Anyone predicting Italy’s clearance model e-invoicing system, FatturaPA, would undergo further reform would be right. Agenzia delle Entrate – AdE, the Italian tax authority, has issued new technical specifications and schemas for Italian B2B and B2G e-invoices. But – what do these changes really mean? And what impact do they have on business processes?
Over recent weeks, three updates have been introduced:
The inclusion of withholding taxes (especially social contributions) is one of the new content requirements for the B2B and B2G XML formats. There are also 12 new document types (including self-billed invoices and integration documents) and a further 17 new nature of transactions options (such as reasons for exemptions and reverse charges).
These content updates now require Italian companies to have a deeper understanding of the Italian tax system. The changes impact the moment taxpayers classify their supplies: under the current model, Italian companies don’t have to worry about this until the submission of their VAT returns but under the new schema this classification will be performed in real-time. These updates are likely to impact business processes. They are a necessary next step in paving the way ahead of the upcoming introduction of pre-completed VAT returns, an initiative largely considered to eliminate administrative burden and make life easier for most Italian businesses.
In parallel, further changes resulting from the new versions of the FatturaPA formats have a technical impact on businesses, demanding IT implementation readiness. Among the technical updates are the inclusion of additional fields, length of content, permitted characters, shifting from optional to mandatory field fulfillment and vice-versa, and how often a field can be repeated.
The new technical specifications also introduced new validations that will be performed by the Sistema di Interscambio – SDI, the Italian government-platform responsible for clearance of e-invoices. Most of the new validations check the content of the e-invoice against document types and the indicated nature of the transactions and require taxpayers to eventually be able to understand, process and react accordingly to new errors.
The SDI platform will start processing B2B invoices in the new FatturaPA format from 4 May 2020, but the AdE will enforce use of the new schema on 1 October 2020, triggering new validations and errors only after this date as per the Provvedimento from 28 February 2020. Different deadlines apply to B2G invoices, unless of course the AdE publishes new transition rules for these invoices before that date. The enforcement of the new schema for B2G invoices is set to begin on 1 May 2020.
In practice, the effect of these deadlines mean that while the schemas for B2B and B2G invoices are indeed the same from a technical perspective, taxpayers will must be ready for different deadlines and be prepared to work with two different invoice schemas from 1 May until 4 May.
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In Turkey, the Revenue Administration (TRA) published the long-awaited e-Delivery Note Application Manual. The manual clarifies how the electronic delivery process will work in addition to answering frequently asked questions. It addresses the application as well as its scope and structure, outlines important scenarios and provides clarity for companies who are unclear about the adoption of e-delivery notes.
The e-delivery note is the electronic version of the “delivery note,” currently printed on paper. As a result, it allows the TRA to regularly monitor the movements of delivered merchandise in the electronic environment.
Electronic delivery has the same legal qualifications as the delivery note but is issued, forwarded, retained, and submitted digitally.
According to the circular published by the TRA at the end of February, taxpayers in scope of the e-delivery note application are;
Taxpayers engaged in fruit and vegetable trade as brokers or merchants completed their transitions of January 1, 2020. Other taxpayers covered by the mandate must be ready by July 1, 2020.
Taxpayers deemed to be risky or at low levels of tax compliance by the TRA must complete their transition to the e-delivery note application within three months after being notified.
Besides explaining the basic concepts, the manual also details the previously announced scenarios providing answers to many areas that were confusing for taxpayers.
The main scenarios are:
In addition, other topics covered include:
Full details on the Turkey E-Delivery Application Manual are available in Turkish from the TRA e-Document website.
Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.
The upcoming tax reform in Greece is expected to manifest itself in three continuous transaction control (CTC) initiatives.
Earlier this month, new technical specifications were published for the online connection of cash registers with the government portal. From June 2020, all cash registers currently used in Greece must be updated to meet the new technical specifications (available in Greek) to be able to connect and transmit their transaction data to the government portal.
The technical specifications regulate two aspects:
These specifications are complementary to those published in late 2018, which mainly regulated the security and certification requirements of the new generation cash registers. This latest development is further proof that the Greek government is committed to moving forward with the CTC plans it initially outlined two years ago.
Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.
Certification of e-invoice service providers is an important first step and milestone ahead of the implementation of e-invoicing in Greece. The Greek Government has now defined the regulatory framework for e-invoice service providers, their obligations, and a set of requirements needed to certify their invoicing software. Find out what you need to know about the accreditation scheme for e-invoicing service providers in Greece.
E-invoice service providers are entities the taxpayer authorises to issue invoices on their behalf electronically for B2B in addition to B2C transactions. They’re responsible for issuing, the authenticity and integrity, and the transmission of transaction data to the tax authority in real-time. Other outsourced functions include e-invoice delivery to the buyer directly and archiving on behalf of the issuer.
The service provider’s software must meet a number of requirements. It must for example be able to guarantee integrity and authenticity of the invoice according to the SHA-1 algorithm, provide real-time connection with the customer’s software, and make the invoice available to the customer in electronic (or, upon request, in paper) form. Any software which meets these criteria recieves a “Suitability Permit”, which is valid for five years.
Service providers must be a Greek registered entity or permanently established in Greece. They must also meet certain technical, security and financial criteria and the invoice data must be stored within the EU. Other obligations also include making a user manual available to the customer; notifying the tax authority of each outsourcing contract they have entered into; and addressing privacy-related matters.
The transmission method to the myDATA will be the myDATA REST API and the format of the e-invoice exchanged between the parties is based on the EN norm, as defined by law just a few days ago. The myDATA website will publish any details and further legislation.
Through this Decision, the Greek Government is introducing the long-awaited secondary legislation, as mandated in the budget law 2020 earlier this year. Precisely how these provisions will work together with the myDATA scheme, scheduled to be fully operational on 1 April 2020, is still to be defined by the authorities. However, Greece requires further legislation, as well as a formal derogation decision from Brussels. This is if the Greek government wishes to mandate e-invoicing in the country. As such a reform would deviate from principles laid out in the EU VAT Directive.
Need more information on the accreditation scheme for e-invoicing in Greece? Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.
For those following the ongoing tax control reform in India, 2019 has been a very eventful year for Indian e-invoicing. Starting last spring, a group of government and public administration bodies have convened regularly with the mission of proposing a new way of controlling GST compliance through the introduction of mandatory e-invoicing. Given the vast impact such a reform would have on not just the Indian but the global economy, these discussions, often carried out behind closed doors, have triggered a large number of rumours, sometimes leading to misinformation on the market.
So far, not much information of a formal or binding nature has been published or made available to the public. After the public consultation held earlier this autumn, a high-level whitepaper describing the envisaged e-invoicing process was published; however, since then nothing formal or binding has been released. A recent media note made available by the relevant authorities to the press indicated that the timeline envisaged by the government for the roll-out would be:
1 January 2020: voluntary for businesses with a turnover of Rs.500 Crore or more;
1 February 2020: voluntary for businesses with turnover of Rs.100 Crore or more;
1 April 2020: mandatory for both of the above categories and voluntary for businesses with a turnover of less than Rs. 100 Crore.
While the clarity was welcomed, this timeline was not yet binding, and as a result, taxpayers were left with little information on how to meet the requirements of the tax control reform, and no binding indication of when they need to comply. However, this situation is now currently being remedied, and we are seeing the first codification into law.
On December 13, 2019, a set of Notifications (No. 67-72/2019) introducing amendments to the existing GST legislation framework were released and are currently awaiting publication in the Gazette of India. In a nutshell, these Notifications:
These Notifications issued on December 13 will be the first of many pieces of documentation that are needed to formally clarify the details of the upcoming e-invoicing reform. More important still, they serve as a clear indication that the relevant Indian authorities are nearing the end of what has been an analytical and consultative design period, and that they now instead are transitioning into a period of preparation for the first roll-out.
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Two months after closing the public consultation on the myDATA scheme, the Greek tax authority, IAPR, has yet to share the feedback received from the industry on the proposed scheme or make any official announcement in this regard. However, local discussions indicate that, the IAPR may reintroduce its initial agenda proposed back in August 2018, which would mandate electronic invoicing based on a clearance model.
Following input from stakeholders, the IAPR is believed to have realised that mandatory e-invoicing in a clearance model will be required to achieve its sought-after goals of reducing administrative burdens on businesses and combatting tax fraud. An EU derogation from the VAT Directive will still be required, and the IAPR will have to follow the logistics and formalities of the derogation process including justifying its request to implement special measures that deviate from the freedom of choice of the Directive regarding the invoicing method.
A first natural step towards e-invoice clearance would be to formalise the definition of e-invoice service providers (SPs). The current role of SPs in the myDATA framework is to help taxpayers with data preparation, consolidation and transmission to the government portal. The scope of the SPs role could either remain the same, in which case little or no governmental oversight would be required, or it could expand and include functions that usually are at the core of government tax controls, such as clearing an invoice by various means.
The former function would resemble a clearance model similar to India, where an Application Service Provider, ASP, (non-regulated function) can perform various functions, such as verifying the Invoice Reference Number on the invoice, which under the Greek framework could correspond to verifying the relevant reference number under the myDATA scheme, called MARK. The more expanded role would be a regulated function subject to government control and eligibility criteria that are usually restrictive. The SP would then act in its capacity of a government agency, similar to a PAC in Mexico which performs the government outsourced function of clearing the invoice. It remains to be seen which pathway Greece will take at this clearance cross-road.
Regarding the implementation timeline, the myDATA project is expected to be postponed by three months which would allow the authorities more time to complete the accreditation scheme for e-invoice SPs at the beginning of 2020. The new expected launch data for the myDATA scheme is 1 April 2020.
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Following India’s recent public consultation looking at the proposed introduction of an e-invoicing regime, the GST council has now released a white paper on the architecture of the new framework and also provided answers to a number of outstanding questions.
From 1 January 2020, taxpayers in India can start to use the new e-invoicing framework, which relies on connectivity to the GST system for reporting of all B2B invoice data. The first part of the roll-out starting from this date will be voluntary for businesses. It will only become mandatory at a later stage, the timing of which is still to be communicated by the relevant authorities.
The new e-invoicing system, considered to be not only a tax reform but also a business reform, has two key aims:
Under the e-invoicing system, taxpayers will be obliged to create the e-invoice in the structured JSON format and transmit it to the Invoice Registration Portal (IRP). The IRP will then check the e-invoice according to the requirements of the schema and determine if a duplicate record is already registered on the GST system.
After this check, the IRP will digitally sign the e-invoice, assign a unique number – the invoice registration number (IRN) – to the invoice and create a QR code, before submitting the invoice to the GST system. The QR code will help to authenticate the e-invoice by the seller and buyer and to confirm that the invoice is successfully registered in the GST system. Connection to the portal is needed to see all the e-invoice data and to view all the details online. A digital signature by the taxpayer is not mandatory, but it is permitted before submission to the IRP.
An IRN can also be generated by the seller with the required parameters, which would then be validated by the IRP and transmitted to the GST System if it meets the predefined criteria.
Once the e-invoice has been cleared by the IRP, it will be transmitted to both the seller and the buyer by email.
Taxpayers can use several methods to connect to the IRP including web, API, SMS, mobile app, offline tool or GSP based.
The IRP keeps the e-invoices for just 24 hours as its main function is to validate and assign the IRN. Invoices submitted to the GST system will be archived for the whole financial year by the GST system and taxpayers must keep the IRN for each invoice to ensure compliance.
The new system will simplify the preparation of Goods and Services Tax (GST) returns by auto-populating the returns with the data from the e-invoices. The GST System will update the ANX-1 of the seller (sales registers) and ANX-2 of the buyer (purchase register).
Data from the e-invoice will also be used as a basis to populate the current e-waybill (auto-generation of Part-A), where only the vehicle registration number will need to be added in Part-B of the e-waybill.
Whilst the white paper has provided some guidance for businesses ahead of the introduction of this e-invoicing framework, there are still some grey areas to be addressed in the coming months, including the timeline for submitting e-invoices.
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Greece made an important step to digitise its tax system and introduce an innovative platform for taxpayers to fulfil their tax obligations. The new platform will offer businesses a collaborative environment where the data they provide to the Greek Independent Authority of Public Revenues (IAPR) will not only affect their own books but will also auto-populate their buyers’ tax situation.
As a result of this innovative solution, taxpayers will be relieved from some of their filing obligations, which will be fulfilled automatically as a result of this application.
Taxpayers will submit their required transactional data through an automated solution to the platform or through the web portal of the IAPR.
The new platform, called myDATA, which stands for My Digital Accounting and Tax Application, includes two books: The Record Book, and The Summary Book.
The record book records the submitted transactions to the myDATA platform. These transactions are classified as income/expense according to their type (e.g sale of goods, provision of services etc.). Classified data is then summarised within the summary book and depicts the accounting and tax result for the respective period.
Suppliers are required to submit a summary of all their domestic and cross-border sale transactions (wholesale/retail). The reported sales data will update its income books and the domestic transaction data will update the buyer’s expense books.
Buyers are required to submit a summary of their domestic and cross-border purchase invoices for B2C transactions in Greece and abroad. On the other hand they need to submit acquisitions from abroad and they also have a joint responsibility with their suppliers for reporting B2B transactions in Greece. If the suppliers don’t submit the related transactions on the myDATA platform, then their buyers, in order to comply with the e-books requirement, should transmit this transaction data.
Taxpayers will continue to file their tax returns on the basis of their accounting books, but following the submission of their tax returns the data declared in them will be reconciled against the result of the submitted data recorded in the e-books for the corresponding period. If there is a discrepancy between the e-books and VAT returns the taxpayer has to correct the discrepancy within a two month period. After this time (initial disagreement) the taxpayer has two options: 1) to correct the discrepancy and achieve consistency between the VAT returns and e-books or 2) they can explain the discrepancy and achieve justifiable consistency. This will be considered as agreed and no further action will be taken.
A tax audit or penalty may be triggered if no action is taken by the taxpayer within the two month period to correct or defend the discrepancy.
There is an online portal available from the IAPR for testing purposes, where taxpayers can test the integration of their accounting software with myDATA APIs and test their solutions.
The myDATA scheme proposal was open to public consultation until 6 September 2019; no response has been published to-date by the IAPR on the feedback received from the industry and other stakeholders on the scheme. It is expected that myDATA will be introduced as a pilot in Q4 2019 and be fully operational by the beginning of 2020.
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Back in June this year, many heads were turned when the French Minister of Public Accounts and Action, Gérald Darmanin, went on record stating that the French Government has the intention of making e-invoicing mandatory also for B2B transactions. Now it seems that the Government – spearheaded on this topic by Minister Darmanin as well as by the Minister of Finance Bruno Le Maire – has moved from word to action. The French Finance Bill for 2020, formally presented after the meeting of the Council of Ministers on 27 September, codifies the plan to extend the B2G e-invoicing obligation in force today to cover also B2B e-invoices.
In just three short paragraphs, the draft finance law outlines the major principles for the budding reform. While much is left to be clarified by later decrees, art. 56 of the Finance Bill introduces the main rule that electronic form for invoices will be mandatory and that, as a result, paper invoices will no longer be permitted. It also introduces language that means that e-invoices most likely also will be cleared by the tax authority, or otherwise have the data transmitted to the tax authority to enable control of the VAT on the invoice. France will effectively, and not surprisingly, be joining the ranks of other countries such as Mexico, Turkey, Italy and Brazil, who have implemented measures to tackle its VAT gap through real-time VAT control mechanisms.
The timeline of the roll-out of the mandate will, just like the roll-out of the B2G mandate currently in force, be scheduled in stages; gradually becoming applicable for companies depending on the size of the business. The first stage of the mandate will begin on 1 January 2023, and according to the bill the entire economy should be up-and-running under the new e-invoicing system no later than 1 January 2025.
The Government also states that it, during the course of next year, will present a report to parliament, the Assemblée Nationale, presenting how the reform will be carried out as well as the underlying analysis of which method and what regulations constitute the most appropriate technical, legal and operational solution, particularly as regards the clearance/transmission of invoice data to the tax administration.
In addition to the analysis and drafting of both laws and reports that the Government announced, it’s also clear that one more critical element needs to be covered before the reform becomes a reality: Brussels.
Ever since Italy went down this same path and became the first EU country to introduce mandatory clearance B2B e-invoicing, many parallels have been drawn between the two countries. They share a similar situation in terms of VAT gap and IT infrastructures, which have made many experts (rightly) assume that France would follow down the path Italy set out. However, in order to lawfully do so, Italy had to seek and obtain permission from the EU Council to deviate from the provisions of the EU VAT Directive (2006/112/EC). The French Government has acknowledged that it will need to do the same.
Want to learn more? For a continued and in-depth analysis of the French e-invoicing reform and its challenges, please join a webinar hosted by Christiaan van der Valk, e-invoicing expert and VP of Strategy at Sovos, on this topic on 3 October.
Inscrivez-vous ici si vous désirez rejoindre le webinaire de Christiaan van der Valk le 3 Octobre.
Last month, we made some predictions on how the outcome of the recent elections would impact the agenda of the Independent Authority of Public Revenues (IAPR) on the envisaged e-invoicing and e-reporting reform. It looks as if the newly elected government is fully in-line with the IAPR agenda to implement e-reporting and bookkeeping (mandatory e-invoicing is still in the agenda but at a later stage) and its proposed model, as announced yesterday by the minister of Finance during parliamentary discussions.
The IAPR has made great progress towards the implementation of the e-reporting scheme (named “Epopis”) by publishing, just yesterday, the technical specifications and schemas for the transmission of data to the IAPR platform. The IAPR reporting platform now has a name, “myDATA,” meaning Digital Accounting and Tax Application. It is worth noting that no legal documentation has been made available yet.
Having made available enough information on the process and the technical details, the IAPR has launched a public consultation to receive inputs from businesses and interested stakeholders on the proposed e-reporting scheme that will be open until 6 September 2019.
On 7 July, Greece began voting to elect a new government. The disposed governing left party has been dealt with a hefty blow having been in power since 2015. It was hoped they would introduce less severe politics which many claim they have not only failed to do but, in fact, they actually introduced stricter measures. As some expected, the opposition centre-right party won with an outright majority. With this result, Greece has once again voted for change with a manifesto to boost economic growth.
We expect that the result of the recent elections may impact the agenda of the Independent Public Revenue Authority (IPRA) on how Greece will implement its envisaged e-invoicing reform.
The IPRA, which has authority over all tax matters in the country, is also the architect behind a recent proposal for a nationwide e-invoicing and reporting framework. Being an independent authority and not subject to any form of government oversight or control, the IPRA shouldn’t be affected by the outcome of the parliamentary elections; however, its policy might change depending on how strict the new government will be with tax controls and enforcement in its efforts to combat VAT fraud and close the country’s VAT gap.
Before making any predictions, it is worth noting that the IPRA first envisaged an e-invoicing mandate similar to what was rolled out in Italy during 2018-2019. However, just like Italy, Greece would in this situation need to seek and obtain EU approval ahead of such a reform. An Italy-like EU derogation would not only take time but may also be more difficult for Greece to obtain as it lacks the technical B2G e-invoicing infrastructure that Italy already had in place. It has instead moved ahead with another model based on e-reporting and bookkeeping within the tax administration’s online platform. Essentially, this model is a combination of supplier-driven reporting of basic invoice data combined with buyer-side requirements for validating the data with various accounting information. The process will also update the online ledgers held by the IPRA. This model stops short of real-time ‘clearance’ of electronic invoices, but the IPRA has stated that this Latin American style approach is ultimately their goal for the country.
IPRA has announced that the reporting and bookkeeping model will be implemented in January 2020 but as the country is facing political change in the coming months, this deadline appears unrealistic.
Although it is difficult to predict whether or not Greece will move ahead with the proposed e-reporting and bookkeeping framework, it is much less likely that the authorities will change the scope or specifics of the invoice data to be sent to the tax administration in the future reporting scheme. While implementation directions may change, the shift in focus from traditional compliance and audit to more continuous transaction controls in real or near-real time is significant. This trend is gaining momentum across Europe and is politically unstoppable as more and more governments take measures to combat fraud and make tax controls more effective.
To find out more about what we believe the future holds, download Trends: e-invoicing compliance and follow us on LinkedIn and Twitter to keep up-to-date with regulatory news and other updates.
As more and more countries across the world depend on VAT, GST or other indirect taxes as the single most significant source of public revenue, governments are increasingly asking themselves what technical means they can use to ensure that they maximise the collection of the taxes due under the new tax regimes. India is the most recent such example.
GST was introduced in India in July 2017, following many years of discussions and negotiations between different stakeholders in the country. The reform has entailed significant simplifications and streamlining of taxation in India. While the road to roll-out of the tax was bumpy, it was by international comparison very quick. Nearly two years down the road, the roll-out is widely viewed as a success, and it appears as if the government is ready to take the GST success story one step further by introducing real-time tax controls to the B2B e-invoicing process.
Earlier this spring, the Indian GST Council announced the formation of a special committee with the purpose of investigating a potential Indian implementation of a mandatory B2B e-invoicing system: the “Committee of Officers on generation of electronic invoice through GST Portal” (CoO).
More specifically, the CoO has been tasked with analysing and comparing the South Korean clearance system to similar systems in Latin America in order to understand global best practices and also to assess to what extent the existing Indian state-controlled platform – the GST Network – can serve as the central hub in a clearance-style e-invoicing process.
In late May, the CoO formed two sub-committees to continue working on parallel tracks: one on legal and policy matters and the other on the development of technical requirements. During the past few weeks, work has progressed in these working groups as well as in public-private consultations.
The committee is getting close to concluding the initial deliberations, but its closing recommendations have not yet been published in a final report. As a result, no draft laws, draft invoice schemas or draft process frameworks have yet been made public; however, results are expected to be published this summer.
While it’s still too early to describe what the Indian e-invoicing system will look like with any real certainty, speculation has naturally already begun. The CoO was specifically asked to investigate how the current eWaybill system could be recycled into a mandatory e-invoicing system, and it is therefore very likely that the new framework will bear strong similarities to the eWaybill process.
Such similarities include the principle of real-time or near-real-time generation of invoice number ranges by a central platform, which must then be included on the invoice document in order for it to constitute a fiscally valid invoice. In other words, this type of system would not entail issuance of the invoice on a clearance portal, such as in Italy, but constitute a somewhat softer version of a clearance e-invoicing system.
E-invoicing has been a legal possibility and practical reality in India for a number of years now, and as a result many companies are up and running with PDF-based e-invoicing in the country. Given the size of the Indian economy and the role it plays in global manufacturing, any major e-invoicing reform will have significant impact, not just on local businesses but on international commerce as a whole.
On 21 June, the GST Council is set to discuss the general topic of tax controls and how to increase tax collection through modernised compliance requirements. It remains to be seen if the GST Council is ready to formally decide on the introduction of mandatory e-invoicing in the country, or if it is ready to publish a high-level framework for basic considerations such as scope, dates for entry force and high-level technical principles.
If not, there’s still no reason to worry that a decision will be delayed; if anything, it would be wise to expect the opposite: the government has repeatedly displayed the ability to get things done with remarkable speed. Strengthened as the prime minister is after the recent elections not even a month ago, there’s every reason to believe that this project won’t be an exception.
Learn how Sovos helps companies handle e-invoicing and other mandates all over the world. To find out more about what we believe the future holds, download the Sovos eBook on trends: e-invoicing compliance.
Italy has been at the forefront of B2G e-invoicing in Europe ever since the central e-invoicing platform SDI (Sistema di Interscambio) was rolled out and made mandatory for all suppliers to the public sector in 2014.
While a number of its European neighbours are slowly catching up, Italy is continuing to improve the integration of new technologies with the public administration’s processes. Its latest move is to make e-orders mandatory in public procurement. By leveraging the successful use of the public administrations’ Purchase Orders Routing Node platform (Nodo di Smistamento degli Ordini, or NSO) in the Emilia-Romagna region, Italy is now extending the functionality throughout the country.
As of 1 October 2019, all purchase orders from the Italian National Health System (Servizio Sanitario Nazionale, or SSN) must be delivered to and received by suppliers through the NSO platform. The suppliers affected by the mandate will be required to receive e-orders from public entities; the public administration will not proceed with the liquidation and payment of invoices issued by non-compliant companies. It is noteworthy that the mandate covers all purchase orders made by entities associated with the SSN, including office supplies and electronics, and not just health-related products.
In addition to mandatory receipt of e-orders, suppliers will also be able to send messages to the public administration. In cases where suppliers and the public administration have previously agreed, the supplying company may send pre-filled e-orders to the public administration buyer, which will confirm or reject the proposed supply.
Moreover, foreign suppliers must also comply with this mandate. The NSO mandate will have some impact on e-invoicing for Italian public administrations seeing as certain e-order data must be included in the e-invoices that are transmitted through the SDI.
The NSO system is built upon the existing SDI infrastructure, and as a result, the communication with the NSO requires similar channel accreditation as the SDI. Suppliers and intermediaries already performing the transmission of messages through the SDI platform are required to comply with complementary accreditation requirements, which are yet to be published. Furthermore, the technical specifications show that PEPPOL intermediaries may interact with the NSO platform through an Access Point service accredited with the NSO.
Learn how Sovos helps companies handle e-invoicing and other mandates in Italy and all over the world. To find out more about what we believe the future holds, download the Sovos eBook on Trends: e-invoicing compliance.
The French Minister of Public Accounts and Action, which has authority over all tax matters, has taken advantage of the process that is required to transpose the EU E-Commerce Directive to launch a number of initiatives to curb VAT fraud, including a renewed attempt to create a system of mandatory e-invoicing.
A program for the gradual implementation of electronic invoicing for business-to-government (public procurement) transactions is currently entering its final stages whereby even small companies will soon be required to send their invoices to public entities via the so-called Chorus platform.
Current President Macron had previously, as Finance Minister under his predecessor François Hollande, already proposed to introduce a similar obligation for B2B e-invoicing, but this proposal was rejected due to inconsistencies with the VAT Directive and a perceived increase in the administrative burden on companies.
However, times have changed and France – like other EU Member States – is seeing new opportunities to go down the B2B e-invoicing mandate path since Italy led the way on 1 January 2019. The Italian government obtained an EU derogation from certain provisions in the VAT Directive which allowed the country to go live with a countrywide e-invoicing mandate that is based on prior real-time controls by the tax administration. Such ‘clearance’ e-invoicing systems, which are generally inspired by the approach taken in the past 5-10 years by Latin American countries, have proven to be very effective tools in the fight against VAT fraud.
While it’s still too early to talk about a concrete (or theoretical) French proposal for B2B e-invoicing, it is clear that the government means business. Minister Gérald Darmanin has stated that the government will begin a consultation process that involves the private sector to discuss how to best get small and medium sized companies up-and-running as smoothly as possible.
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Beyond the implications outlined in our last blog, Decree-Law 28/2019 (the Decree-Law) impacts areas beyond invoicing, introducing modifications to both archiving and the reporting of tax data.
A novelty of the Decree-Law is the explicit introduction of an obligation to archive electronic invoices in electronic format which in turn further promotes the adoption of electronic formats. Portugal has chosen a closed system in which by law the invoice must remain in the same format in which it was issued. This means that even those companies who are not engaged in e-invoicing, but who receive an electronic invoice from a supplier, will have to acquire and maintain an electronic archive. The alternative would be to reject the invoice and request a printed version. For archiving, the law does not allow for the invoice format to change.
The law also establishes archiving requirements:
It is mandatory for taxpayers to report to the tax authority the location of the electronic archive. All taxpayers must comply with the transition rules of the Decree-Law within 30 days from when it comes into force – i.e. by 17 March 2019.
As well as the e-archiving rules, changes have been introduced to the reporting of invoice data to the tax authority through SAF-T (PT) files by modifying provisions set in Decreto -Lei n.º 198/2012 regarding the time of filing the SAFT-T (PT) file. Until now, taxpayers could file the SAF-T file to fulfill reporting obligations until the 25th of the following month of issuing the invoice.
A reduced time to report comes into force according to the following schedule:
Taxpayers can still choose to report in real-time through webservice integration instead of uploading the SAF-T (PT) file. The Decree-Law enhanced this option as taxpayers who choose to report in this way are not obliged to print B2C issued invoices unless it is explicitly requested by the buyer and provided they comply with the requirement of inserting the unique invoice code to the invoice and use certified invoicing software.
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On 15 February 2019, Portugal published Decree-Law 28/2019 regarding the processing, archiving and dematerialisation of invoices and other tax related documents including:
The decree aims to consolidate rules and to promote the adoption of electronic means of dealing with tax documentation and archiving. It also aims to eliminate tax fraud by tightening controls through the identification of invoicing software, identifying where invoicing terminals are located, the mandatory obligation to include a unique document code (UUID) in the tax document and, finally, identifying the location of the transaction.
According to the Decree-Law, invoices (paper or electronic) must be processed using certified invoicing software, which must, amongst other things, complete the invoice’s content in line with the VAT law. Simplified invoices (issued for less than €100 Euro) can, however, be processed by “other electronic invoicing means” such as cash machines. The Decree-Law also regulates contingency situations where the invoice must be based on pre-printed documents.
Having to use invoicing software that has been certified by the tax authority is not new in Portugal. However, the changes in the new Decree-Law mean that more taxpayers must now comply with the obligation as the mandate threshold has reduced. Previously it only affected companies (with a permanent establishment in Portugal) with a revenue in the previous year of €100K. It now includes companies with a revenue of over €75K (applicable during 2019) and reduces to €50K from 2020.
The decree also mandates that from 1 January 2020, invoices must carry a unique invoice code (UUID) following the government’s requirements. The code will also be represented as a QR code on printed invoices. Both requirements are new and software providers will have to adapt their solutions in the future to meet these new legal requirements.
Another new requirement set by the Decree-Law is that taxpayers must communicate to the tax authority the invoice series used by each establishment before issuing any invoice. The tax authority will assign to each series a code that must be included in the new mandatory UUID. While not the same, a similar requirement applies in many other countries, more specifically, in countries that have introduced a clearance model. In fact, Latin American countries with a clearance system often require taxpayers to either request prior invoice ranges from the tax authority, or to have an invoice series authorised by the tax authority, or to have the numeration done directly by the tax authority in connection with the clearance process. A good example of the first scenario is in Chile or Colombia, where taxpayers must request prior authorisation of an invoice range by the Chilean tax authority. An example of the second process is Mexico, where the invoice is numbered by the state agent that intervenes in the clearance process. However, such a requirement is new in the EU context, demonstrating once more that Europe is drawing inspiration from Latin America’s success in closing their VAT gap.
When it comes to guaranteeing the integrity and authenticity of invoices, it is worth noting that the decree deviates from the Directive 2010/45/EU as the possibility to use business controls provides a reliable audit trail (hereinafter BCAT) as a method of guaranteeing integrity and authenticity is expressly limited to paper-based invoices only. Furthermore, such controls must be properly documented.
For electronic invoices (ie those that are issued and received electronically) integrity and authenticity are guaranteed when one of the following methods is used: qualified e-signature; qualified e-seal in accordance with e-IDAS Regulation; or electronic data interexchange (EDI) with secure and documented processes to ensure integrity and authenticity. Taxpayers have until 31 December 2020 to migrate to the new methods of guaranteeing integrity and authenticity for electronic invoices.
Portugal is implementing its own vision when it comes to guarantees of integrity and authenticity putting itself, once more, closer to Latin American clearance countries where such guarantees are only achieved by digitally signing e-invoices. The distinction between methods (BCAT for paper invoices vs. e-signatures and EDI for electronic invoices) is an explicit preference of e-signatures and EDI over BCAT methods as the most efficient way to guarantee e-invoice integrity and authenticity.
In addition to the new invoicing requirements, the Decree-Law imposes taxpayers with new obligations to notify the tax authority with additional information. This includes:
Taxpayers who have already carried out activities subject to VAT must present the above-mentioned information by 30 June 2019.
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More than six months ago the Greek authorities announced their intention to introduce mandatory e-invoicing and e-bookkeeping rules, and enough information is now available to assess what the proposed rules will mean for Greece.
Although formal legislation has yet to be published, it’s expected the new e-invoicing measures by the Independent Public Revenue Authority, the Greek authority responsible for all tax matters (AADE; in Greek, “ΑΑΔΕ”), will be mandated by January 2020.
The Director of AADE recently stated that e-invoicing is incomplete without e-reporting, so the proposed rules must encompass both areas of tax compliance. By January 2020 the goal is for reporting to occur in real-time at the same time as the invoice is issued. The new rules would make e-invoicing and e-reporting mandatory, with a real-time connection from the invoicing system (by transmission of all relevant invoice data) to the electronic system (TaxisNet) of the Greek tax authorities.
So far, no real action has been taken regarding the implementation of the new e-invoicing system, e.g. the e-invoicing process, e-invoice format requirements and the software systems to connect to the tax authority have not yet been defined. However, the Ministry of Finance recently published a Decision establishing certification requirements and describing the certification process and responsibilities for e-invoicing service providers, who would be able to perform services of issuance, delivery and archiving on behalf of the taxable person.
By comparison, more progress has been made for implementing real-time reporting. AADE has published the technical specifications for transmission of invoice data – however, the scope of the reporting framework covers other tax as well as invoice data – e.g. income tax – to the government portal (TaxisNet) and invoice data will need to be reported on a daily basis (instead of periodically as currently). These technical specifications apply to the connection from the so-called Greek “electronic fiscal devices” – which is the most commonly used compliant method for issuing (and ensuring integrity and authenticity of) B2C invoices in Greece – to TaxisNet, as well as the data transmission software operated by e-invoicing service providers.
For B2B invoices, whose integrity and authenticity can be guaranteed by any method of the EU Directive, no technical specifications have been published yet. Further clarification and legislative action by the tax administration is required. Details about service providers’ software systems and the government infrastructure are expected to be finalised by mid-2019.
Until the implementation of the new reporting framework whereby invoice data will be reported in real-time at the same time as the invoice is issued, AADE is working on the alternative that invoice data will be reported on a regular basis by the issuer only, and not the buyer, which should minimise the overall reporting workload and ensure uniqueness of data. The buyer will be able to amend the relevant reporting field on TaxisNet where there is insufficient invoice data from the supplier.
On 29 October 2018 the Government published a Bill to transpose the Directive 2014/55/EU on e-invoicing in public procurement; it however still needs to be approved. The Bill makes e-invoicing mandatory for both the supplier and the buyer/government in public procurement scenarios as of 1 April 2019.
AADE has clearly stated that mandatory e-invoicing would be incomplete without some type of combined transactional reporting; data should be created once and not several times as is currently the case. Therefore, we expect a type of “clearance” e-invoicing model in Greece, however at this stage it’s still too early to categorise the reform as being similar to Italy (“real” clearance e-invoicing) or more like Hungary (real-time reporting as soon as the invoice has been issued). Clearly, Greece is in line with the EU paradigm shift towards increased governmental control over transactional data and recognises the benefits of tighter tax compliance and in taking steps to close its tax gap.
Even if the new measures aren’t particularly welcomed by many individuals in Greece – much in the spirit of a well-held opposition against EU austerity measures which have led to riots and social unrest in the past – these new measures are well positioned to provide the Greek tax administration and government with an opportunity for structural change. The use of technology will enable more effective tax controls and enforcement as well as a more efficient tax environment for business, leading to a positive knock-on effect for future restructuring and rebuilding of the Greek economy.
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