On 14 May 2024, an amendment to the VAT Directive was discussed at the European Union level (ECOFIN). This amendment contains three main pillars aimed at modernising and simplifying the tax system in the EU. The first pillar is e-invoicing, the second pillar is VAT rules for platforms and e-shops and the third pillar is simplification using a single VAT registration at EU level. This article takes a closer look at the first pillar - e-invoicing.
This pillar proposes the introduction of e-invoicing for supplies of goods and services across the EU and aims to harmonise e-reporting and e-invoicing. Several important changes have been made compared to the original proposal. The deadline for the introduction of e-invoicing has been postponed to 1 July 2030, giving businesses (VAT payers) more time to prepare and switch to e-invoicing. The time to issue an invoice has been extended to 10 days compared to the original two days, allowing businesses more flexibility and time to process invoices correctly. What is also new are the so-called hybrid invoices, which combine an e-invoice in a structured form with a PDF form. This format makes it easier for the human eye to read while meeting the requirements for electronic invoicing.
However, companies should not remain idle, even though the deadline for the introduction of pan-European e-invoicing has been extended by two years. Indeed, many countries have already made progress in digitising invoicing, including Belgium, Poland, Romania, Germany, France and Spain. Companies should therefore map their transactions and the markets in which they operate and develop an e-invoicing strategy. This strategy should include a clear architecture for an e-invoicing solution that should be closely linked to the company’s core processes, such as Accounts Payable (AP) and Accounts Receivable (AR). Companies should leverage the potential of this change to automate these processes – and thereby increase efficiency and reduce errors.
When choosing the right solution, companies have several options. They can integrate e-invoicing into their existing accounting system, use local national solutions, or implement a comprehensive e-invoicing system on a global level. Each approach has its own advantages and the specific needs and capabilities of individual companies need to be considered.
Companies should be proactive and prepare for the upcoming changes in e-invoicing. The right strategy and early implementation can bring many benefits, including increased efficiency and automation of key processes. Moving to e-invoicing is not just about meeting legislative requirements, but also about seizing the opportunity to modernise and improve internal processes.
If you are currently addressing this issue, please do not hesitate to contact our tax technology team who will be happy to help you with the preparation and implementation.
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