The countries of Northern Europe have long been proponents of digitalization and automatization when it comes to business documents and processes. The widespread adoption of Peppol has laid the foundation for new developments and initiatives.
Sweden was early out with its e-invoicing obligation in the public sector. Since 2008, issuing electronic invoices to governmental institutions has been mandatory. This was further extended in 2019 to encompass the entire public sector through the Peppol framework.
From a B2B perspective, the country is purely a post-audit market. While e-invoicing is widely used in the private sector, it is not mandated. This, however, may change soon.
The latest development in Sweden is that The Agency of Digital Government (DIGG), along with The Swedish Companies Registration Office (Bolagsverket) and the Tax Agency (Skatteverket), have submitted a formal request to the Swedish Government to investigate the introduction of mandatory e-invoicing in both the B2B and G2B segments. This request follows the latest developments in the EU with the ViDA proposal. There have also been rumors that Sweden is moving towards a Peppol CTC model for B2B e-invoicing as well.
There has yet to be final confirmation from the Swedish Tax Authority (Skatteverket) on settling for a specific CTC model, but Peppol CTC still seems to be a likely candidate. With B2B e-invoicing being expanded across the European Union (VAT in the Digital Age), Sweden is closely following these developments.
Norway also has been long ahead of other countries with regard to digitalizing their economy. Since 1 July 2012, all central government entities in Norway have been obliged to receive invoices electronically. This was executed using Peppol infrastructure using the EHF format, the Norwegian national version of Peppol BIS.
The country has no mandate for B2B transactions today, but companies extensively use e-invoicing.
Similar to its neighbours, Finland has gone a slightly different path for their e-invoicing. The country follows the post-audit model – the same as the other Nordic countries for B2B invoicing. However, for public invoicing, Finland has adopted an approach of interoperability and Peppol.
There are a few alternatives for sending e-invoices to the government. Suppliers can establish an interoperability agreement with the contracted Service Provider of the Finnish Government or send e-invoices through the Peppol network via a Peppol Service Provider. Worth mentioning in Finland is Tieke (the Finnish Information Society Development Centre), which, besides running an e-invoicing forum for Service Providers, also developed a search engine – the E-invoice address registry – that can be used for finding the e-invoicing addresses of companies.
The latest news in Finland is that it has joined the growing list of countries with their own Peppol authorities. Furthermore, it has formally announced its support for the ViDA initiative, the first Member State of the EU to do so.
In Iceland, government agencies only accept e-invoices complying with the national standard TS-236 technical specification. However, the Icelandic government neither mandates nor recommends any e-invoicing service provider or using a particular e-invoicing platform.
Suppliers can issue electronic invoices via their billing systems or service providers. Invoices sent to governmental entities are also accepted through the Peppol network.
There are currently no indications of Iceland introducing mandatory e-invoicing for business transactions, but things can change anytime.
Another Nordic country that does not mandate B2B transactions is Denmark. The country uses Peppol/NemHandel for B2G e-invoicing.
The most significant development in Denmark recently has been the introduction of the new Danish Bookkeeping Act, effective as of 1 July 2022. The major change the act brings to the table is the requirement for businesses to use “digital bookkeeping systems” capable of issuing, receiving, exchanging, processing and archiving invoices electronically.
Software providers of the services above must also register with ERST (Erhvervsstyrelsen) to become classified as “digital bookkeeping systems”.
Although the bookkeeping act is active, the digital obligations will be gradually rolled out, with the expected starting date from 1 January 2024, with the larger companies that are obliged to submit an annual report to ERST being the first out and smaller companies later on. The timeline is subject to change since there have been delays in the implementation process. It is still quite unclear regarding the digital obligations and what additional requirements could be in store for businesses and service providers operating in Denmark. What’s clear is that the introduction of the new bookkeeping law reflects a new paradigm with regard to Danish e-invoicing.
As to the Baltics, Estonia, Latvia and Lithuania are developing and rolling out e-invoicing initiatives within their respective borders.
The Accounting Act Amendment Act 795 SE made Estonia another European country to go beyond Directive 2014/55/EU requirements and extend the B2G e-invoicing mandate to the suppliers' side.
As of July 2019, all invoices to the public sector can only be sent as e-invoices compatible with the European Norm. There is no specific mandatory infrastructure for e-invoicing in the country, i.e., contracting authorities and private businesses can contract an e-invoicing service provider.
Therefore, several private service providers offer e-invoicing exchange services in Estonia via interoperability or the Peppol network. For small companies (start-ups and SMEs) that want to send invoices to the public sector, the Estonian Center of Registers and Information Systems (RIK) made available, at no charge, the use of e-Financials, a web-based infrastructure to send invoices to governmental entities. On the B2B side, Estonia has not yet imposed specific requirements; thus, taxpayers can issue and exchange invoices and other documents in any preferred format or mechanism.
Earlier in October last year, the Cabinet of Ministers in Latvia revised and approved the informative report initiated by the Ministry of Finance on implementing an e-invoicing system. The key novelty of this report is the introduction of mandatory e-invoicing in the B2B and B2G segments starting in 2025, and Peppol e-delivery network is proposed to be adopted as a single standard for sending and receiving e-invoices.
The eSaskaita platform is the central information intermediary that receives and sends electronic invoices between suppliers and public contracting authorities in Lithuania. It is also Peppol-enabled since 2019: businesses can either connect directly with the platform to issue e-invoices or select an accredited Peppol Service Provider. The Service Provider will convert the data into the Peppol BIS 3.0 format, apply the necessary validations, and submit the e-invoice via the AS4 communication protocol to eSaskaita, which will provide the e-invoice to the buying public entity.
While the B2G sector in the country follows the centralized CTC model, Lithuania applies post-audit for business transactions.
The jurisdictions within Eastern Europe seem to highly favor the centralized model, establishing a mandatory infrastructure for issuing and receiving invoices. A few others are utilizing real-time invoice reporting (RTIR) and Peppol. Some also follow the fiscalization approach towards B2C transactions, where special hardware devices must be installed, storing and reporting the data to the government.
In 2018, Hungary introduced a voluntary real-time invoice reporting scheme, ultimately mandating invoice reporting for B2B and B2C transactions by April 2021. While not regulating e-invoices themselves, the model requires taxpayers to send a subset of their invoice data to the Hungarian Tax Authority (NAV) via the Online Szamla platform immediately after issuing the invoice.
Encompassing both Hungarian taxpayers and non-established entities with VAT registration in Hungary, the transactions that Online Szamla validates in real time include:
- B2B & B2C domestic transactions;
- B2B intra-community transactions;
- Tax-exempt domestic transactions;
- Export transactions; and
- B2C distance sale transactions.
The requirement to send invoice data is enforced by penalties up to HUF 500 000 (approx. EUR 1500,00) per invoice.
While the Online Szamla platform receives invoice data, it is important to note that this is for reporting purposes exclusively. Issuing and fetching invoices via the platform is not possible.
Poland has received a derogation from Directive 2014/55/EU to implement a mandatory countrywide CTC model centered around the KSeF platform beginning January 2024. Since January 2022, the platform has been available for use voluntarily, but its adoption is currently not widely practiced.
While the centralized model with KSeF as a mandatory platform is for B2G and B2B transactions, using PEF (the Polish Governmental E-Invoicing Platform) is still possible in the public sector. PEF, which operates on the Peppol network, will run in tandem with KSeF for the foreseeable future.
Using KSeF has many benefits for taxpayers issuing invoices in the infrastructure. Besides increased speeds for tax refunds and the convenience of end-to-end process automation, taxpayers now have fewer obligations when it comes to archiving, as invoices can be stored in KSeF for up to 10 years. Moreover, using this platform reduces administrative responsibilities such as generating and sending specific audit files. As data will already be transmitted via KSeF, tax authorities will already have access to this information.
Since 2019, Romania has been leading the EU in VAT gaps with a total gap of 34.9%. To curb this and follow the other European jurisdictions successfully combating tax evasion, the country is implementing e-invoicing and e-transportation mandates alongside a new SAF-T schema.
Since July 2022, it has been required for B2G invoices to be issued via the RO e-factura infrastructure. The Romanian government has also mandated to validate invoices concerning high-risk fiscal goods and services between private companies via the RO e-factura platform.
High-risk fiscal transactions allow for a higher risk of tax evasion when bought and sold. These can be anything, e.g., alcoholic beverages, clothing, construction materials, etc.
To further apply controls around these goods, the RO e-transport system has been introduced in parallel. It allows monitoring of high-risk fiscal goods transportation and requires documentation with a unique ITU code to accompany all such goods transported. While this has been mandatory since July, penalties for not complying with these requirements have been deferred until January 2023.
Serbia is another Eastern European country implementing a centralized exchange model for invoice issuance. Since May 2022, entities have been required to issue e-invoices to their public sector trading partners via the SEF (Sistem E-Faktura) platform.
It is planned to extend the mandate for issuing invoices via the SEF infrastructure to the private sector, beginning January 2023. This incorporates another distinctive measure regarding invoice responses in Serbia.
Another notable feature of the Serbian implementation is the mandatory issuance of electronic business responses by the buyers. The buyer is given a limited timeframe to issue such a response, which, if not observed, has the effect of the invoice being final and non-disputable for B2G transactions or rejected for B2B transactions.
As Serbia is not an EU member, there is a freer rein to implement continuous transaction controls in the jurisdiction without requiring a derogation.
Slovakia has been executing test runs on the prototype of its IS EFA infrastructure since June 2022. This is the stepping stone to adopting a public sector mandate, but the implementation dates, the exact CTC model, and document types are not yet known.
Furthermore, the Slovakian government has announced its intention to extend the mandate countrywide, encompassing the private sector, but further legislation is still to be published.
Allowing for the issuance and reception of e-invoices, Slovenia has adopted the centralized platform UJP eRačun and Peppol for B2G transactions. This provides suppliers with more flexibility when issuing their business documents. Entities can either use Peppol BIS, eSlog 2.0 or other EN compatible formats.
The discussions on the future outlines of the CTC model in Slovenia are about to restart. Previous news regarded the introduction of a CTC model involving centralized pre-clearance with exchange via interoperability. The extended scope of the taxpayers is expected to include business entities, budget users, or taxpayers having subscriber status in the jurisdiction.
Looking at this region, we can see a great variety of implemented or planned CTC models. Italy and Türkiye have adopted countrywide centralized exchange models, Basque Country in Spain introduced a real-time invoice reporting scheme and Malta with Cyprus are embracing the Peppol approach. Greece, facing an accounting data reporting obligation, plans to implement e-invoicing in the public sector via Peppol.
In its efforts to combat the VAT gap, Italy has obtained a derogation from Directive 2014/55/EU and implemented mandatory countrywide e-invoicing via the SDI platform. The country applied a centralized model for domestic transactions within the private and public sectors.
As a result, e-invoicing has significantly helped reduce tax evasion. At the end of 2021, the European Council authorized Italy to extend the derogation until 2024.
Since 1 July 2022, all cross-border transactions have been included in the scope of the e-invoicing mandate. The Esterometro scheme used for this purpose was abolished, so now Italian taxpayers must report sales and purchase invoices from non-Italian trading partners in real-time and on a transactional level via SDI.
Furthermore, 1 July 2022 was the date when e-invoicing for the supply of goods and services became mandatory between Italy and San Marino. Other than this case, the post-audit regime is dominant in the autonomous district of San Marino.
At the end of 2021, Malta took a step towards complying with the E-procurement Directive and chose Peppol to facilitate B2G e-invoicing. With the help of the Peppol network, digital communication between governmental institutions and suppliers will be standardized and consistent.
Learn more how the Maltese Ministry of Finance and Employment will drive the implementation with Pagero.
In Spain, for e-invoicing in the public sector (B2G), the most commonly used platform for exchanging invoices is the central FACe platform, utilising the Facturae format. Some regions, such as the Canary Islands and Catalonia, use other e-invoicing approaches and government buyers have not connected to FACe.
Furthermore, the Spanish government has set sights on introducing mandatory B2B e-invoicing with the “Crea y Crece” law, with the CTC exact model and implementation timelines still being investigated.
While there are no exact specifications for countrywide business e-invoicing obligation yet, the municipalities in the Basque Country are rolling out their own tax reporting system TicketBAI for B2B and B2C transactions, based on a real-time invoice reporting CTC approach.
With such regional and industrial disharmony, Spain is a country to keep a close eye on in the coming years.
Portugal has a mixture of accounting SAF-T reporting and e-invoicing requirements in place. B2G e-invoicing in the country follows a centralized model via the FE-AP platform with interoperability through contracted service providers. The business sector is still operating in the post-audit regime.
Within the previous years, some initiatives were introduced to promote the digitalization of the invoicing processes. They have little to do with real e-invoicing, however. These steps are the mandatory application of QES (Qualified Electronic Signature) on the non-EDI invoices and the generation of the ATCUD code on all types of invoices.
In Cyprus, since 2019, suppliers to its governmental entities could issue e-invoices voluntarily via Peppol or ARIADNI portal, with institutions processing invoices manually in the following steps.
The government planned to introduce mandatory B2G e-invoicing by 1 January 2022. No announcements have been made up to date, however.
While Greece has implemented the myDATA (My Digital Accounting and Tax Application) schema for reporting various accounting information to the Independent Authority for Public Revenue (IAPR), most invoicing still follows the post-audit approach, where the businesses are free to agree on how they want to exchange invoices with each other.
Recently, the IAPR informed businesses who opted in for certified myDATA agents for complying with the reporting requirements that they would also have to send invoices electronically via such solutions to the public buyers that have been Peppol-enabled. We should be expecting further developments in this respect coming out of Greece.
Türkiye is a country with a fairly complex but mature CTC environment. They kicked off their journey into mandatory e-invoicing back in 2014, and since then, they have continued to extend the scope of taxpayers (by revenue) or industries that have to exchange and process invoices electronically.
For those operating in Türkiye, it’s important to keep in mind that requirements will differ depending on whether you are handling basic or commercial B2B invoices, B2G invoices or B2C transactions.