Unfortunately, non-compliance is not an option regarding e-invoicing mandates, as governments either already have or will impose penalties on taxpayers who do not meet the standard or follow the procedures set out. Not imposing fines will make companies less likely to participate, and a national e-invoicing platform stands or falls by the level of participation. You can find out more here if you want to learn why governments are keen to impose a mandate.
Below, we explore some examples of measures put in place by governments to deal with non-compliance. Please note that this list is not exhaustive and that the information is accurate at the time of writing.
To ensure businesses in Saudi Arabia use the ZATCA platform correctly and as intended, ZATCA issued a set of fines that will apply when a company violates the rules it has set out. Compared to other countries, the list of violations and its penalty scheme in the KSA is more comprehensive than others.
Please note that there are more. The above is just a selection.
A violation of any of the requirements set by ZATCA is as follows:
ZATCA did announce that until 31st May 2023, it will uphold a grace period and withhold the issuance of widescale fines and financial penalties.
In contrast to the KSA regulations, the French Government opted for a fixed fine per offence. As the mandate covers e-invoicing, e-reporting and payment statuses, the French government has placed different penalties for each category.
For every e-invoice that violates the rules, the issuer will receive a fine of €15, with a maximum of €15,000 per calendar year.
Interestingly, the penalties for e-reporting and payment status violations are much higher. Per every missed obligation to transmit data, a fine of €250 will be issued. Moreover, there is no cap on a company's maximum penalties.
In both cases, there is a waiver for the first offence, but only if the business corrects the violation itself and within 30 days of the first request by the government. This waiver is currently in place until 2027.
In addition, there are penalties stipulated by law for the PDP in case of any non-compliance by the issuers using their services.
The French mandate comes into effect in July 2024 through a phased approach and covers both AP and AR. You can catch the latest webinar here and subscribe to our compliance monitor for more information on when to comply.
Another country that will be kicking off its mandate in 2024 is Poland.
At the time of writing, VAT payers might face non-compliance penalties of up to 100% of the tax amount on an invoice (or up to 18.7% of the total amount in case of an invoice without tax) from January 2025 (draft amendment).
The penalties are very straightforward in Hungary, especially compared to other countries. This is mainly because Hungary has a Real-Time Reporting CTC mandate.
In this model, the issuer only needs to report the sending of the invoice to the recipient, compared to going through a government platform for invoicing and payments, like in KSA and France.
For every invoice a taxpayer fails to report to the Hungarian government, a fine of up to HUF 500,000 (approx. €1,250) may be imposed.
A much more complex sanction model is stipulated in Italy, where buyers and sellers can receive penalties. Plus, additional fines can apply if you operate cross-border if you fail to submit or submit incorrect data.
In case of violation of the mandate, an administrative fee of € 2 per invoice is applied (max € 400 per month). Similar fines (and maximum per month) apply for failing to or wrongfully submitting incorrect data for cross-border operations.
Sellers can see a fine ranging from 90% to 180% of the VAT when this is not correctly documented. On the receiving end, a buyer, upon receiving an incorrect invoice and who fails to regularise the transaction themselves, can see a penalty of 100% of the VAT.
From a quick look at the above examples, it is clear there can be a vast difference in rules and stipulations across countries regarding penalties and fines. Other governments have also stipulated their sanctions on non-compliance, and even in the countries above; there are further details that we couldn’t address here.