Electronic invoicing mandates are being implemented across Europe. This is why we dedicate another overview to this topic, looking at the most crucial aspects of e-invoicing and its potential benefits to your business.
E-invoices differ from traditional digital invoices in PDF or other formats because they are readily standardized so that their data can be used for electronic processing right away. Mandates that make issuing electronic invoicing mandatory for all businesses in the EU will make it easier for the taxation authorities to track VAT duties and combat fraud. The first countries to bring e-invoice requirements to life choose to mandate the B2G (business-to-government) transactions first, but other businesses will follow.
Here are the main benefits of electronic invoicing for all private and institutional economic actors:
- E-invoices reduce costs — paper invoices and archiving are no longer needed.
- At the same time, they save time as submitting fully electronic invoices is faster, and bookkeeping is automatized. When the time comes for VAT reporting, e-invoices enable automatic pre-filling of returns.
- With automatization comes increased efficiency and competitiveness of the business. Digital invoices mean that data can be fed directly to the analytics tools and used for better planning, forecasting, and bottleneck prevention. E-invoices can also reduce the number of human errors.
- For taxation authorities, e-invoices work as an anti-fraud tool that can increase the accuracy and speed of fraud detection and crime prevention.
- Once more transparency is brought to VAT reporting, countries expect to collect more taxes and reduce the VAT gap.
To learn how exactly e-invoicing mandates would impact your businesses, it is important to take into account the type of e-invoices planned to implement in your country.
Generally, there are two types — post-audit and clearance invoices. The post-audit invoices are reviewed by the tax authorities after issuing them and upon request. This way of invoicing is implemented in Portugal and Hungary. The clearance model requires real-time e-invoicing, which enables the taxation authorities to check and approve the invoices before they become valid. In this scenario, tax authorities receive invoice details earlier than the client. The clearance model is implemented in Italy and Brazil.
If you wish to learn more about how to implement e-invoicing in your business efficiently — follow us for more updates on the topic or reach out to our team for an individual consultation. We’re here to support you in all things taxation!