Global B2B e-invoicing mandates to know in 2023

Corcentric

Business-to-business (B2B) electronic invoicing has reached a tipping point in Europe, in part driven by the necessity of reaching customers who were out of the office during the COVID-19 pandemic lockdowns. B2B e-invoicing initiatives have also been influenced by a shift towards mandatory e-invoicing in the business-to-government (B2G) space, as dictated by EU Directive (2014/55/EU). Public sector spending is typically a large percentage of GDP for most countries (52% of GDP in the UK from 2020-21), with a significant B2G supply chain, so the ramifications of this Directive are far reaching. Furthermore, a growing list of European countries mandate electronic invoicing to improve VAT reporting, closing a tax gap estimated to be €134 billion in Value-Added Tax (VAT) revenues in 2019, according to the 2021 Report on the VAT Gap released by the European Commission.

What started as a B2G mandate has continued to flow into B2B invoicing best practices next.

B2B e-invoicing has proven to be an extremely powerful tool for countries such as Brazil, Chile, and Mexico to close their tax gap from unpaid VAT. Any doubters to the effectiveness of these programs only needs to consider how Mexico has improved tax yields by 48% since implementing e-invoicing—a compelling case for EU member states to learn from.

Following the lead from this success in Latin America, Italy was the first European country to mandate e-invoicing for B2B transactions, at odds with the EU VAT Directive (2010/45), which clearly states that a buyer must agree to exchanging e-invoices and should have the freedom to choose a document format. The Italian Government’s regulations force e-invoicing on businesses without an opt-out, which was in violation of that original principle.

However, Italy’s approach was approved by the EU Commission allowing a derogation from the EU VAT Directive. Other EU countries wanting to take a similar path must apply for a similar derogation to enshrine mandatory B2B e-invoicing in their laws.

France, Spain, and Poland are also making B2B e-invoicing mandatory, with requirements coming in to play from 2023 for Spain and 2024 for France and Poland.

E-Invoicing clearance model for VAT compliance

One of the main drivers for e-invoicing adoption has been to improve VAT collection efficiency and close tax gaps due to fraud. As a result of this, a “clearance” model for VAT-compliant e-invoicing has been put in place in Italy and will be in place in France from 2024.

A clearance model requires e-invoices to be delivered via a portal which sends this data to the tax authorities, giving them a real-time insight into VAT liabilities per invoice.

Italy’s Sistema di Interscambio (SdI) was the first invoice clearance service in the EU, launched in 2019, providing centralized clearance, validation, and exchange of data through a central platform deployed by the tax administration.

A hybrid approach will go live in France from 2024, mandating that businesses use either the government portal directly or a partner platform called plateforme de dématérialisation partenaire (PDP) for their invoicing. A PDP is a platform certified by the French tax administration to collect and report invoice data to the tax authority. In this specific case, the tax administration outsources part of the clearance process to these accredited service providers to validate invoice data and send this back to the tax authorities.

Mandatory B2B e-invoicing in Europe

Mandatory B2G e-invoicing has been around in Europe for almost a decade now, but mandatory B2B e-invoicing has only recently emerged as a requirement. As mentioned above, this was driven by Italy’s maverick approach requiring all B2B invoices to be issued electronically (starting in January 2019). This allows the Italian Revenue Agency to automatically collect details of all e-invoices — before they are even sent to customers — enabling them to accurately calculate the tax due on payment of each invoice.

So far, France, Spain, Belgium, Portugal, Poland, Greece, and Turkey have joined Italy in this move to mandatory B2B e-invoicing requirements. As figures emerge demonstrating the positive impact on tax revenue collection, it’s likely we will see this list of countries grow considerably in the next few years. Germany and the Netherlands are already talking about B2B e-invoicing mandates soon.

As of August 2023, here is a snapshot of mandatory B2B e-invoicing in European countries which have mandates in place (either mandated at present or with a future date).

Italy – B2B e-invoicing

  • It is a mandatory requirement for all B2B invoices to be issued electronically through the Sistema di Intercambio (SdI) system. This allows the Italian Revenue Agency to automatically collect details of all e-invoices — before they are even sent to customers — enabling them to accurately calculate the tax due on payment of each invoice.
  • The Italian e-invoice format is an XML format called FatturaPA.
  • The number of e-invoices sent to the Exchange System is approximately 30 million per year.
  • E-invoicing issuers and recipients must preserve their electronic documents for five years minimum

France – B2B e-invoicing

  • As part of the Ordinance n°2021-1190 of 15 September 2021, there is an obligation to send e-reporting information on Business to Consumer (B2C) sales, international B2B sales, Intra-EU supply information, and payment information for invoices or sales where the tax point date (VAT eligibility) is on payment. These obligations come into force via the following tiers:
  • Delay in e-invoicing and e-reporting implementation: The French Ministry of Finance on 28 July 2023 announced a delay in implementing the e-invoicing and e-reporting mandates originally set to begin in July 2024.
  • At the latest on 1 January 2025 for medium-size companies
  • At the latest on 1 January 2026 for all companies
  • E-invoices must be sent via the Chorus Pro platform, which also allows cross-border receiving and processing of e-invoices from non-domestic suppliers (thanks to its connection to PEPPOL) and allows archiving of the e-invoices processed via the platform.
  • Chorus Pro uses CII with Factur-X, the Franco-German standard for hybrid electronic invoicing (named ZUGFeRD in Germany).

There is a legal obligation to preserve invoices for six years, although, issuer and recipient often keep the original documents for at least a decade.

Spain – B2B e-invoicing

  • On 8 July 2022, the Spanish government published new proposals to the “Ley Crea y Crece” draft law and provided more details on the new e-invoicing law that will affect private entities in Spain.
  • Once the draft law gets published in the State Official Bulletin, large taxpayers (with annual revenue of more than EUR 8 million) will have one year to adapt their workflows to issue, exchange, and receive e-invoices. Smaller businesses will have one year to implement similar changes.
  • FACeB2B is a new platform (available since June 2018) allowing B2B electronic invoicing. It is provided by the government free of charge for any business, and it uses the same format and interfaces already in place for B2G invoicing.
  • Electronic invoices in B2B will be expected to comply with the Facturae (XML based) national standard, used in association with an eSignature following the XAdES standard.
  • There is a requirement for recipients to preserve the original electronic documents (e-documents) for at least five years.

Poland – B2B e-invoicing

  • Poland has raced to beat France to the implementation of mandatory B2B e-invoicing. The next step is through a derogation of the VAT directive to allow all transactions for which an invoice issued under Polish VAT law must be processed via the national system for electronic invoicing (Polish: Krajowy System e-Faktur – KSeF).
  • On 17th June 2022 the Council of the European Union agreed to make electronic invoicing mandatory in Poland from January 1, 2024. Find all the details on the website of the Polish Ministry of Finance.
  • Companies that wish to send invoices electronically ahead of this deadline can use the national KSeF platform, which remains available for voluntary use from January 2022.
  • Poland has already made significant progress in combating VAT fraud by employing SAF-T files (known in Poland as JPKs) and the fraud flagging system STIR to enable electronic VAT reporting, even including for data from electronic cash registers, over the past few years. Taxpayers are required to submit SAF-T reports to the Polish Tax Authority on a monthly basis. However, SAF-T reporting is not in real-time. Furthermore, SAF-T reporting does not automate sending and processing invoices as efficiently for businesses as electronic invoicing based on XML-e-invoices does.
  • Electronic invoices need to be PEPPOL BIS Billing 3.0 compliant.
  • Invoices must be preserved for five years at a minimum.

Greece – B2B e-invoicing

  • Since November 2021, electronic invoicing has been mandatory for business-to-business in Greece.
  • MyDATA is the platform in charge of receiving all the summary of e-invoices for B2B and B2G transactions. On this platform, the Greek authorities can process all the data and then create financial reports for each taxpayer in Greece. This has been instrumental in tackling Greece’s estimated 30% original shortfall in VAT payments, down to 25.6% in 2019 and falling further still as time moves on.
  • Electronic invoices need to be PEPPOL BIS Billing 3.0 compliant.
  • Invoices must be preserved for six years at a minimum.

Turkey – B2B e-invoicing

  • B2B e-invoicing is mandatory for all but the smallest of transactions in Turkey, as of January 2020. However, the type of e-invoice is dependent on whether the business has registered with the Turkish Revenue Administration (TRA), in which case they issue invoices as e-Fatura format. Alternatively, for businesses not registered with the TRA, invoices are issued via the e-arşiv platform.
  • Once authorized by the TRA companies must report invoices in UBL-TR 1.2 format
  • The TRA expanded the e-transformation practices both in terms of application and taxpayers in scope with the General Communique issued on 19 October 2019. Within this context, using the e-invoice system and e-arşiv, e-invoices became mandatory for businesses with a year-end turnover of TRY 5 million (£229,000) and above.
  • Businesses with gross sales revenue above TRY 5 million (£229,000) in 2020 had to switch to the e-arşiv invoice system before July 2021.
  • As of January 2020, Businesses have had to issue e-arşiv invoices through the TRA’s portal if the total amount of an invoice issued to non-registered taxpayers, including taxes, exceeds TRY 30,000 (£1,375), or if the total amount of an invoice issued to taxpayers, including taxes, exceeds TRY 5,000 (£229).

How Corcentric can help

Mandatory B2B electronic invoicing requirements can be massively simplified by working with a third party to ensure your invoices are delivered in the right format, adhering to the right standard, for each recipient, wherever they are in Europe.

Companies in a wide range of industries work with Corcentric in a number of jurisdictions that require mandatory B2B e-invoicing for both issuing and receiving invoices.

All of this is possible through the Corcentric’s e-invoicing solution, which can be leveraged as a technology-enabled managed service to streamline implementation and take away the overheads associated with invoice delivery.

For Order-to-Cash needs, Corcentric EIPP works as an electronic invoicing platform layer on top of your ERP, requiring minimal integration (all taken care of as part of the managed service). ERP output is taken, and invoicing requirements determine the automation rules applied to this, reducing the workload for your accounts receivable team. Corcentric EIPP streamlines the process of delivering invoices and allows your team to focus on more profitable activity.

For Source-to-Pay needs, Corcentric Platform enables your team to receive all or some of your invoices as your service provider. All tax authority models including centralized, clearance, post-audit, are supported. With wide CTC country coverage, you can connect Corcentric Platform to all your P2P platforms.

For businesses who want to go a step further and do all the above plus unlock cash flow and drive business outcomes, Corcentric provides Managed Accounts Receivable and Managed Accounts Payable services. You can find out more in our blog on how Managed Services are transforming growing businesses.

As legislation evolves across the EU and additional formats enter circulation, Corcentric will continue to ensure compatibility as well as the ability to send invoices out in a variety of other formats, in parallel.

See how Corcentric can simplify e-invoicing compliance for you.