The European Union relies on electronic invoicing as a solution to fight against tax fraud, limit the financial losses of the Member States and better control economic activity.
Its main advantages are the reduction of administrative burdens and the automation of the cycle of creating, sending, storing and receiving invoices from customers and suppliers.
The adoption of electronic invoicing is advancing by leaps and bounds both in Germany and in Europe. The European Union has seen in the e-invoicing an efficient measure to optimize the control and monitoring of the administration, in order to improve the declarations to limit tax fraud, especially VAT.
In 2019, the EU lost 134,000 million euros in VAT revenue, as stated in the European Commission’s 2022 “VAT Gap” report. Among the main causes are bankruptcies, insolvency or information errors in addition to the fraud, which itself costs European countries between 40 and 60 billion euros every year.
One of the main advantages of e-invoicing for European companies is the reduction of administrative burdens as it facilitates the daily tasks of the administration and accounting departments.
Through technology, it is possible to automate the sending and receiving of invoices, to reconcile the invoices received with the merchandise received and the purchase orders or to validate the invoices, quickly, free of human errors and with greater efficiency to optimize , in this way, time.
In this context, the European Union seeks in electronic invoicing a tool that allows authorities to control activity in real time, adopt measures without delay based on the economic context and standardize the treatment of national and European transactions.
X-ray of electronic invoicing in Europe
The obligation to implement electronic invoicing is progressively being extended to B2B transactions. The European Union wants to fight against tax fraud, limit the financial losses of the Member States and better control the economic activity of its actors.
The Member States of the EU have some flexibility regarding the implementation of electronic invoicing both with public (B2G) and private (B2B) agents. Therefore, not all countries are in the same phase.
Electronic invoicing is mandatory in the central administration and the Länder of Bremen, Saarland, Baden-Württemberg and Hamburg. For the rest of the federated states, its adoption will be mandatory from 2023. In the private sector, electronic invoicing has been optional since 2011.
In Austria, electronic invoicing is mandatory for central public administrations, since 2014, federal and municipal public administrations, since 2020, and for their providers. In the private sector, electronic invoicing has been optional since 2013.
For the public sector, electronic invoicing has been mandatory in France since 2020 through the Chorus Pro platform. As for the private sector, there is a gradual obligation to issue invoices for VAT-registered companies between July 1, 2024 and on January 1, 2026.
In Italy, electronic invoicing has been mandatory since 2014 in the public sector and since 2019 for private agents through the SDL platform. In addition, the mandatory use of the electronic purchase order for the public health sector was established.
Electronic invoicing is mandatory for public administrations and their suppliers since 2019. The platform used in Portugal is eSPAP (Entidade de Serviços Partilhados da Administraçao Pública).
On September 29, Law 18/2022 on the Creation and Growth of Companies, which registers the obligatory nature of the adoption of electronic invoicing in Spain, was published in the BOE. The standard includes, as a novelty, the issuance of electronic invoices in commercial operations between businessmen, professionals and suppliers. An obligation that extends regardless of the sector in which the activity is carried out.
This Law includes the obligation to use electronic invoicing and that it will come into force in two phases. On the one hand, companies and the self-employed with an annual turnover of more than 8 million euros will have the obligation to apply this measure within a maximum period of one year from the approval of the regulatory development (from mid-2023).
On the other hand, the rest of the companies whose annual turnover is less than 8 million euros will have to apply this measure within a period of two years, that is, in 2025 it will be mandatory for any type of company in Spain.
A solution to fight against tax fraud, limit the financial losses of the Member States and better control economic activity.