Update: 8 March 2023
South Korea has recently approved a tax reform which introduces several measures for 2023, among which is the possibility of issuance of self-billing tax invoices.
This tax reform amends the current VAT law to allow the purchaser to issue invoices for the supply of goods and services.
However, this will only be allowed in specific circumstances, such as when the supplier cannot issue the invoice. The purchaser can claim a deduction for the related input VAT by issuing a self-billing invoice.
Therefore, issuing self-billing invoices for VAT-exempted supplies of goods and services will not be permitted. However, the issuance of self-billing invoices by the purchaser depends on confirmation from a district tax office.
This amendment will enter into force and apply to all supplies of goods and services from 1 July 2023.
This South Korean tax reform will expand the transactional scope of the country’s e-invoice issuance and continuous transaction control (CTC) reporting system (e-tax invoicing), as the transactions in the scope of e-tax invoicing are generally the same as those in the scope of VAT invoicing.
Interested in learning more about e-invoicing in South Korea? Contact a member of our expert team today.
Update: 17 January 2021 by Selin Adler Ring
Collection of real-time fiscal data is becoming one of the core public finance decision making tools. Transactional data provides a timely and reliable overview of the business sector, enabling governments to rely on analytical data in the decision-making process.
This is what has led many governments to adopt CTC regimes that require taxpayers to transmit their transactional data in real/ near-real time to government services. South Korea was one of the first countries to appreciate the benefits of a CTC regime and mandated reporting of e-invoice data to the government for certain taxpayers as early as 2011.
The year after the first implementation, the South Korean authorities expanded the mandate scope and the e-invoicing system became mandatory for more taxpayers. 2014 saw another expansion of the CTC mandate to reach its current scope.
The current system requires any business that is a corporate entity or an individual whose aggregate supply value for the immediately preceding tax year is KRW 300,000,000 or more to issue an e-invoice to the recipient of goods or services subject to VAT, as well as to report the invoice data to the government.
The South Korean e-invoicing system mandates the issuance of an e-invoice to the recipient and reporting of this invoice data to the government portal within a day of its issuance. Before e-invoices are transmitted, suppliers must digitally sign them with a PKI electronic signature. E-invoices are reported in an XML format to the National Tax Agency (NTS) Portal. Due to the near-real time reporting time-limit, the South Korean e-invoicing system falls under the category of CTC.
South Korea has implemented a comprehensive e-invoicing system from the beginning and as a result there haven’t been any major changes to the requirements or practices. This is a big relief for taxpayers in South Korea compared to other CTC jurisdictions where there are constant changes.
In addition to the benefits for taxpayers, a considered CTC regime is also less burdensome for the state as the implementation costs of the constant regulatory changes can be significant.
More and more governments are considering the adoption of CTC regimes and should look to South Korea as a success story for this approach which has worked well for both the government and taxpayers.
Please get in touch to discuss how Sovos can help your business comply with CTC regime reporting in South Korea or other jurisdictions subject to e-invoicing mandates.
The European Commission’s VAT in the Digital Age (ViDA) proposal continues to unfold with the latest details published on 8 December 2022. As a result, many EU countries are stepping up their efforts towards digitising tax controls – including mandatory e-invoicing.
While we see different approaches to initiate this transition across Northern Europe, the trend towards continuous transaction controls (CTCs) and e-invoicing mandates has accelerated.
Recent statements indicate that Germany is taking steps towards a B2B e-invoicing mandate, however, without a centralised reporting or clearance element – at least for now. During a VAT conference on 10 March, the Federal Ministry of Finance announced that a draft paper will be published in a couple of weeks for the introduction of the e-invoicing mandate.
It is worth noting that Germany had previously requested a derogatory decision from the European Commission to implement a mandatory e-invoicing regime, as announced by the Ministry of Finance in November 2022.
Sweden is another country where it would not be surprising to see an e-invoicing requirement emerge. The Swedish Agency for Digital Government (DIGG) has expressed the desire to implement mandatory e-invoicing in the country.
With the Swedish Tax Agency and the Swedish Companies Registration Office, DIGG has requested the government research the conditions for mandating e-invoicing in B2B and G2B flows, which would be added to the current B2G e-invoicing mandate.
The reasoning behind this request is that if the European Commission’s ViDA proposal is adopted, it will result in mandatory e-invoicing in cross-border flows. Therefore the national system should align for efficiency purposes. DIGG does not believe that alignment will occur voluntarily, but a mandate will be necessary.
In Finland, no mandatory B2B e-invoicing mandate is in place. However, buyers can receive a structured electronic invoice from their suppliers if requested. This regulation has been in effect since April 2020 for all Finnish companies with a turnover exceeding €10,000.
Furthermore, the Finnish government recently demonstrated their support of electronic invoicing by sending a letter to Parliament outlining its benefits. The government sees electronic invoicing as a means of increasing business efficiency and combatting VAT fraud through the ViDA package.
Lithuania is laying the groundwork for the broader use of e-invoices. It has announced plans to build a technological solution that complies with the European standard for the transmission of electronic invoices.
The platform is expected to be available free of charge to businesses for at least five years and should be ready by September 2023. Additionally, the platform will meet Peppol Network requirements and comply with Peppol BIS 3.0.
Denmark has also been working on digitizing the business processes by implementing a new bookkeeping law. The Danish Business Authority has initiated implementing the Bookkeeping Act’s digital bookkeeping provisions by adopting draft executive orders for standard digital bookkeeping systems and their registration.
As a result, providers of standard digital bookkeeping systems must adapt their systems to the new requirements by 31 October 2023 at the latest. The new provisions stipulate that traditional digital bookkeeping systems must support the automatic sending and receiving of e-invoices in OIOUBL and PEPPOL BIS format.
While Denmark has not announced the final dates, it expects taxpayers to adhere to the digital bookkeeping rules between 2024 and 2026.
Speak to a member of our team if you have further questions about e-invoicing.
Update: 4 October 2022 by Enis Gencer
The recent EU Commission report on the VAT in the Digital Age Initiative indicates that continuous transaction controls (CTCs) will become more prevalent across Europe. The final report suggests introducing an EU-wide CTC e-invoicing system covering both intra-EU and domestic transactions as the best policy option. While Eastern European countries have been at the forefront of local implementations, acting swiftly and introducing CTCs, it’s also worth keeping an eye on some of the developments in Northern Europe.
Following the 2021 national elections, the new coalition government in Germany identified VAT fraud as a policy question. It announced its intention to introduce a nationwide electronic reporting system as soon as possible, which will be used for the creation, checking, and forwarding of invoices. Although there are no details about the nature of the system, discussions are ongoing with stakeholders from the private sector, mainly focusing on the implementation timeline and the government’s role in such a system.
B2G e-invoicing has been mandatory for invoices issued to the federal administration since 2020. The scope was expanded from 1 January 2022 to include state-owned authorities in Baden-Wurttemberg, Hamburg, and Saarland, with the next states joining in 2023 and 2024. Moreover, the IT Planning Council, the Central Body for the digitization of administration in Germany, issued the decision 2022/31 advising all contracting authorities to accept electronic invoices via the PEPPOL network by 1 October 2023 to connect the entire public area in a uniform manner.
Denmark is also aiming to introduce new requirements to digitize the business processes of Danish companies. On 19 May 2022, the Danish Parliament passed a new accounting law requiring taxpayers to make their bookings electronically using a digital accounting system. The mandate will take effect gradually between 2024 and 2026, depending on the company’s form and turnover.
While the new accounting law doesn’t introduce any mandatory e-invoicing or CTC obligations, it is envisaged that the digital accounting systems must support continuous registration of the company’s transactions and the automation of administrative processes, including automatic transmission and receipt of e-invoices. The Ministry of Finance has been authorised to adopt rules requiring companies to register purchase and sales transactions with electronic invoices as the documentation of the transactions, which in practice would amount to an e-invoicing mandate.
The Danish Business Authority, Erhvervsstyrelsen, has prepared drafts for three executive orders concerning the new digital bookkeeping requirements. According to draft regulations, digital accounting systems are required to support the automatic sending and receiving of e-invoices in OIOUBL and PEPPOL BIS format. These systems must be able to share the company’s accounting data by generating a standard file, which is the Danish SAF-T Standard recently published by Erhvervsstyrelsen.
The draft regulations will be available for public consultation until 27 October and the requirements are expected to enter into force on 1 January 2023. There will be a conversion period until 1 October 2023 for digital accounting systems to comply with the requirements.
Sweden is another country looking at introducing digital reporting requirements. The Swedish Tax Administration, Skatteverket, is considering different ways to ensure the correct collection of VAT while obtaining useful economic data from businesses. The project is still at an early phase, and while such requirements could mean introducing Standard Tax Audit File (SAF-T) requirements or a type of CTC, e-reporting, or e-invoicing, the tax authorities would still strive to implement a smooth system for businesses.
The Latvian Ministry of Finance has been working on digitizing invoicing processes for a while. They conducted a public consultation and took into consideration opinions of companies and non-governmental organizations to find out the readiness to start using e-invoices in Latvia.
As a result, the Ministry of Finance prepared a report discussing the current situation and the implementation of e-invoices, and possible technological solutions. The report focuses on different e-invoicing systems, such as post-audit e-invoicing, centralised e-invoicing, and decentralised e-invoicing, comparing the advantages and disadvantages of such systems.
The report favours the PEPPOL BIS standard for the introduction of mandatory e-invoicing in B2B and B2G transactions and proposes the use of e-invoices must be defined as an obligation in Latvian regulations, setting a mandatory requirement for the use of e-invoices to start no later than 2025.
The Latvian government approved the report, and the necessary regulatory acts, hence implementation of technological solutions are expected to take shape in due course.
It’s clear that CTC initiatives are becoming increasingly popular among governments and tax authorities in Europe, with the Northern European countries starting to follow this trend, even if they seem to be acting more cautiously. It will be very interesting to see how and when these CTC projects take shape and be affected by the upcoming results from the EU Commission on the VAT in the Digital Age project.
Need help with e-invoicing requirements? Get in touch with our tax experts.
Update: 2 November 2023 by Dilara İnal
On 23 October 2023, the Israeli Tax Authority (ITA) announced that it had extended the continuous transaction controls (CTC) implementation timeline to offer businesses more time to complete their technological development. According to the announcement, the ITA will allow the deduction of input tax from a tax invoice, even in the absence of an allocation number, until 31 March 2024.
The new Israeli invoicing framework will require businesses engaged in B2B transactions that exceed a specific threshold to obtain an allocation number. The first phase starts on 1 January 2024 for invoices exceeding 25,000 NIS. Businesses must ensure that their invoices include the allocation number to be eligible for input VAT deduction as of this date. In light of this recent announcement, buyers will receive an additional three-month period to comply.
It is important to emphasise that although the ITA has extended the time for input tax deductions, the clearance platform will be fully operational as originally planned from 1 January 2024. From this date, invoice issuers who will request allocation numbers will receive them.
Looking for more information on Israel’s invoicing developments? Find out more.
Update: 6 July 2023 by Enis Gencer
The Israel Tax Authority has released a set of guidelines encompassing technical details and other relevant information regarding the implementation of the Israeli Invoice model.
The guidelines state the new model will be a phased implementation that begins with a pilot program in 2024. A key objective of this new model is to address and mitigate the long-standing issue of fictitious invoices in Israel.
Under the newly introduced Israeli Invoice model, taxpayers involved in B2B transactions which exceed a specific threshold will be required to obtain an invoice number. This will be done by contacting the designated tax authority service via APIs and sending the invoice information prescribed by the tax authority.
The guidelines define the set of information that must be reported to the tax authority, including:
Once acquired, the invoice number must be included on the tax invoice. Without this number, taxpayers will not be eligible to deduct input VAT. It is important to note that the tax authority reserves the right to not assign the invoice number if there is reasonable suspicion of any legal inconsistencies concerning the invoice.
Buyers can use the invoice number to access invoice details through the tax authority service. This feature is designed to optimise the process of incorporating the invoice into the taxpayer’s accounting system.
The Israeli Invoice model will be a phased implementation, beginning with a pilot program in January 2024 for invoices exceeding 25,000 NIS (approximately 6,500 euros). During this phase, the tax authority can only reject the request for invoice numbers in cases of technical errors.
As implementation progresses, the threshold will be gradually reduced as follows:
Israel is quickly taking steps towards the introducton of its invoicing system by publishing technical details and its implementation timeline soon after introducing the system formally in February 2023. Taxpayers should now prepare their systems according to the legal and technical guidelines that the tax authority has recently published.
Looking for more information on Israel’s upcoming regulations? Contact our team of experts.
Update: 26 May by Enis Gencer
More details have emerged regarding the implementation of the continuous transaction control (CTC) model in Israel, which was announced to be introduced in the country in February 2023.
As we reported earlier, Israel’s government approved the 2023-2024 budget on 24 February 2023, setting the stage for the adoption of the CTC model. Since then, the proposal has gone through the standard legislative process and it has recently received approval from the Finance Committee, with some modifications.
According to the latest announcement, the modified plan introduces a CTC e-invoice clearance model for invoices exceeding NIS 25,000 (approximately 6,500 Euros) in business-to-business (B2B) transactions. Under this model, invoices must be issued through the tax authority’s system and obtain real-time approval. Taxpayers will not be allowed to use unvalidated invoices for deducting input tax.
The implementation of the CTC e-invoicing model is scheduled to start in January 2024, and by 2028, the threshold will be reduced to NIS 5,000, thus covering smaller amount transactions.
Despite the short implementation timeline, it is important that the authorities publish regulatory and technical specifications in time for taxpayers to prepare their invoicing systems to fully comply with the new requirements by January 2024.
Find more information about Israel’s current e-invoicing system here.
Update: 14 March 2023 by Enis Gencer
Israel’s government approved the 2023-2024 budget on 24 February 2023 to introduce a continuous transaction control (CTC) model in its tax system.
This long-awaited move will have significant implications for businesses operating within the country. It is essential to know the changes that may impact your company.
The new plan, prepared by the Ministry of Finance and approved by the government, envisages an e-invoice clearance model for invoices over NIS 5,000 (appx. 1300 Euros) issued between businesses. Under this model, invoices must be issued through a tax authority system and receive real-time approval.
The tax authority system will issue a unique number as proof of clearance for each invoice, which businesses can then use to deduct input VAT. The government has also proposed that the tax authority be entitled to refuse a request to assign a number and not clear the invoice if there is a reasonable doubt that the invoice is not issued legally.
While this plan is an exciting development, it is only the beginning of a long journey towards implementing a CTC model. The above proposal is currently only outlined in a budget document, which will be subject to further readings and approvals before the government can implement it.
Additionally, an amendment to VAT Law and the publication of technical details will be necessary to make it legally and technically enforceable.
For further information on the digitization of tax in Israel, speak to a member of our team.
Update: 9 April 2020 by Joanna Hysi
With the long-lasting problem of fictitious invoices in Israel, a move towards some form of mandatory e-invoice clearance might be the answer. After having been withdrawn once due to failing support, the idea of a continuous transaction control (CTC) model is being revived by the Israeli tax authority. The proposed model, similar to Chile’s e-invoicing system (clearance), would include a direct connection between the tax authority and businesses in real time for each transaction. The proposal, which is currently being reviewed with interested stakeholders, will be presented to the Knesset Finance Committee, with the hope of promoting legislation for implementing the planned reform measures as soon as a new government is formed.
Subject to final adoption in law, the core points of the reform are:
It’s an interesting observation that for years Israel appeared to be heading towards the EU approach of a post-audit system, yet recently they seem to have pivoted and be heading towards the more Latin American style of continuous transaction controls.
Either way, the Israeli tax authorities are now taking firm measures to combat VAT fraud, as to whether they go for a model similar to Chile, or something close to home in India or Turkey, we will have to wait and see.
Note: The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. Our blog, France: B2B E-Invoicing Mandate Postponed, is promptly updated whenever there are changes to the rollout of the French mandate.
France will implement a mandatory B2B e-invoicing and an e-reporting obligation. Every company operating in France is affected.
Electronic invoicing in France requires using a (partner) dematerialization platform. The already enacted legislation leaves the choice of which platform up to companies.
Should you use the public platform (‘PPF – Portail Public de Facturation’, i.e. Public Invoicing Portal) or a third-party private platform (‘PDP – Plateforme de Dématérialisation Partenaire’, i.e. Partner Dematerialization Platform)? And which organisation registered as a PDP should you opt for?
There is a lot to consider – including the type of invoices, data management, customer/supplier relations, transmission, functionalities, and more – this blog will help you make a decision.
The electronic invoicing process includes formatting, controlling, reporting, routing tracking, transactions, whether between trading parties (domestic B2B e-invoices) or with the PPF (domestic B2B e-invoices, cross-border B2B sales and purchases, B2C sales, payments received on services). In this respect, PDPs are essential.
French legislation allows companies to choose their dematerialization platform for submitting and/or receiving domestic B2B invoices and reporting transactions. A public solution exists, the PPF, alongside which other PDPs position themselves.
What parameters should you consider when choosing a dematerialization platform? What are the conditions for becoming a PDP and when will they be operational?
This blog discusses the elements that enable companies to understand the role of dematerialization platforms in managing electronic invoicing. If you wonder how to choose the right PDP for your organization, read this blog about Choosing the right PDP – 5 Questions to ask Yourself.
The need to use a dematerialization platform is part of the electronic invoicing requirements, which come into force for business-to-business (B2B) transactions with go-live of the mandate.
An electronic invoice must be delivered in a structured format, leaving it to the trading parties and their PDPs to agree on the standard. By default, PDPs must be able to process the three core set formats, UBL, CII, or UNCEFACT, with the obligation for the platforms to produce a legible version of each invoice, or Factur-X hybrid format (XML+PDF/A-3).
PDPs may also offer to process any other structured formats (e.g. EDI formats such as EDIFACT), subject to acceptance by both the buyer and the seller. In both cases, PDPs will have to extract mandatory data from the issued e-invoice and map it into one of the core set formats – and then report them to the PPF within 24 hours of the e-invoice issuance.
The corresponding flows can be exchanged under various communication protocols (EDI, API, etc.)
Using a PDP isn’t mandatory from a legal point of view. However, using a PDP will be necessary for companies who want to exchange invoices in specific formats due to the specificities of the invoice flow (not supported by the PPF).
The PPF will be used for the obligatory transmission of invoice data to the tax authorities.
It will manage the following for companies:
The PPF performs other functions including management of the Central Directory (in which any registered company subject to VAT will be identified), data collection and transmission to the tax authorities, and retention of e-invoices.
Like the PPF, a Partner Dematerialization Platform (PDP) ensures the submission of invoices and conversion into one of the three core-set formats – CII, UBL or Factur-X.
But, contrary to the PPF, they will allow the exchange of invoices in any EDI format (other than the three core-set formats).
The PDPs will allow the following:
In addition to these mandatory functionalities, they may also offer the following:
A PDP is a platform registered and authorised by the French tax authorities. The official registration number will be issued based on an application file submitted by an operator. This file will have to document how the regulation requirements (decree and order published in October 2022) are met, particularly the ability to perform the functions expected of a PDP. These requirements are meant to be slightly revisited with a new decree/order to be published beginning of 2024 (more precisely, with the removal of connectivity tests with TA Platform as a PDP Registration Criteria)
In addition to the guarantee provided by this registration (mainly from the point of view of compliance with stringent security rules), what distinguishes a registered platform from a simple dematerialization operator is the possibility of transmitting invoices to other dematerialization platforms (PPF or other PDPs).
This registration is valid for three years and then must be renewed, based on audits to be regularly provided by the PDPs (first audit to be conducted no later than 12 months after the registration entering into force).
The first certified PDPs should be announced in the beginning of 2024 and will be published on the tax authority’s website.
Find out how Sovos can help you comply with e-invoicing regulations by speaking with one of our experts.
Thailand has permitted e-invoicing since 2012. From 2017 – following regulations issued on e-tax and e-receipts – taxpayers may prepare, deliver, and keep their invoices and receipts electronically, subject to prior approval from the Thai Revenue Department.
Currently, the Revenue Department and the Electronic Transactions Development Agency (ETDA) are working together to improve the e-tax invoicing system in Thailand. As a result of this joint effort, they’re developing new regulations.
Thailand´s voluntary e-invoicing system aims to promote and support their e-payment policies and electronic transactions, reduce the cost and management of the government and private sector and increase confidence and safety according to international standards.
According to the Revenue Code documents that can be voluntarily issued electronically are tax invoices (known as e-tax invoices), credit notes, debit notes and receipts.
E-tax invoices are electronic tax invoices, including regular invoices and debit and credit notes prepared in a specific electronic format.
Formats may include a Microsoft Word file, a Microsoft Excel file, PDF, PDF/A-3, XML or other forms established by the Revenue Department. Finally, the e-tax invoice must be signed using a digital signature or time stamp before being delivered to the buyer.
Thailand currently has two e-invoicing systems for taxpayers to adopt voluntarily. These are e-tax invoices and e-receipt RTIR, and e-tax invoices by email.
Any taxpayer can voluntarily register for this system without a turnover threshold.
Entrepreneurs can prepare electronic tax invoices and electronic receipts in an XML file or other electronic formats with a digital signature. However, to submit the data to the Revenue Department, the information should only be in an XML file format (Bor Thor. 3-2560). They must also have an electronic certificate provided by a Certification Authority.
In this system, the supplier must submit the e-invoice to the Revenue Department by the 15th day of the subsequent tax month after delivering it to the buyer.
This system is designed for small entities with an annual turnover of less than THB 30 million. Taxpayers can email the invoice to the buyer and include the central system of the agency that develops electronic transactions in the CC field for time stamping.
The system then sends both trading parties an e-tax invoice with a time stamp. In this system, the file format is PDF/A-3. Information is automatically sent to the Revenue Department.
It’s important to note that once approved by the Thai Revenue Department to issue electronic invoices, taxpayers must comply with all the regulations and rules for preparing and storing electronic invoices and receipts.
The Thai Revenue Department has recently published new announcements from the Director-General of the Revenue Department regarding VAT, namely: no. 48, 247, 248 and 249.
E-tax invoices and credit and debit notes should include specific statements from those announcements. As of January 2023, they must specify that electronic invoices were prepared and sent to the Revenue Department electronically.
The Thai Revenue Department also set forward new standards in the Announcement of the Director-General of the Revenue Department No.48 regarding forms, method of delivery, storage and documentary evidence or books and information security for operations relating to electronic invoicing.
These new standards entered into force on 19 August 2022.
This regulation reinforces the need for prior approval and permission from the Revenue Department to connect with the electronic systems to issue e-tax invoices. It is subject to the requirement that a data security system can ensure the fulfilment of e-tax invoices and e-receipts.
The taxpayers opting for e-invoicing must follow the rules and conditions for this process. They need to inform the Revenue Department of the e-tax invoice by submitting a receipt for the tax invoice and the certificate used for digital signature.
The Thai Revenue Department also issued new standards in Announcement No. 48 for storing and archiving e-tax invoices and e-receipts.
Taxpayers who are obligated to issue an invoice and choose to do so electronically have to keep the electronic invoice or receipt according to specific criteria:
(a) Use reliable methods to maintain message integrity from the time the message is completed and can display that message later.
(b) Keep information on tax invoices or receipts, which can be accessed and reused, and the meaning does not change.
(c) Keep the information of tax invoices or receipts in the format in which they were created, sent, or received – or in a form that can display messages correctly, and
(d) Retain information indicating the origin and destination of the tax invoice or receipt and the date and time they sent the message.
According to the Thai Revenue Code, electronic invoices must be stored electronically for no less than five years but no more than seven years. Taxpayers must keep tax audit e-invoices until the completion of the audit.
These were significant steps towards the digitalisation of taxation in Thailand. Although there is no future timeline or mandate, they’ve taken more measures to solidify and mature the e-invoicing mandate.
While e-invoicing is still not mandatory in Thailand, the government intends to promote e-tax invoices to help businesses to increase efficiency and decrease costs. These measures could be applicable in a future compulsory e-invoicing mandate.
If you want to learn more about e-tax in Thailand or have any other question please feel free to get in touch with a tax expert today.
Update: 28 March 2023 by Maria del Carmen
On Friday 31 March 2023 the grace period granted by Mexico’s Tax Administration Service (SAT) in the Miscellaneous Tax Resolution 2023 (RMF) ends. Taxpayers must transition to version 4.0 of CFDI, Comprobante Fiscal Digital por Internet, the electronic billing schema.
Document formats that will no longer be accepted following the end of the grace period include:
Authorized CFDI Certification Service Providers (PSCCFDI) must update their integration mechanisms to remain compliant with the new CFDI 4.0. Taxpayers must align their technologies with the changes that their PSCCFDI notifies.
The authority has the power to impose fines for non-compliance with the new CFDI tax provisions, when executing verification powers or within are fund application process.
These fines range from $ 19,700.00MXN ($ 1000.00 USD approx.) to $ 112,650.00MXN ($ 5500.00 USD approx). Repeated non-compliance can result in the tax authority preventively closing the taxpayer’s establishment for a period of three to fifteen days.
Fines of $ 400.00MXN ($ 20.00 USD approx) to $ 600.00MXN ($ 30.00 USD approx) will be issued for tax receipts that don’t include the relevant supplements as outlined in the SAT’s guidelines.
In extreme cases where damage to the federal treasury is proven, this is considered comparable to tax fraud. This would involve when CFDI is used for taxes calculation with non-compliance requirements of Articles 29 and 29-A of the Federal Tax Code.
The CFDI Version 4.0 became the only way to invoice, the tax authority has updated the following documents ahead of CFDI v4.0 transition:
Companies will need to be mindful of these changes and how to implement them to ensure ongoing compliance during the transition to CFDI 4.0.
Need to discuss compliance with Mexico’s e-invoicing requirements? Speak to our experts.
Update: 1 February 2023 by Maria del Carmen
CFDI, which stands for Comprobante Fiscal Digital por Internet, is the electronic billing schema defined by the Mexican federal tax code. It has been mandatory for companies that do business in Mexico since 2011.
CFDI aims to increase visibility into companies’ tax liabilities so the government can ensure it is receiving accurate payments. It has been successful, with audits based on the legislation revealing a 34% increase in VAT collected in a single quarter.
Tax legislation in Mexico requires additional information when companies make certain transactions. Named “complementos” or supplements, the additional information must be attached to the main CFDI.
There are 30 main CFDI ‘complementos’, each with its own essential components and requirements. There is also a validation process and cancellation process to follow and a wide range of penalties for non-compliance.
Read our Mexico e-invoicing guide to learn more and ensure compliance with this complex VAT landscape.
On 27 December 2022, the Mexican Tax Administration Service (SAT) published the Resolution Miscellanea Fiscal (RMF) 2023. Each annual revision sets outs rules and adjustments for CFDI, a key component of Mexico’s electronic invoicing system.
The RMF entered into force on 1 January 2023.
Among the most important rules is the extension of the grace period for issuing certain documents. Now extended to 31 March 2023, the provision covers the following documents:
The RMF 2023 states cancellations of the CFDI cannot be made later than the month in which the annual declaration of the ISR (tax on income) must be submitted. That’s in April for individuals, and in March for companies.
The resolution also states that corrections to the payroll payment CFDI (CFDI de nómina) can only be made once and no later than 28 February 2023.
Taxpayers that carry out volumetric controls of hydrocarbons and petroleum products may continue to issue a daily, weekly, or monthly CFDI for all operations carried out with the public, until 31 December 2023.
Including supplement “Hidrocarburos y Petroliferos” in the CFDI will become mandatory 30 days after the SAT publishes the complement on its website.
The RMF states until 31 July 2023 no fines will be imposed and it will not be considered under the crime of smuggling if the Carta Porte supplement does not have all the requirements indicated in the CFDI Filing Guide.
To prove the transport of goods or merchandise, the intermediary or transport agents must now issue the CFDI type income (CFDI tipo ingreso) with the Carta Porte Supplement – instead of the CFDI type Traslado.
Taxpayers involved in the motor transport of dedicated services are subject to additional rules. Those who provide the service to a single client or contractor through the specific assignment of vehicle units may issue the CFDI type income (CFDI ingreso) to cover the entire service provided without the Carta Porte Supplement.
In these instances, the client or contracting party must issue the CFDI of transport (CFDI de transporte). This includes the Carta Porte supplement for each trip, which must be related to the CFDI type income (CFDI ingreso) issued by its carrier.
Additional regulations are established regarding the issuance of CFDIs related to bareboat charter services, for a specific time, per trip, and ferry modality.
The RMF includes information about the Resource Identification Supplement and Expense Bill of Third Parties provision, this will become mandatory 30 days after the tax authority publishes it on its website.
For further questions don’t hesitate and get in touch with our experts today.
Electronic invoicing in Poland via KSeF has undergone a long journey. Providing new expectations for B2B and B2G transactions alike, it is vital for taxpayers to understand what’s to come – though that can be tough when rules and regulations change frequently.
This blog provides a comprehensive timeline of Poland’s advancement towards its e-invoicing mandate, detailing the adjustments your organisation should be aware of. The cost of non-compliance reaches beyond financial penalties, so knowledge is vital.
If you’re looking for the current KSeF requirements, visit our overview of e-invoicing in Poland. If you want to see the journey the regulation has been on, and any upcoming changes that could affect your business, keep reading.
Update 19 January 2024 by Marta Sowinska
Poland’s Ministry of Finance announced today the postponement of its e-invoicing mandate. Originally scheduled for July 2024, the initiative has been postponed indefinitely due to major errors identified in the KSeF system.
The Minister of Finance emphasized that the current technical status of the KSeF system poses substantial challenges, preventing its secure implementation in Poland. Critical errors were identified in the code, affecting overall system functionality and performance of KSeF, prompting the Ministry to take decisive action.
To address these issues, the Ministry of Finance will initiate an external audit to assess the functioning of the KSeF system and evaluate the preparedness for its implementation. The final date for the introduction of mandatory e-invoicing will be contingent upon the results of these audits. In addition, the Ministry will intensify consultations with businesses regarding KSeF.
While expressing full support for the implementation of the KSeF system, the Ministry of Finance reiterated that their priority is to ensure the proper functionality of the system. This commitment stems from the need to secure the economic turnover in the country and avoid situations where taxpayers might be unable to issue e-invoices due to KSeF errors.
Update 5 January 2024 by Marta Sowinska
The regulation amending the scope of data included in the JPK_VAT with a declaration (VAT return) in Poland, has been published in the Official Journal on 4th January.
The final version of the regulation from 29 December 2023 has been further changed compared to the initial draft, and its final form does not include previously stated obligations to:
However, it still includes the obligation to include the unique ID number (numer KSeF) in the VAT return, in case the number has been assigned on the invoice, from:
The regulation is planned to enter into force from 1 July 2024.
Update: 19 December 2023 by Marta Sowińska
The Ministry of Finance has released technical specifications for the KSeF interface in the test environment. This documentation outlines details about QR codes and their associated verification links, it also clarifies information derived from the draft regulation on the use of KSeF that was published in November.
The QR codes serve as visual representations of the verification links and must adhere to the ISO/IEC 18004:2015 standard. Their size and precise placement on printouts are flexible and can be tailored to specific requirements.
Update: 28 November 2023 by Marta Sowińska
On 26 November, the Ministry of Finance published two long-awaited draft acts regarding mandatory e-invoicing via KSeF.
The draft acts are planned to enter into force on 1 July 2024, except for the obligation covering VAT-exempt taxpayers.
In the coming days, the tax authorities will publish the interface technical specifications and description of the technical requirements for the verification codes (i.e. QR codes).
Update: 26 October 2023 by Marta Sowińska
Both the draft regulation and schema specifications are available to view.
Update: 7 August 2023 by Marta Sowińska
On 4 August 2023, the Polish President signed an Act amending the VAT Act and certain other laws which introduces mandatory e-invoicing via KSeF. This means that the e-invoicing mandate will enter into force on 1 July 2024, with no further postponements.
The press information and official announcement from the Ministry of Finance are available to view.
Following the enactment of the law, the Ministry of Finance published a draft regulation amending the regulation on the use of KSeF from 27 December 2021.
Update: 28 July 2023 by Marta Sowińska
The Sejm has voted against the Senate’s veto which blocked the draft legislation introducing the national e-invoicing system, KSeF, on the grounds of it being unconstitutional.
Following its adoption by Sejm and pursuant to the draft legislation, the e-invoicing obligation will come into force, as planned, on 1 July 2024, with some exceptions.
As a next step, the draft law will be adopted and enacted in the country after it has been signed by the President.
The results of the voting in Sejm can be found here: Głosowanie nr 39 na 80. posiedzeniu Sejmu – Sejm Rzeczypospolitej Polskiej
Update: 6 July 2023 by Marta Sowińska
On 29 June 2023, the Ministry of Finance (MoF) published updated schema FA(2) on the ePUAP platform in the Central Repository of Electronic Document Templates (CRWDE), template number (2023/06/29/12648).
Important information about timelines:
Read the official announcement for further information.
Update: 10 May 2023 by Marta Sowińska
On 9 May, the government in Poland adopted a draft law introducing mandatory e-invoicing via KSeF, which will take effect from 1 July 2024. Now the draft law must be approved by Parliament, and the next session is planned for the end of May.
The adoption of this piece of legislation is an essential step, showing that the government is moving forward with the digitalization of the public sector by introducing mandatory e-invoicing via KSeF.
Find out more via the official announcement.
Update: 22 March 2023 by Marta Sowińska
Poland has published the second draft law amending the VAT Act and certain other laws on the Government Legislation Centre on 15 March 2023.
The amendments mainly confirm previously announced changes, though some additions are worth noting. The essential clarifications include:
The draft law entirely withdraws the possibility for buyers to issue corrective notes. Buyers cannot propose corrections to the original invoices through or outside KSeF, which the previous draft law presented. Accordingly, changes in the issued invoice can be made only by issuing a corrective invoice.
In line with the previous draft proposal, the current draft law specifies the possibility of issuing e-invoices in offline mode – outside of KSeF in a structured format and delivering to KSeF on the next business day – in case of a failure on the taxpayer side.
The Ministry of Finance will communicate relevant information to the public regarding any maintenance work conducted in KSeF or any system failure. During this time, taxpayers can issue invoices outside of KSeF and deliver them to the buyers in the agreed format.
Such invoices must follow the structured format, be assigned with a QR code and, after the failure ends, be delivered to KSeF within seven days. The date of issuance will be the date stated in the P_1 field, while the buyer’s receipt date will be the date when KSeF assigned the unique ID.
The government has added a new requirement for including a QR code on the invoices issued during a failure of the KSeF system. As previously announced, the QR code must also be included on the invoice visualizations issued outside of KSeF, for example, to foreign buyers and on the VAT RR invoices and corrections to them.
The Ministry of Finance responded to feedback about the lack of a self-billing process for cross-border transactions. Therefore, a method of authentication in KSeF for foreign buyers will be included in KSeF, allowing foreign buyers to issue structured invoices on behalf of the suppliers.
The exchange rate used for converting foreign currencies into PLN currency can be maintained from the day preceding the date indicated in the P_1 (date of invoice issuance).
The exchange rate will be calculated based on the date when an e-invoice was issued (stated in the P_1 field), provided that an e-invoice is sent to KSeF no later than the day after the date indicated in the P_1 field.
Sanctions will apply from 1 January 2025 (previously 1 July 2024) up to 100% of the amount of VAT indicated on the invoice or up to 18.7% of the total amount due shown on the invoice. However, no minimum penalty amount will apply – previously, it was 1000 PLN – approx. 200 EUR.
The draft law is expected to be published in Q3 of 2023, with most provisions applying from 1 July 2024.
Accordingly, the associated final schema FA (2) and FA (RR) are also planned to be published at the end of June or the beginning of July, as announced by the Ministry of Finance during a conference on 16 February 2023. Therefore, we are still waiting for the legislative process to be completed for the e-invoicing mandate to take effect.
Speak with our team if you need more information on the upcoming e-invoicing changes in Poland.
Update: 3 February 2023 by Marta Sowińska
According to an official announcement published by the Ministry of Finance on 2 February 2023, the go-live date of Poland’s mandatory e-invoicing system is now 1 July 2024 – delayed six months from the previous date.
More than a year after the roll-out of the voluntary phase and following extensive testing of the KSeF system by taxpayers, the Ministry of Finance responded to the feedback submitted in the public consultation by delaying the mandate and relaxing certain requirements.
The expected changes are:
Taxpayers should not treat the postponement of the e-invoicing mandate as a reason to pause the implementation process. Instead, treat the delay as an incentive to implement complex legislative and technical requirements before the go-live date and adapt their accounting and invoicing processes considering any errors that may appear.
Looking for more information on e-invoicing in Poland? Speak with our expert team.
With the entry into force of resolutions SAT-DSI-1240-2021 and SAT-DSI-1350-2022, most taxpayers in the country are now obliged to issue electronic invoices under the Online Electronic Invoice System (Regimen de Factura Electronica en Linea – FEL).
The latest taxpayers to join the mandatory electronic billing system are include taxpayers incorporated into the General Value Added Tax (VAT) Regime and the group of natural and legal persons registered in the Small Taxpayer Regime.
With the addition of these last two groups, the Superintendence of Tax Administration of Guatemala (SAT) has practically completed the gradual process of incorporation into the country’s electronic invoicing regime.
Today, the general population should only accept FEL documents from obligated taxpayers. Paper invoices (preprinted) are no longer valid, making them unusable for transactions such as tax credit, among others.
The operating model and the rules applicable to the online electronic invoice of the Republic of Guatemala includes the issuance, transmission, certification, and preservation by electronic means of invoices, credit and debit notes, receipts, and other documents authorised by the Superintendence of Tax Administration, known as Electronic Tax Documents (DTE).
The following tax documents are available for issuance under the Regimen de Factura Electronica en Linea – FEL:
The Guatemalan system follows e-invoice clearance system, the well-established trend in LatAm countries. The clearance system means that the tax authority must authorise the electronic documents before the issuer is able to send them to the recipient.
The issuance process goes through the following mandatory steps:
The SAT store all invoices. This does not exempt senders and receivers from keeping the XML file for the period of four years, established in the Tax Code. The certifiers are also obliged to keep the certified DTE files in XML format, as well as the respective acknowledgments of receipt from the SAT.
Now 98.23% of the total billing of the General VAT Regime is using FEL, with only around 20,000 businesses needing to migrate to the system since it was first launched in 2020.
Online e-invoices for all remaining VAT registered business will be mandatory from 1 April 2023 via the FEL.
Still have questions about e-invoicing in Guatemala? Speak to our tax experts.
African countries are following e-invoicing and continuous transaction control trends implemented rapidly by many countries around the globe.
Each country in the continent is developing their variation of a tax digitization system. This means there is currently no standardisation with compliance requirements differing in each jurisdiction.
A common transaction reporting feature among African countries is the use of electronic or virtual fiscal devices. Electronic fiscal devices are cash registers with software and direct communication to the tax authority. Virtual fiscal devices serve the same purpose but without the hardware component.
However, reporting transactions is one of many fiscal digitization processes applied by African countries. E-invoicing is on the agenda for several authorities, including Nigeria, Kenya and Uganda. In this blog we explain the key features of these systems.
Taxpayers report their transactions electronically to the tax authority through the Automated Tax Administration System (ATAS), established for electronic VAT compliance purposes.
In addition to this e-reporting function, as of February 2022, all import and export operations need an authenticated e-invoice issued according to the format specified by the Central Bank of Nigeria (CBN).
The CBN has introduced the Cross-Border e-Invoicing program, where suppliers and buyers operating in imports and exports register on the dedicated electronic platform. There are exemptions to obligatory e-invoices based on operations and taxpayers, such as the transaction value within the invoice.
Businesses subject to VAT must report their e-invoices to the Tax Invoice Management System (TIMS), which requires taxpayers to install, and use approved electronic tax register machines. These tax register machines connect to the tax authority’s online system. There is a mandatory format for submitting e-invoices to the tax authority.
Regarding the full implementation, the Kenya Revenue Authority (KRA) announced additional time to comply with the TIMS after the grace period, and taxpayers are expected to be fully prepared by the end of November 2022.
The Electronic Fiscal Receipting and Invoicing System (EFRIS) covers invoices and receipts of B2B, B2G and B2C transactions. Taxpayers must send e-invoices to EFRIS through electronic fiscal devices or via an API connection between the taxpayer and EFRIS. When initiating a transaction, transaction details are transmitted in real time to EFRIS to generate an e-receipt or e-invoice.
Given the growth in jurisdictions applying mandatory e-invoicing and e-reporting and the common agenda set by African Union that also refers to tax control and traceability, we can expect more African countries to introduce similar e-invoicing systems in the near future. The countries that follow will likely learn from the pioneers, leading to a more uniform development of tax digitization in Africa.
Ask our tax experts about e-invoicing compliance in African countries. Simply get in touch. Or read our E-invoicing Guide for more in-depth information about electronic invoicing’s development and adoption, globally.
On 19 May 2022, the Danish Parliament passed a new bookkeeping law – Lov om bogføring – introducing requirements for companies to use a digital bookkeeping system.
Section 16 of the Law requires many Danish companies to use a digital bookkeeping system and make their bookings electronically. The final deadline is yet to be announced but is expected to be July 2024, with the Danish Business Authority announcing they will give businesses enough time to comply with the e-bookkeeping requirements.
The subjective scope of the digital bookkeeping requirements covers all companies in Denmark that are liable for accounting according to section 3(1) of the Financial Statements Act. Moreover, other companies whose net turnover exceeds DKK 300,000 in two consecutive income years are subject to digital bookkeeping requirements. Finally, the rules cover bookkeepers and others who carry out bookkeeping for other companies.
These companies will be required to record company transactions and store records in a digital bookkeeping system. Companies can use a digital bookkeeping system registered with the Danish Business Authority, Erhvervsstyrelsen, or any other bookkeeping system. However, companies who choose the latter option must ensure their systems meet the requirements according to Law for digital bookkeeping systems.
While the new bookkeeping law doesn’t introduce any mandatory e-invoicing or continuous transaction controls (CTC) obligations for businesses, it is envisaged that the digital bookkeeping systems must support continuous registration of the company’s transactions and the automation of administrative processes. This includes automatic transmission and receipt of e-invoices.
This requirement was further detailed in the draft executive order on requirements for standard digital bookkeeping systems, which outlines that the taxpayers:
Moreover, the new bookkeeping law authorised the Minister for Industry, Business, and Financial Affairs to introduce rules:
(a) that require companies to record their transactions regarding purchases and sales with e-invoices as documentation of the transactions,
(b) on transmission of records by digital bookkeeping systems to a public receiving point through the shared public digital infrastructure for the exchange of e-documents and the storage of such records.
Although Denmark’s e-invoicing journey is still in the early phases, it seems that the new bookkeeping law and requirements for digital bookkeeping systems lay the foundation for a future e-invoicing mandate to be duly introduced by the Minister for Industry, Business, and Financial Affairs.
It will be interesting to see how and when Denmark’s plans for e-invoicing will take shape and be affected by the upcoming results from the EU Commission on the VAT in the Digital Age project.
If you have any question about Denmark’s new bookkeeping law or e-invoicing requirements in Denmark, please reach out to us: Speak to our tax experts. Refer to this guide for a comprehensive overview about e-invoicing in general.
France is implementing a decentralised continuous transaction control (CTC) system where domestic B2B e-invoicing constitutes the foundation of the system, adding e-reporting requirements for data relating to B2C and cross-border B2B transactions (sales and purchases).
Under this upcoming regime, data or invoices can be directly sent to the Invoicing Public Portal ‘PPF’ (Portail Public de Facturation, so far known as Chorus Pro) or to a Partner Dematerialization Platform ‘PDP’ (Plateformes de Dématerialisation Partenaires). In addition, there are also Dematerializing Operators (Operateurs de dématérialisation) that are connected to either the PPF or a PDP.
Requirements for these portal and platforms have been published.
The Ministry of Economy published Decree No. 2022-1299 and Order of 7 October 2022 on the generalisation of e-invoicing in transactions between taxable persons for VAT and the transmission of transaction data (together known as ‘new legislation’), providing long-awaited details for PDP operators and PPF.
The new legislation introduces rules concerning the application process for PDP operators. Although French establishment isn’t required, PDP operators must fulfill a number of requirements, such as operating their IT systems in the EU.
France is implementing a model where third-party service providers are authorised to transmit invoices between the transacting parties. With the mandatory use of the PPF or PDPs for exchanging e-invoices, trading parties cannot exchange invoices between them directly. Therefore, PDPs must be able to receive and send invoices in structured formats, whether the ones supported by the PPF (CII, UBL, or FACTUR-X) or any other required by their clients. Also, to ensure interoperability, PDPs are expected to connect with at least one other PDP. Besides this requirement, it’s stated by the new decree that PDPs must be able to send e-invoices to PDPs chosen by their recipients which implies a complete interoperability between PDPs.
It was previously announced that taxpayers could submit PDF invoices for a transitional period. The new legislation outlines the transitional period as until the end of 2027. During this period PDPs and PPF must be able to convert the PDF into one of the structured formats.
The new legislation also provides information about the content of e-invoices, which has new mandatory fields, and the content of transaction and payment data to be transmitted to the tax authority.
It also announced frequencies and dates of data transmission. Deadlines for transaction and payment data transmission are based on the tax regimes of taxpayers. For example, taxpayers subject to the normal monthly regime should transmit payment data within ten days after the end of the month.
With the aim of having traceability over documents, the lifecycle statuses of the domestic B2B e-invoices are exchanged between the parties and transmitted to the PPF. Lifecycle statuses that are mandatory (“Deposited”, “Rejected”, “Refused” and “Payment Received”) are listed in the new legislation.
Further details regarding the Central Directory, which consists of data to properly identify the recipient of the e-invoice and its platform, are provided within the Order.
PDP operator candidates can apply for registration as of Spring 2023 (precise date still to be confirmed), instead of September 2023 as previously set. From January 2024, a six-month test run is expected to be conducted for enterprises and PDPs before the implementation in July 2024.
Still have questions about France’s upcoming continuous transaction control mandate? Get in touch with our tax experts.
Brazil is known for its highly complex continuous transaction controls (CTC) e-invoicing system. As well as keeping up with daily legislative changes in its 26 states and the Federal District, the country has over 5,000 municipalities with different standards for e-invoicing.
The tax levied on consumption of services (ISSQN – Imposto Sobre Serviços de Qualquer Natureza) lies under the competence of the municipalities. Each municipality has authority over the format and technical standard of the services e-invoice (NFS-e – nota fiscal de serviço eletrônica). This poses a significant compliance challenge, as e-invoicing is mandatory for nearly all taxpayers in the country.
However, important steps have been taken towards changing this scenario. An agreement (Convênio NFS-e) recently signed by the Brazilian Federal Revenue Agency (RFB), the National Confederation of Municipalities (CNM), and other relevant entities, has established the National System of the NFS-e with a countrywide unified standard for the services e-invoice.
The SNNFS-e introduces a unified standard layout for the issuance of the NFS-e, as well as a national repository of all e-documents generated within the system. Adhesion to the system is voluntary for municipalities. Since the bill proposed to regulate this issue (PLP 521/2018) has been static in Congress since 2019, the agreement was designed to allow municipalities to voluntarily adopt the national standard, which then becomes mandatory for taxpayers.
The system will allow issuance of the NFS-e in a national standard, through the web portal, mobile app or API (application programming interface). It also creates the National Data Environment (ADN), the NFS-e unified repository.
The SNNFS-e offers several service modules and municipalities can choose which ones to adopt. The ADN is the only mandatory module, as it ensures the integrity and availability of information contained in the documents issued is in the unified standard. Additionally, the ADN allows adhering municipalities to distribute issued NFS-e among themselves and taxpayers.
Once the agreement is signed, the municipality must activate the system within a certain deadline, which hasn’t been established. Activation involves configuring system parameters and amending municipal legislation to reflect the national system requirements. Only after complete activation will taxpayers be able to issue invoices based on the unified standard.
Technical documentation of the NFS-e has also been released, but these are not the definitive specifications, which are still to be approved by the National Standard Electronic Service Invoice Management Committee (CGNFS).
The NFS-e national standard provides substantial simplification of taxpayers’ e-invoicing obligations. With a standard layout, compliance with multiple formats can be drastically reduced. The document format for issuance of the standard NFS-e is XML and it must be digitally signed.
Another benefit is that one of the available modules allows taxpayers to pay the ISSQN owed in several municipalities at once, using one single document (Guia Única de Recolhimento) issued by the system.
Although municipalities may choose to keep their current NFS-e issuance system, they must still adhere to the communication deadlines, layout, and security standards of the national NFS-e. They must also ensure transmission of all issued documents to the national data environment. This ensures that taxpayers will only be required to issue the NFS-e in one standard layout.
The first phase of production started on 23 July 2022 with five pilot municipalities. Transmission will be available through different methods, with gradual implementation. According to the initial implementation schedule of the National Confederation of Municipalities, API transmission is set to happen from mid-October 2022 or later, depending on the stability of the other transmission methods. Further development of this schedule can be expected in the coming months.
São Paulo, Salvador, and Florianópolis are among the many municipalities that have already signed the agreement. The success of this national NFS-e standard relies on significant adoption by municipalities, so taxpayers must ready themselves to comply as this takes place across the country.
Need to ensure compliance with the latest e-invoicing requirements? Get in touch with our tax experts.
Update: 8 March 2023 by Kelly Muniz
Spain launches public consultation for B2B mandatory e-invoicing
The Ministry of Economic Affairs and Digital Transformation (Ministerio de Asuntos Económicos y Transformación Digital) has launched a public consultation on the upcoming B2B e-invoicing mandate.
The mandate will enable citizens to participate in elaborating norms before its development. This public consultation is carried out through the web portal of the competent department and all interested parties have until 22 March 2023 to send feedback.
Based on the feedback received, the government will develop and approve the regulatory framework that is needed according to the law adopting mandatory B2B e-invoicing which was published on 29 September 2022.
The public consultation consists of 32 specific questions on seven different areas that the regulatory framework will address. These areas are:
You can find the official text of the public consultation here.
Looking for more information on e-invoicing in Spain? Speak to a member of our expert team. For more information about VAT compliance in Spain read this page.
Update: 16 September 2022 by Victor Duarte
The Congress of Spain has approved the Law for the Creation and Growth of Companies, and it is expected to be published in the Official Gazette (BOE) in the following days.
This Law also amends Law 56/2007 on Measures to Promote Information to adopt the mandatory electronic invoice issuance requirement for all entrepreneurs and professionals in their commercial relationships.
According to this Law, all entrepreneurs and professionals must issue, send, and receive electronic invoices in their business relationships with other entrepreneurs and professionals. Additionally, the recipient and the sender of electronic invoices must provide information on the status of the invoices.
The main rules of the Law related to e-invoicing establishes that:
The process for accreditation of interconnection and interoperability of the platforms will be determined by the regulations at a later stage.
The law establishes that companies providing the supply of certain services to final consumers must issue and send electronic invoices in their relations with individuals who agree to receive them or who have explicitly requested them. This obligation affects companies supplying telecommunication services, financial services, water, gas, and electricity services among other sectors and activities prescribed in Article 2.2 of Law 56/2007.
These companies must provide access to the necessary programs so that users can read, copy, download and print the electronic invoice for free without having to go to other sources to obtain the necessary applications. They must also enable simple and free procedures so users can revoke the consent given to the receipt of electronic invoices at any time.
Companies within scope that refrain from offering users the possibility to receive electronic invoices will be sanctioned with a warning or a fine of up to 10,000 euros.
The Government will develop provisions of this Law in accordance with the regulations, and within the scope of its powers. Therefore, the Ministries of Economic Affairs and Digital Transformation and of Finance and Public Administration will determine the information and technical requirements to be included in the electronic invoice to verify the payment dates and obtain the payment periods.
It is also necessary to establish the minimum interoperability requirements between the providers of electronic invoice technology solutions, and the security, control, and standardisation requirements of the devices and computer systems that generate the documents.
The Government will have 6 months from the publication of this Law in the Official Gazette to approve the regulatory framework.
The provisions regarding mandatory B2B electronic invoicing will be effective according to their annual turnover:
This means that the B2B e-invoicing obligation could be effective for large taxable persons by the first quarter of 2024.
It is important to highlight that the entry into force of the B2B e-invoicing obligation is subject to obtaining the community exception to articles 218 and 232 of the VAT Directive. This exception is less difficult to obtain the previously as has been granted to other Member States such as Italy, France, and Poland to allow them to adopt the mandatory e-invoicing regime in their jurisdictions.
Need to ensure compliance with the latest e-invoicing requirements in Spain? Get in touch with our tax experts.
The Colombian tax authority (DIAN) continues to invest in the expansion of its CTC (continuous transaction controls) system. The latest update proposes an expansion of the scope of documents covered by the e-invoicing mandate.
In this article we’ll address the newly published Draft Resolution 000000 of 19-08-2022. This advances important changes for taxpayers covered by mandatory e-invoicing rules.
These draft changes include a new obligation to issue equivalent documents (documentos equivalentes) in electronic format, a schedule for its implementation, updated technical documentation and other significant developments, all of which require taxpayers to ready themselves to comply.
Amongst many proposed changes, the draft resolution’s main purpose is to regulate the electronic issuance of the equivalent document.
These documents correspond to the sales invoice under Colombian law, but cover specific types of transactions and are regulated in the draft resolution, as follows:
This means that all taxpayers subject to the Colombian e-invoicing mandate who issue one of these equivalent documents will be required to do so in an electronic format, according to the Technical Annex of the Electronic Equivalent Document version 1.0 (Anexo técnico del Documento Equivalente Electrónico), introduced by the draft.
Additionally, the draft provides an initial regulation of the electronic documents of the invoicing system (documentos electrónicos del sistema de facturación). These are documents that aid control by the tax and customs authority, to support tax or customs declarations and/or to support the procedures carried out before DIAN, under the provisions of subsection 1 of article 616-1 of the Tax Statute.
Finally, the technical specifications of the system’s main electronic invoice, the sales e-invoice, is updated to version 1.9 (Anexo técnico de la Factura Electrónica de Venta version 1.9).
The obligation to issue the equivalent document in electronic format will be implemented gradually, according to the type of equivalent document. It starts on 1 March 2023 and will cover all equivalent documents on 1 July 2023.
Early voluntary implementation will also be possible, once the functionality is available in DIAN’s system. Until the deadlines for the electronic implementation of the equivalent document are fulfilled, these must continue to be issued in accordance with Resolution No. 000042 of 2020.
The draft also sets a schedule for implementation of the electronic documents of the invoicing system, during the taxable years of 2023 and 2024. These documents will be further regulated in the six months following the validity of the official resolution, as well as the adoption of its technical annex, which hasn’t been presented with the draft resolution.
Lastly, the proposal establishes the deadline for implementation of the Technical Annex of the electronic sales invoice version 1.9 by taxpayers. This will be at least three months following its official publication.
The draft resolution, once officially published, will derogate DIAN Resolution No. 000042 of 2020 in all provisions that are contrary to it, except those related to equivalent documents, which will remain in force until the DIAN establishes their electronic implementation.
Taxpayers can also expect new legislation regulating the remaining electronic documents of the invoicing system, in the months following the official publication of this draft resolution.
Until then, companies should prepare for the significant upcoming changes and adjust their businesses processes to comply with the new Colombian mandate.
Need help with evolving e-invoicing requirements in Colombia? Get in touch with our tax experts about how Sovos can help your business meet your VAT compliance obligations.
Update: 14 February 2023 by Andrés Landerretche
As of February 2023, new rules came into force in Colombia. These are for the issuance threshold of equivalent documents generated by Point of Sale (P.O.S.) systems.
As a result, a ticket issued by cash registers with P.O.S. systems (tickets de máquinas registradoras con sistemas P.O.S.) must not exceed the maximum amount of five Tax Value Units (UVT), without including the amount of tax for each sale or service provision operation.
For sales operations and the provision of services exceeding this amount – excluding taxes – taxpayers must issue an electronic sales invoice as part of the country’s e-invoicing mandate.
It is important to note that the equivalent documents generated by cash registers with a P.O.S. system do not entitle the purchaser to discountable sales tax (VAT) or costs and deductions in income and complementary taxes.
However, purchasers may request that the seller issue a sales invoice when they have the right to request deductible taxes, costs, and deductions. In this case, the supplier must issue an electronic sales invoice.
The Colombian tax authority (DIAN) officialised the implementation of the five UVT thresholds for tickets generated through P.O.S. systems through Resolution 1092, published on 1 July 2022.
The Resolution implemented the phased roll-out of this mandate, following the calendar below:
Every 1 January from the taxable year 2024, taxpayers obliged to issue a sales invoice that choose to issue the equivalent document, called a ticket for a cash register with a P.O.S. system, must adjust the value of the applicable UVT to comply with the limitation of five UVT in the issuance of each ticket.
Speak with a member of our expert team for further clarification of e-invoicing in Colombia.
Update: 23 August 2022 by Kelly Muniz
The Colombian tax authority (DIAN) has concentrated heavily on expanding its electronic invoicing regime over recent years. The DIAN introduced the first schedule for mandatory implementation of e-invoicing in the country in 2018, and, since then, the system has gradually encompassed more transactions and taxpayers.
In this article, we’ll look at the two latest new mandates in Colombian e-invoicing:
These new obligations have significant impact and require adjustments by taxpayers. These changes also represent a substantial expansion of Colombia’s e-invoicing to include entirely new transactions under its scope.
The Colombian tax authority has created a new e-document type, the support document for acquisitions from subjects not obliged to issue e-invoices. This support document and its corrective notes were introduced by Resolution 167 of 2021. It expands the e-invoicing scope to ensure more transactions fall within the mandate and allows support for tax deductions.
Taxpayers obliged to generate this e-document are those under the country’s e-invoicing regime. It includes those subject to income and complementary tax payments and responsible for VAT when purchasing goods and/or services from suppliers not obliged to issue e-invoices or equivalent documents and require support for costs and deductions in the mentioned tax declarations. To generate the support document, the taxpayer must be authorised by the DIAN as an electronic issuer.
The support document and its corrective notes must be generated in XML format and contain a CUDS: unique support document code (código único del documento soporte). This alphanumeric code allows it to be unequivocally identified. After generation, the e-documents must be transmitted for clearance by the DIAN either in real-time or, at the latest, on the last calendar day of the week, for accumulated operations with the same supplier carried out during that same week.
Having been postponed from its original implementation date, the generation of the acquisitions support document became mandatory on 1 August 2022.
According to this mandate, cash register tickets generated through POS systems (tickets de máquinas registradoras con sistemas P.O.S.) may be issued by subjects obliged to invoice, provided that the sale of the good and/or the provision of the service recorded therein doesn’t exceed five (5) UVT (tax value unit) for each document, excluding taxes.
This means that, for operations covering sales of goods and/or provision of services exceeding the amount of five (5) UVT, taxpayers under the country’s e-invoicing mandate must issue an electronic sales invoice. The purchaser of goods and/or services below the threshold may still require the issuance of a sales invoice, in which case the supplier must provide it.
The threshold was de facto introduced in 2021 by Law 2155, but it was only in July 2022 that the DIAN established a phased roll-out of the mandate, through Resolution 1092, following the calendar below:
While the generation of the support document for acquisitions is already srequired, taxpayers must start preparing to comply with the new threshold for e-invoice issuance in place of POS tickets. Sovos can help your company adjust to e-invoicing and ensure compliance with Colombia’s new mandates.
Contact our team of experts today to ensure your company is complying with Colombia’s e-invoicing mandates.
The European Commission (EC)’s action plan for fair and simple taxation – ’VAT in the Digital Age’- continues to progress. After a public consultation process, the EC has published Final Reports discussing the best options for the European market to fight tax fraud and benefit businesses with the use of technology.
The areas covered are:
The EC is expected to propose legislative amendments in the VAT Directive this autumn.
The report focusing on VAT reporting and e-invoicing evaluates ‘Digital Reporting Requirements (DRR)’. This is any obligation for VAT taxable persons to periodically or continuously submit transaction data digitally to the tax authority, e.g. by use of SAF-T, VAT listing, real-time reporting or e-invoicing.
According to the report, the best policy choice would be the introduction of a DRR in the form of an EU-wide continuous transaction controls (CTC) e-invoicing system covering both intra-EU and domestic transactions. Member States with an existing e-invoicing system would be able to keep this in the short term via a standstill clause, provided they ensure interoperability with the new EU system. However, in the medium term of five to ten years, national e-invoicing systems would be required to converge to the EU system.
The report clearly favours the policy option of a full EU harmonisation through a CTC e-invoicing system, meaning the invoice will be submitted to the authorities before or after issuance. The harmonisation focus seems to be primarily on form, with a suggestion of an EU-wide common protocol and format. Whereas important decisions regarding architecture risk being left to the Member States include whether the system will be clearance or simply reporting, whether to leverage an existing domestic B2G platform and the periodicity of the reporting etc. The only requirement on Member States seems to be accepting issued and transmitted e-invoices based on a common protocol and format.
The report suggests aligning the scope of requirements and excluding non-registered taxable persons and those covered by the SME VAT scheme. In the short term, only B2B and B2G transactions are covered, with B2C transactions remaining out of scope.
Finally, the report suggests that to ease the burden on businesses Member States must consider a number of measures such as jointly removing other reporting obligations, providing pre-filled VAT returns, supporting the investment in business automation (especially for SMEs) and providing public support to the adoption of the IT compliance systems
How this will be jointly coordinated isn’t discussed but it doesn’t sound like the EC expects such measures to be harmonised by the EU.
Although the report concludes implementing an EU-wide mandatory e-invoicing system is the best and most future-proof measure, how to design an effective e-invoicing system is not explained in the report and doesn’t seem to be in scope for harmonisation.
However, the design of the e-invoicing system may have an important impact on fiscal and economic results. As the independent expert report ʻNext Generation Model Decentralized CTC and Exchange’ (supported by EESPA, openPEPPOL and other key stakeholder groups) describes, the greatest benefits can only be realised when an e-invoicing system allows businesses to automate other processes as well as invoicing.
It’s a welcome start that the Commission is aiming for an EU-wide CTC e-invoicing scheme. It remains to be seen how effective this harmonisation will be. When Europe’s politicians return from this year’s summer break, we’ll start to gain more insight into the overall feasibility of the Commission’s views.
As a vendor that has implemented CTC and VAT compliance solutions around the world for several decades now, our desire would be for the debate to go beyond interoperability on a data level, so that Europe can take bold steps towards a future that preserves supply chain automation and technological innovation.
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In India, the e-invoicing system has been live since 2020. Taxpayers in the scope of e-invoicing mandate must issue their invoices relating to B2B and B2G transactions through the e-invoicing system, which is a form of continuous transaction controls (CTC).
However, B2C invoices are not issued through the CTC system, which means that B2C invoices don’t pass through the Invoice Registry Portal’s (IRP) clearance. The Indian authorities have announced their goal to include B2C invoices in the scope of the CTC system although there is no timeline provided for that plan.
Meanwhile, there is a separate QR code requirement for B2C invoices. We explain why and when a QR code is required and how taxpayers can generate it:
The QR code requirement for B2C invoices aims to promote digital payments. In that respect, it differs from the QR code for B2B and B2G invoices which include the IRP’s signature. The latter serves as proof of clearance that B2B and B2G invoices must go through. Additionally, the QR code for B2C invoices must be self-generated, whereas the IRP generates the QR code content for B2B and B2G invoices (if the supplier is in the scope of e-invoicing).
The QR code requirement doesn’t apply to all suppliers. As per the CBIC notification, F. No. CBEC-20/16/38/2020-GST, suppliers with annual revenue of 500 Cr. Rupees or more (from 2017-2018) must comply with the QR code requirement when issuing invoices to their end customers (B2C).
The QR code must be dynamic. Unlike static QR codes, the system will update the content of the dynamic QR code if the payment is received. Content-wise, businesses must include the following information:
After printing the QR code on the invoice, customers must be able to scan it to make payments. If the supply is made through an e-commerce platform, suppliers must give cross-references of the payment received in respect of the said supply on the invoice. Then the invoice would be deemed to have complied with the requirements of the Dynamic QR Code.
The Indian authorities are making significant progress with their efforts to digitize paper processes in the country by introducing a CTC invoicing system and encouraging digital payments. In line with their ambitions, we expect further digitization developments in the near future.
Need to ensure compliance with the latest e-invoicing requirements in India? Get in touch with Sovos’ tax experts.
As previously predicted by Sovos, the threshold for implementing mandatory e-invoicing has been lowered by the Indian authorities. According to the Central Board of Indirect Taxes and Customs Notification No. 17/2022 – Central Tax, from 1 October 2022 compliance with the e-invoicing rules will be mandatory for taxpayers with an annual threshold of 10 Cr. rupees (approximately 1.270.000 USD) or more.
The Indian e-invoicing system falls under the category of continuous transaction controls (CTCs) under the Goods and Services Tax (GST) framework. The legal validity of the invoice is conditional based on the Invoice Registration Portal (IRP) digitally signing the invoice and providing an Invoice Registration Number (IRN). If the IRN is not included in an invoice, the invoice will not be legally valid.
The scope covers both domestic and cross-border transactions. The IRP clearance process is mandatory for B2B, B2G and export transactions. So, taxpayers in scope must issue their invoices (as well as other documents that need an IRN) according to the new system for all B2B, B2G or export transactions.
Taxpayers in scope of e-invoicing must generate e-waybills through the e-invoicing system. It is not possible to voluntarily adhere to the e-invoicing system. This means that taxpayers not satisfying the threshold limit cannot adopt CTC invoicing.
Before the initial introduction, the e-invoicing plan was announced by the Indian authorities as early as 2018. Afterwards, the evolvement of the plan has been as follows:
1 January 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.500 Crore or more
1 February 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.100 Crore or more
1 October 2020: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.500 Crore or more (six months later than previously intended). For the first 30 days, there was a grace period during which invoices could be reported after they had been issued.
1 January 2021: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.100 Crore or more.
1 April 2021: Threshold for mandatory e-invoicing lowered to taxpayers with turnover between Rs. 100 Crore to Rs. 50 Crore.
1 April 2022: Threshold lowered from Rs. 50 Crore to Rs. 20 Crore. Taxpayers above Rs. 20 Crore must implement e-invoicing.
1 October 2022: Threshold will be lowered from Rs. 20 Crore to Rs. 10 Crore. Taxpayers above Rs. 10 Crore must implement e-invoicing.
Some changes concerning the e-invoicing workflow are expected. Currently, there is a single platform (IRP) for the clearance process but multiple IRPs will be introduced soon. The Indian Authorities have already approved new IRPs, demonstrating that the authorities wish to have an interoperable e-invoicing market and are moving ahead with their plans to realise their goals.
Additionally, B2C invoices are not currently covered by the IRP clearance, yet the authorities have announced their intention to include those in scope of their CTC system.
India is a challenging jurisdiction for many taxpayers; businesses must have smart digitization and maintenance strategies to stay compliant. The benefits of digitization can be realised through a global strategy that businesses might put in place.