations around the world are taking great strides toward the most widespread possible adoption of e-invoicing. From voluntary systems, we are moving toward the gradual introduction of mandatory systems.
The reasons are very simple:
– Drastic reduction of tax evasion and avoidance, resulting in the recovery of resources by the state.
– Simplification and digitization of all processes, both for administrations and businesses.
– Cross-border interoperability in an economic ecosystem that increasingly needs to bypass traditional national barriers.
– Increased security and transparency, with increasingly reduced margins for error or fraudulent manipulation.
– Reduced costs, on the corporate side, related to the transmission and storage of paper invoices.
– The possibility, again on the business side, of integrating the electronic invoicing tool with other digital tools for managing sales, purchasing, and customer relationship processes.
It’s a matter of being able to grasp the scope of this shift and, above all, the opportunities it offers that go far beyond obligations and that affect administrations, businesses, individual citizens…in short, the community as a whole.