E-Invoicing – Governments Enforce Adaption
As local e-invoicing compliance requirements increase, so too does the corresponding technical complexity needed to implement them. This is especially true for Business to Government suppliers (B2G) and for Business to Business invoices with Tax authority clearance (B2Tax).
Electronic Invoicing Features
Electronic invoicing is a form of electronic billing between Trading Partners, e.g. a customer and a supplier. E-invoicing can include a number of different technologies by which an invoice is electronically presented to a customer for payment.
An e-invoice can be defined as structured invoice data issued as an Electronic Data Interchange (EDI) message. An e-invoice is typically built upon previous process steps such as orders, order responses and dispatch advice messages.
With shallower integration requirements, the focus stays on just the processing of the invoice. This resource page conveys the compliance requirements in several countries and how these requirements can be addressed under the already agreed levels of integration between suppliers and customers.
Trading Partners handling their invoice processes electronically in an automated way are able to save between 60 and 80 percent in costs – compared to a paper-based process. This is achieved by way of reduced processing times along with increased quality and transparency. E-invoicing also improves the business relationship with both your suppliers and your customers: no lost invoices, better utilization of discounts and optimized cash management.
Invoicing makes it easy to report to tax agencies VAT/GST-data in real-time
Clearance is expected to grow among the world and will mid-term / long-term replace post audit entirely.
Pioneering countries such as Mexico have been promoting e-invoicing as a clearance model since 2011. The state obligates the use of a single XML format. Each transaction takes place in real-time for every B2B process.
Most countries within the European Union are still using Post Audit, which means that an audit can take place at a later point in time.
The picture below shows the countries in which Post Audit and Clearance models are used today.
The legal framework for the entire European Union is regulated by Directive 2010/45/EU, however the usage across countries varies
- The legal framework is regulated by Directive 2010/45/EU, focusing on the need to guarantee the origin and authenticity of electronic documents
- Each member state has developed its own legislation to transpose this directive to its own judicial framework
- The format for the electronic document exchange will be XML because it is widely used and cost effective
- E-Invoicing in Europe was developed in a harmonizing spirit designed to potentiate the benefits of e-commerce between businesses. Consequently, the obligatory nature of its use in the B2B area has not been proposed in any member state.
- The vast majority of European states are implementing mandatory e-invoicing with their suppliers, in order to modernize their e-government systems and speed up collection times
- Customary requirements call for e-certificates issued by authorized bodies to validate the pertinent electronic document signature processes
- Italy is the latest EU member example that changed from Post Audit to Clearance
Established already in March 2015
- Italy was one of the pioneers in putting the E-Invoicing EU Directive into practice with the Exchange System ‘Sistema di Interscambio’ (SdI). This is based on the FatturaPA specification.
- FatturaPA is the only type of electronic invoice that will be accepted by Public Administrations (PA) which, according to the Law, are obliged to make use of the Exchange System
- Since then approximately 2.7 million B2G electronic invoices have been sent to PA
- FatturaPA XML is the mandatory XML format which needs to be signed with a certified XAdES-BES signature
- SdI offers communication channels for automated integration (e.g. Web Services and FTP) and a web interface for manual uploads
- FatturaPA invoices must be stored in the same way as any other electronic B2B invoice in compliance with Italian law
Current state (since January 2017)
- FatturaPA XML’s transmitted via SdI can be used for e-invoicing between business partners of the private sector (B2B)
- For B2B the usage of SdI is optional, and – when practiced – reduces existing reporting obligations
- Per quarter, approximately 5,000 B2B invoices have been exchanged electronically via SdI – as there was no obligation to use it
New upcoming Obligations
With the passing of the 2018 Budget Law, mandatory electronic invoicing between private companies has finally been approved in Italy. It becomes mandatory for domestic B2B and B2C invoices:
1) July 1st 2018
- Supply of petrol or diesel intended for use as motor fuel
- Services rendered by subcontractors in the supply chain of companies participating in contracts with a public administration
2) September 1st 2018:
- Tax-Free Shopping
- A regular invoice is issued
- The goods are transported in personal luggage outside the European Community within 3 months of purchase
- The goods are intended for personal or family consumption
- The goods are purchased by a private citizen
- The new obligation affects electronic invoicing for selling goods (not services) exceeding the 155€ threshold (including VAT), resulting from a single invoice at the same point of sale
- Is a tax advantage reserved for people living outside of the European Community, that allows them to be reimbursed for VAT paid on purchases made in Italy
3) January 1st 2019:
- All other business-to-business transactions
Every invoice from an Italian supplier to an Italian buyer must be submitted in FatturaPA format via the SdI exchange system before it will be considered as issued from a tax perspective. With this obligation Italy will operate very similarly to Clearance countries such as Mexico, Turkey etc.
The National Tax and Customs Administration of Hungary (Nav Nemzeti Adoes Vamhivatai) Launched a New System Kobak Which Becomes Mandatory July 1st 2018
- Tax payers are required to transmit VAT data on invoices issued in real-time (Real Time Invoice Reporting (RTIR)) via the KOBAK system of the NAV as of 1st July 2018
Reasons for Hungary Introducing VAT Reporting
- A large amount of invoice turnover becomes visible in real-time for the National Tax Authority NAV
- NAV can perform risk management on taxes more effectively
- Increase of VAT revenues by prevention of fraud
NAV – General Information
- The information provided from NAV on this mandate has been subject to changes and frequent updates recently
- Usually, when such new processes and systems are launched, changes to due dates, penalties, formats, notifications, etc. often happen in the beginning
- Therefore, all information provided in this presentation regarding the VAT-reporting in Hungary represents the current SEEBURGER knowledge based on intensive dialogue with the appropriate authorities
Deadlines for VAT Registration of Issued Invoices to NAV
- Amounts lower than 100.000 HUF : No VAT reporting to NAV required
- Preformatted invoices produced by press Technology
- Amounts between 100.000 HUF to 499.999 HUF reporting to NAV within 5 days after the invoice issuance for invoices with VAT
- Amount 500.000 HUF or higher reporting to NAV within 24 hours after the invoice issuance for invoices with VAT
- An invoice must be created no later than the 15th day after the services or goods have been delivered
- Report immediately after ‘technical creation’ of an Invoice
Penalties for Noncompliance
Up to 500.000 HUF / 1.600 € for each Invoice will be charged from 1st July 2018 when obliged taxpayers do not report via NAV
Mexico Introduced the CFDI Format Back in 2011 Which Is Mandatory for Most Electronic Invoices
CFDI stands for ‘Comprobante Fiscal Digital por Internet’ – literally translated as a digital fiscal document via Internet (bill). The CFDI invoice must contain both the signature of the exhibitor and the signature of a certification provider PAC ‘Proveedor Autorizado de Certificación’. The PAC must be authorized by the Mexican Tax Authority (SAT).
There are four types of CFDI’s: invoices, direct debits, credits and bills of lading. The CFDI tipoDeComprobante attribute can have the following values for this purpose:
- ‘Ingreso for facture’ (invoices) oder ‘nota de cargo’ (direct debits)
- ‘Egreso for nota de crédito’ (credits)
- ‘Traslado for carta de porte’ (bills of lading)
Deadlines for CFDI 3.3 Have Been Postponed Slightly
- CFDI version 3.3 mandatory use has been postponed from 01 December 2017 to 01 January 2018.
Taxpayers can use the current version CFDI 3.2 until 31 of December 2018.
- CFDI with ‘payment complemento’ mandatory use has been postponed
- From 1st December 2017 to 1st April 2018 (announcement from November, 2017)
- From 1st April 2018 to 1st September 2018 (announcement from February, 2018)
Until then, its use remains optional.
Via E-RECHNUNG.GV.AT it is possible to transmit electronic invoices to the federal government and to connected institutions of other parts of the public sector.
Invoice Recipients of the Federal Government
Based on the provisions of Section 5 of the Austrian ICT Consolidation Act (IKTKonG), the Austrian federal government only accepts electronic invoices (e-Invoices) for the provision of goods and services. The federal government institutions are in general:
- All ministries and their subordinated administrative offices
- The Parliament
- The office of the federal president
- The higher administrative court
- The constitutional court
- The Austrian ombudsman board
- The court of audit
Invoice Recipients of Other Public Sector Institutions
A detailed listing of all invoice recipients of other public sector institutions connected to E-RECHNUNG.GV.AT, is also available. Currently there is no legal obligation for e-invoices to be used for the institutions of the other public sector.
For Contracting Partners of the Public Sector
1. In order to be able to transmit e-invoices companies need to register once (free of charge) at the USP (User Service Portal - see www.usp.gv.at). Suppliers who submit their invoice through a third party or use the PEPPOL transport infrastructure do not need to register at the USP.
2. After registration and login at the USP and accessing ‘E-RECHNUNG.GV.AT’ (under ‘My Services’) the next page will be shown
3. To transmit an e-invoice by using one of the supported delivery methods certain invoice data is mandatory
Within the Public Sector
1. Other public sector institutions have to embed the functions of E-RECHNUNG.GV.AT into a public sector portal (PVP) in order to be able to transmit e-invoices
2. After registering an authorized employee at the portal Austria (PAT) e-invoices can be submitted by using one of the supported delivery methods. Certain invoice data is mandatory.
On July 1st 2017 the Spanish Tax Agency Initiated a New Vat Management System Based on Information from Business Transactions Called Aeat
- AEAT stands for Agencia Estatal de Administración Tributaria / State Tax Administration Agency in real-time. The technical system enabling it is called SII (Immediate Information Sharing System).
- Currently this process will only be required for 63,000 taxpayers consisting of large companies, VAT groups and those registered in the monthly refund regime
- Advantage for the companies:
They will have an additional 10 days for self-assessments and will not file forms 340 (register books), 347 (transactions with third parties) or 390 (annual summary)
- With the information received and the information contained in the database, the Tax Agency will prepare the taxpayer's tax data, for VAT purposes, thus facilitating the tax return
Who Is Obliged to Follow SII ?
- Large companies (more tan 6M € of annual turnover)
- Companies registered in the monthly VAT return (REDEME)
- VAT Groups
- Additionally: SME (Joint Financial Instrument) will be eligible for the new system but will not be required for them. They must be accepted by census declaration in December of the previous year. The option will have a minimum validation of one year.
- This sums up to approx. 62,000 companies which make up 80% of the total VAT invoicing in Spain
Relevant messages and their deadlines for registration in SII
- Invoice issued: Deadline of 4 calendar days from the issue of the invoice or from the date on which the accounting entry is made
- Invoice received
- Deadline of 4 calendar days from the date of the accounting entry for the invoice, in any event, by the 16th day of the month following the liquidation period in which the relevant operations are included
- For imports, the 4 calendar days must be counted from the accounting entry of the document which records the amount paid to Customs (the DUA) and, in any event, by the 16th day of the month following the liquidation period in which the relevant operations are included
Penalties will be charged from January 1st 2018 when obliged taxpayers do not report via SII
All B2G (Business to Government) or G2G (Government to Government) e-invoices in France will be centralized on a unique platform, Chorus Pro
- Chorus Pro is developed and operated by AIFE (French Government’s Financial Information Technology Agency)
- Subcontractors admitted to the direct payment of contracts concluded by the State, local authorities and public establishments transmit their invoices in electronic form
- State, local authorities and public institutions accept invoices sent in electronic form. Ultimately all the approx. 78,000 public administrations in France will exchange approximately 100 Million invoices per year over the Chorus Pro Platform.
The Chorus Pro Portal:
- Reduces costs and processing times which lead to productivity gains for both companies and the client entity
- Secures the exchanges
- Works for sustainable development (reduction of CO2 emissions, paper, means of transport, etc.)
- Is completely free
Who is obliged to follow Chorus Pro?
- January 1st, 2017: for large companies
- (> 5000 employees or annual revenue > 1.5B €)
- January 1st, 2018: for medium-sized businesses
- (250 <> 5000 employees or annual revenue 50M € <> 1.5B €)
- January 1st, 2019: for small and medium-sized businesses
- (10 <> 250 employees or annual revenue 2M € <> 50M €)
- January 1st, 2020: for microenterprises
- all others included “1-person” businesses
Accepted E-Invoice Formats on Chorus Pro
- Structured invoice formats: UBL (FEN105), CII (FEN135) plus syntax from the European Standard
- PDF invoices (signed or unsigned), which suppliers upload to the Chorus Pro platform. On the platform, the data of the PDF invoices are read out through an OCR. The supplier then has to check the results of the OCR and correct them manually.
- Online invoicing on the Chorus Pro Platform
- Light XML with an embedded PDF invoice
- Hybrid Invoice FACTUR-X
For EDI DEMAT compliant e-invoicing this means:
- EDI DEMAT compliance of invoice content: Invoices must contain the mandatory information required by DEMAT regulations in the corresponding data fields.
- Accepted e-invoice format for EDI DEMAT is EDIFACT D96A.
- Invoice summary list: A sequential summary of the invoices must be created and built up, as messages are sent or received and must not be modifiable.
- Partner list: A file of partners with which the company exchanges invoices electronically must be created.
- Electronic archiving is required:
- The electronic invoice needs to be archived.
- In addition an invoice summary list and a partner list need to be archived.
- Archiving periods are:
- Tax authorities requires six years after expiration of the current financial period.
- Commercial law dictates a period of ten years for archiving of documents.
- Location of storing can be either domestic or outside of French territory
- If in Europe but outside France: customer must specify this to French tax authorities.
- If outside of Europe: the respective country must have signed an agreement with French tax authorities (USA or Turkey haven’t signed it, for example).
- Tax Authorities must be granted online access for downloading – for control purposes – and for use of the data stored, regardless of the place of storage or the person responsible for storing.
Who is obliged to follow DEMAT compliant E-Invoicing?
- EDI DEMAT E-Invoicing is not mandatory so far.
- But when French business partners agree on EDI DEMAT for domestic invoices, they need to follow the rules of French dematerialization.
SEEBURGER has renewed its qualification issued by GS1 for EDI electronic invoicing according to DEMAT in April 2018. The GS1 qualification identifies solutions that meet the demands of the market.
Recent changes to Italian law require that the online platform SdI is used for all business-to-business E-invoicing.