Regulatory updates - EU

A key outcome was the commitment to enhance e-invoicing interoperability between the regions.

The joint statement - annexed with a declaration - has outlined fundamental principles for successful e-invoicing.

Read the full update here.

Below are some key highlights from the report.

Global impact of the e-Invoicing Directive
The e-Invoicing Directive played a significant role in standardizing practices across Europe and globally, with various countries adopting Peppol specifications. Challenges, such as varying adoption rates and the need for complete interoperability at the transmission level, persist due to differences in national implementations.

Cost-benefit analysis

The report highlights that out of 23 surveyed Member States, 17 acknowledged that the benefits of e-invoicing outweighed the associated costs at the national level. The driving factors behind these benefits included process automation, adherence to standardized procedures, expedited processing, reduced payment delays, and simplified protocols. The estimated quantitative gains from automating the invoicing process were around EUR 5.28 per e-invoice issued and EUR 8.4 per e-invoice received, factoring in a labour cost of EUR 46 per hour.

Positive outcomes for SMEs and large enterprises
According to the accompanying report document, additional savings were identified when automating the entire order-to-pay cycle, with benefits estimated between EUR 25 and EUR 65 per purchase-to-pay cycle. Small and medium-sized enterprises (SMEs) experienced positive outcomes, benefiting from streamlined B2G invoicing, enhanced efficiency, and smooth invoicing procedures. Similarly, large enterprises realized cost savings, efficient invoicing to public entities, heightened accuracy, improved data quality, and increased security.

Enhancing legal certainty and streamlining processes

The Directive increased legal certainty and reduced technical complexity, as evidenced by positive impacts reported in 14 out of 23 Member States surveyed. Finland, for instance, experienced improved automation and higher data quality by adopting the European e-invoicing standard.

The Directive's success in fostering interoperability

The Directive successfully created conditions for the emergence of technical solutions, ensuring interoperability through the obligation imposed on public authorities and the facilitation of Peppol as a network for compliant electronic invoice exchange.

The complete report is accessible via the following link, and the accompanying document can be found here.

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) announced two reports in the form of the Draft European Parliament Legislative Resolution consisting of 251 amendment suggestions to the European Commission’s VAT in the digital age (ViDA) proposal.

The second Draft Report announced on 20 June 2023, is the finalized version of the first Draft Report and consists of amendments 88 – 251.

The suggested amendments below are limited to the e-invoicing and digital reporting requirements.

These amendment suggestions will be reviewed by the European Commission.

General suggestions

• Setting a minimum threshold for being qualified as a taxable person for VAT purposes, i.e. taxable person for VAT purposes means any natural or legal person who independently carries out any economic activity with an annual turnover of more than EUR 30 000 or the equivalent in the national currency.
• A longer transition period for smaller companies will ease the burden on SMEs.

Timeline suggestion

• The deadlines for the entry into force of the main dates are delayed by 24 months, i.e., e-invoicing implementation is to be pushed until 2026 / 2028, and the DRR set to commence in 2028 would be pushed until 2030.

E-invoicing suggestion

The following amendments are suggested regarding electronic invoicing:

• The deadline for the issuance of an invoice for cross-border transactions is set at (5) working days after the chargeable event has taken place. The deadline of 2 working days is difficult for SMEs to meet.
• Member States are allowed to authorize other means than e-invoicing for domestic supplies for transactions below a threshold of EUR
• The issuance of e-invoices by the supplier and its transmission to the buyer is conditional on prior authorization or verification by the tax administration.
• The use of European e-invoicing standard EN16931 for the transmission of invoice data at a national level is optional for Member States.
• The requirement to state IBAN in case of bank account payment is removed.
• The new definition of electronic invoice comes into force in 2028.
• Non-established invoice recipients in a Member State mandating the e-invoice issuance may require the invoice issuer to send the invoice in paper or any other format during the transitional period.

DRR suggestion

The following amendments are suggested regarding the Digital Reporting Requirements:

• The deadline for the digital transaction report by the taxable person, or a third party on behalf of the taxable person is extended to (5) / (7) / (10) / (12) days after the posting date in the taxable person’s accounting books.
• Member States may introduce the EU reporting requirements first and only if the expected objectives are achieved, the system should be extended to domestic transactions as well.
• Member States may allow local digital reporting requirements for purchases based on non-EU standards.