During the past couple of months a number of significant changes have seemingly unnoticed entered into force in Estonia. Interestingly enough, Estonia seems to be the first EU Member State to by law require XML format for the exchange of B2B e-invoices, or rather require taxpayers to issue e-invoices using “machine-processable formats”. Only taxpayers who would encounter disproportionate costs or efforts to meet this requirement, for example SMEs, are exempt from the obligation. While this is normal in “clearance” countries e.g. in LATAM, Turkey etc., in Europe the imposition of structured invoice formats has so far been restricted to either B2G invoices, as in Italy or Spain, or in the specific situation of audit, as in Hungary.
Another novelty is the introduction of the concept of “handler of machine-processable source documents” (e.g. invoices). This definition begs the question of what functionalities make an e-invoicing service provider a handler of machine-processable e-invoices? Well, that doesn’t seem to be entirely defined, but format conversion services is one example included in the explanatory notes to the Act.
This concept comes with certain obligations – service providers who fall into this category must e.g. have an agreement with the taxpayer, which shall be notified to the Estonian commercial registry. This obligation goes beyond the more common Post Audit requirement for suppliers to authorize the outsourced issuance of their invoices, since it requires official registration.
Also interesting is that handlers are to be the “primary point of entrance of all incoming invoices” (inbound) addressed to the taxpayer they serve. This obligation to assist in the invoice exchange for both inbound and outbound is something that has not been explicit in the EU before – what it de facto will mean for the market remains to be seen.
