Sovos​, the always-on compliance company,​ today announced a joint business relationship with the Belgian PwC Firm PwC Business Advisory Services bv/srl (hereinafter: “PwC​”),​ leveraging the companies’ complementary tax and advisory service expertise and solutions to address vital e-invoicing and e-reporting needs.

Through this joint business relationship, Sovos and PwC clients can access comprehensive services to adeptly tackle the ever-evolving regulatory challenges linked to e-invoicing and e-reporting, as additional countries look to join the more than 80 countries worldwide with existing e-invoice requirements.

Through implementation of the Sovos Compliance Cloud, organisations will be able to identify and document client e-invoicing regulatory requirements across various markets, evaluate existing processes and technology, and align business objectives. Introduced in February, the Sovos Compliance Cloud is the industry’s premier unified, cloud-based tax compliance and regulatory software platform that provides a holistic system of record for global compliance.

“As companies navigate an increasingly interconnected and dynamic marketplace, the need for ​a ​more integrated e-invoice process has never been more crucial,” said Ellen Cortvriend, partner, of PwC in Belgium. “The Sovos joint business relationship allows us to deliver excellence in an e-invoicing-led global tax compliance project today, with the ability to streamline the e-invoice process even more over time.”

“With many clients of PwC ​in ​Belgium facing imminent e-invoicing mandates, the Sovos Compliance Cloud platform ensures a quick and successful integration,” said Alice Katwan, president of revenue, Sovos. “Rapid and complex compliance changes create both tax and IT challenges, from needing immediate tax determination at the point the invoice is raised, to the integration of validated e-invoices with periodic and SAF-T reporting. By reducing the operational burden and providing a singular data view into their compliance posture, Sovos and PwC allow companies to unlock tremendous business value.”

For business leaders seeking to understand more about the events driving regulatory changes and strategies to stay ahead of the compliance risk curve, PwC and Sovos compliance experts will host a complementary webinar, Have We Hit a Tipping Point for Global Indirect Tax?, on 11 April 2024 at 2 p.m. GMT. Registration is now open.

About Sovos 
Sovos is a global provider of tax, compliance and trust solutions and services that enable businesses to navigate an increasingly regulated world with true confidence. Purpose-built for always-on compliance capabilities, our scalable IT-driven solutions meet the demands of an evolving and complex global regulatory landscape. Sovos’ cloud-based software platform provides an unparalleled level of integration with business applications and government compliance processes.

More than 100,000 customers in 100+ countries – including half the Fortune 500 – trust Sovos for their compliance needs. Sovos annually processes more than 11 billion transactions across 19,000 global tax jurisdictions. Bolstered by a robust partner program more than 400 strong, Sovos brings to bear an unrivaled global network for companies across industries and geographies. Founded in 1979, Sovos has operations across the Americas and Europe, and is owned by Hg and TA Associates. For more information visit https://sovos.com and follow us on LinkedIn and Twitter.

About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 151 countries with more than 364,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2024 PwC. All rights reserved.

Malaysia CTC e-invoice Reporting:

From August 2024, e-invoicing in Malaysia will become mandatory for taxpayers with an annual turnover or revenue of more than RM100 million. The mandate will follow the continuous transaction control (CTC) model and will require e-invoices to be validated by the country’s tax authority, as well as reporting certain transactions. Rollout to all other taxpayers undertaking commercial activities in Malaysia will follow in 2025.

Read on for an overview of Malaysia e-invoicing requirements and bookmark this page to stay updated with the latest mandate developments.  

Table of contents

At a glance: Malaysia e-invoicing

The issuance of an electronic invoice and submission for validation to the IRBM’s Platform (MyInvois) will be mandatory in Malaysia for certain determined transactions (e.g. automotive, aviation, construction).

For transactions where e-invoicing is mandatory, and in all other transactions where the buyer requests the issue of an e-invoice, the supplier will need to issue an e-invoice in XML or JSON format and submit it to the IRBM´s MyInvois platform for validation.

To comply with this e-invoicing requirement, taxpayers can use the MyInvois platform through the free solution offered by IRBM or integrate through specific APIs. A Software Development Kit has been released by the IRBM for this purpose.

The platform will perform certain validation checks, not only to the e-invoice structure but also to Taxpayer Identification Numbers (TIN). Once the e-invoice receives validation from IRBM, buyers are allowed to submit rejection requests stating the rejection reason.

On the other hand, suppliers can agree to such rejections and issue cancellations of the e-invoice during a 72-hour period.  

Following validation, suppliers handle the exchange of validated e-invoices. The exchanged e-invoice should include the original validated e-invoice, the validation link provided by the IRBM in the form of a QR code and a PDF copy.

The QR Code enables the verification of the existence and status of the e-invoice through the MyInvois portal.

Malaysia B2B e-invoicing

CTC Type
E-invoice reporting.

Network
E-invoices are processed via the MyInvois portal, however, they should be exchanged out-of-band.  

Format
XML or JSON.

eSignature Requirement
Not known at this time.

Malaysia B2G e-invoicing

CTC Type
E-invoice reporting.

Network
E-invoices are processed via the MyInvois portal, however, they should be exchanged out-of-band.

Format
XML or JSON.

eSignature Requirement
Not known at this time.

E-invoicing in Malaysia: Key requirements and regulations

From August 2024, Malaysian taxpayers with an annual turnover or revenue of more than RM100 million will be required to submit and clear e-invoices for certain transactions.

Malaysia e-invoicing adopts a continuous transaction control (CTC) approach. E-invoices must be submitted and cleared via MyInvois, the e-invoicing portal of the Inland Revenue Board of Malaysia (IRBM).

As of the 9 February 2024, the IRBM guidelines state that mandatory e-invoicing will be for specific sectors and transactions.

Sectors in-scope of mandatory e-invoicing include:

  • Automative
  • Aviation
  • Luxury good and jewellery
  • Construction
  • Licensed betting and gaming
  • Payments to agents, dealers and distributors

For cross-border transactions, Malaysian taxpayers must issue a self-billed e-invoice to document the expense, but foreign parties do not need to implement the Malaysia e-invoicing system.

B2C transactions fall outside of the e-invoice mandate. Any e-invoices for transactions not in scope are subject to the buyer’s request.

What is an e-invoice in Malaysia?

An e-invoice is a digital representation of a transaction between a supplier and a buyer that replaces all paper or electronic documents serving as invoices, credit notes and debit notes.

An e-invoice under the new framework is a structured file created in a defined format that can be automatically processed by the relevant systems.  The e-invoice structure includes 53 mandatory fields and must be submitted in either XML or JSON format.

An e-invoice will contain the same essential information as per current practices, such as supplier’s and buyer’s details, item description, quantity, price excluding tax, tax, and total amount.

Following the validation process, e-invoices must include an embedded QR code.  

PDFs, Doc, JPG and paper will not be considered as e-invoices.

What is the process flow of an e-invoice in Malaysia?

E-invoice issuance: Taxpayers must submit e-invoices to the IRBM via the MyInvois portal or through a third-party e-invoicing software API in XML or JSON format.

Validation: Once submitted, the e-invoice is validated in real-time and a Unique Identification Number, validation link (QR Code) and PDF format of the cleared e-invoice are sent to the supplier.

Validation notification: The IRBM performs certain validation checks on the e-invoice structure and on taxpayers identification numbers and notifies the buyer and supplier of the validated invoice.

E-invoice sharing: Suppliers should share the validated e-invoice and a visual representation with a QR code embedded. The QR code allows buyers to validate the existence and status of the e-invoice via MyInvois. It’s the supplier’s responsibility to share the document with the buyer.  

Rejection or cancellation: Optional rejection (buyer side) and optional cancellation (supplier side) requests have a 72 hour time limit, after which the invoice is considered valid. Any corrections or amendments made after the 72 hour limit will need to be made through credit, debit or refund notes.

Transaction Summary: A summary of the transaction can be viewed via the portal.

What are the types of e-invoices in Malaysia?

In Malaysia, the e-invoice mandate covers the below document types:

  • Invoice
  • Credit note
  • Debit note
  • Refund invoice
  • Self-billed invoice

E-reporting regulations in Malaysia

For all other transactions that fall outside of the mandatory e-invoicing scope, and where the buyer did not request an e-invoice to be issued, suppliers can issue an invoice or receipt as per the current practices (e.g. paper).

However, in these cases, suppliers are required to instead issue a consolidated e-invoice aggregating all invoices and receipts on a monthly basis, within 7 days of the month end-. Consolidated e-invoices are common in Malaysia today, and this requirement allows this practice to continue, while still giving the IRBM access to aggregated transaction data. These consolidated invoice reports are issued to a ‘general public’, without specification of each buyer, and a general TIN is provided.

A description of the products or services is provided by the summary of each receipt presented as separate line items in the consolidated e-invoice and/or the list of receipts (in a continuous receipt number) presented as line items.

Additionally, when consolidated- e-invoices are issued, MyInvois will send notifications back to the supplier only. Rejections are not allowed from the buyer side and suppliers are not required to share the validated e-invoice with buyers.

Consolidation cannot be used for self-billed invoices.

Implementation timeline

2015: Malaysia introduces voluntary e-invoicing

October 2022: The Malaysian Ministry of Finance announces plans for e-invoicing pilot program for select taxpayers

November 2023: Mandatory e-invoicing implementation timeline is delayed to August 2024

February 2024: Inland Revenue Malaysia publishes Software Development Kit and e-invoicing guidelines

August 2024: Mandatory e-invoicing and clearance in Malaysia for taxpayers with an annual turnover or revenue of more than RM100 million (aprox. 20 million euros)

January 2025: Mandatory e-invoicing for taxpayers with an annual turnover or revenue between RM25 million (aprox. 5 million euros) and RM100 million

July 2025: Mandatory e-invoicing for all taxpayers

For the latest updates and in-depth timeline bookmark our Malaysia e-invoicing system blog.

Setting up e-invoicing and
e-reporting in Malaysia

Malaysia’s e-invoicing mandate allows submission of e-invoices via a third-party API. Sovos’ e-invoice and e-reporting compliance solutions are suitable for Malaysia and other international tax requirements.

Speak with a Sovos expert to set-up e-invoicing in Malaysia.

Complete the form below to speak with one of our e-invoicing experts

FAQ

E-invoicing will become mandatory for certain transactions for taxpayers with an annual turnover or revenue of more than RM100 million from August 2024. Additional taxpayers will be in scope from 2025 with all taxpayers included by July 2025.

There is a consolidated e-invoice requirement for transactions where e-invoicing is not mandatory, and the buyer does not request an e-invoice to be issued. Taxpayers must aggregate all invoices and receipts issued and issue a consolidated e-invoice via the MyInvois, on a monthly basis (within 7 days from the month end).

E-invoicing is currently optional for taxpayers in Malaysia but an upcoming mandate will make it a requirement for all taxpayers by 2025. The first group of taxpayers need to comply by August 2024.

The Inland Revenue Board of Malaysia (IRBM) is the e-invoicing authority in Malaysia. The IRBM is responsible for the MyInvois Portal, the platform used to submit, clear and validate e-invoices in the country.

Taxpayers within scope of the e-invoicing mandate submit documents via the country’s MyInvois Portal for validating, before sharing with the buyer. The real-time e-invoicing process saves time and resources for businesses and facilitates cross-border and international trade.

Malaysia is one of many countries in Asia Pacific to adopt e-invoicing including , China, South Korea, Singapore, Japan and the Philippines.

Dominican Republic e-invoicing

The Dominican Republic is just one of the many nations that are turning to e-invoicing. From 2024, established taxpayers will be required to meet strict new rules for how they execute business transactions.

Understanding what’s to come is vital, as is choosing a partner with the technical know-how and foresight to ensure compliance during change. Bookmark this page to stay updated with developments in e-invoicing in the Dominican Republic, written by regulatory experts.

At a glance: e-invoicing in the Dominican Republic

Dominican Republic B2G e-invoicing

CTC Type
E-invoice clearance according to the calendar, starting with the first group in May 2024

Network
The system’s web services are a set of protocols and standards that, using extensible markup language (XML) and REST API, allow the exchange of data between the heterogeneous invoicing software of taxpayers and the tax authority through an environment defined as {Environment}, finding various services in electronic invoicing

Format
Electronic invoices will be sent in an XML file, which consists of a plain text record that uses a series of custom tags to describe both the structure and other characteristics of the document

eSignature Requirement
A digital certificate for Tax Procedure, issued and signed digitally, by a certification entity authorised by INDOTEL or a certificate with an institutional link is required

Archiving Requirement
10 years

Dominican Republic B2B e-invoicing

CTC Type
E-invoice clearance according to the calendar, starting with the first group in January 2024

Network
The system’s web services are a set of protocols and standards that, using XML and REST API, allow the exchange of data between the heterogeneous invoicing software of taxpayers and the tax authority through an environment defined as {Environment}, finding various services in electronic invoicing

Format
Electronic invoices will be sent in an XML file, which consists of a plain text record that uses a series of custom tags to describe both the structure and other characteristics of the document)

eSignature Requirement
A digital certificate for Tax Procedure, issued and signed digitally, by a certification entity authorised by INDOTEL or a certificate with an institutional link is required

Archiving Requirement
10 years

E-invoicing regulation in the Dominican Republic

The electronic invoicing regulation in the Dominican Republic was published on 17 May 2023 and lays out the specific expectations and requirements for taxpayers.

Firstly, the e-invoicing regulation applies to natural and legal persons, both public and private. It also applies to entities without legal personality domiciled in the Dominican Republic that carry out the transfer of goods, delivery in use or provision and lease of services for consideration or free of charge.

All issuers of electronic invoices are to be recognised and authorised as such by the DGII and have a digital certificate for Tax Procedure issued by an entity authorised by the Dominican Institute of Telecommunications (INDOTEL).

Electronic invoices must be compliant with a set format and are to be sent to the authority and electronic receiver. Each e-invoice will have a Printed Representation (RI) of the electronic tax receipts (e-CF) which will be delivered physically to exceptional non-electronic receivers.

The regulation outlines three forms of acceptable e-CF issuance:

  • Using self-developed systems, following authorisation from the DGII
  • Using e-invoicing service providers that have been certified for compliance
  • Using the DGII’s free technological facility (known as free billing)

Find more details on the e-invoicing regulation in the Dominican Republic.

Timeline: e-invoicing adoption in the Dominican Republic

It can be difficult to stay informed about the changes to e-invoicing’s implementation in the Dominican Republic. This simple timeline details the key developments:

  • February 2019: Pilot phase for e-invoicing commences with 11 large companies
  • September 2022: Draft law filed for the Senate’s approval
  • 17 May 2023: The Electronic Invoicing Law of the Dominican Republic was published in the Official Gazette
  • 18 May 2023: The e-invoicing mandate became applicable across the nation
  • 15 January 2024: Group 1 of large national taxpayers need to have implemented e-CF by now
  • 15 March 2024: Group 2 of large national taxpayers need to have implemented e-CF by now
  • 15 May 2024: Group 3 of large national taxpayers and Government Institutions classified as Large National Taxpayers need to have implemented e-CF by now
  • 15 May 2025: E-invoicing will become a requirement for large local and medium-sized taxpayers
  • 15 May 2026: E-invoicing will become a requirement for small, micro, unclassified taxpayers and the remaining Government Institutions

Who must use an e-invoice in the Dominican Republic?

Both issuing and receiving electronic invoices are currently voluntary for both B2B and B2G transactions in the Dominican Republic. This will change in 2024 when the first wave of mandatory requirements rolls out, specifically to large taxpayers.

View the timeline below to find out exactly when e-invoicing will be obligatory for different taxpayer groups.

How to choose the right e-invoicing software in the Dominican Republic

The impending launch of electronic invoicing in the Dominican Republic brings along the need to find a system and strategy that works. Strategy isn’t one-size-fits-all; compliance is imperative and, subsequently, so is finding a solution that understands your company.

Sovos is a global compliance partner for organisations of all shapes and sizes, and our solutions not only help you to comply but also free up resources so you can focus on what really matters.

Another aspect of compliance to be mindful of is that requirements change. It’s unavoidable. Instead of jumping between solutions, organisations that partner with Sovos have peace of mind that they will be compliant in the present and meet any new demands that come in the future.

Get in touch with us

FAQ

e-CF, otherwise known as an electronic tax receipt, is the Dominican Republic’s version of an electronic invoice. Taxpayers must submit e-CFs to the nation’s tax authority, DGII, for approval.

Once you have issued an electronic invoice, request an e-CF sequence and the DGII will validate the file. Once the tax authority has validated the e-CF, you will receive authorised versions.

The different statuses for e-CF are as follows:

  • Accepted e-CF – The document has been received and is valid
  • Rejected e-CF – The document has been received but is not valid
  • e-CF not found – The sequence is valid but has not been submitted to the Internal Revenue Service
  • In process – The document is being validated by the DGII

Regarding e-invoicing in the Dominican Republic, the Acknowledgement of Receipt only confirms that the electronic invoice has been received. The Commercial Approval indicates whether the e-CF has been accepted or rejected.

In less than six months, Poland is going to introduce its long-awaited CTC clearance e-invoicing mandate – a tax reform that will impact a large amount of businesses.

It has been possible to issue and receive e-invoices voluntarily via Krajowy System E-Faktur (KSeF) since January 2022, but from 1 July 2024 it will become mandatory for suppliers and buyers that are in scope of mandatory e-invoicing to do this via KSeF.

A detailed understanding of the new regime, plus timely and proper preparation, is critical for compliance. Whilst there is a six-month grace period on financial penalties, non-compliance can negatively impact your business in many other, often unexpected, ways.

In this 45-minute deep-dive webinar, Marta Sowińska from our Regulatory Analysis and Design team will cover:

Join us on 8 February at 2pm GMT | 3pm CET for a thorough review of the Polish KSeF e-invoicing mandate and the opportunity to submit your questions.

Register today

As tax authorities continue to digitize processes in their mission to reduce fraud and close their VAT gaps, they are introducing requirements that provide greater visibility into a company’s financial operations in the form of Continuous Transaction Controls (CTC).

It would be a mistake to think that being prepared to meet obligations in one of the countries where you operate can simply be replicated in another – CTCs are far from a ‘one-size-fits-all’ solution.

Join us on 24 January 2024 in our latest quarterly VAT Snapshot webinar series where regulatory experts Dilara Inal and Marta Sowinska will examine how tax authorities in Poland, Romania, Israel, Greece and Spain – all simultaneously implementing CTC regimes – are doing so with different sets of requirements.

Don’t miss this opportunity to learn more about these unique regimes and what they mean for your business.

Register now.

Poland SAF-T framework

Poland is one of many countries to use the Standard Audit File for Tax (SAF-T) to streamline tax compliance and reporting for businesses. The country was one of the first in Europe to replace the traditional VAT return with SAF-T.

Poland introduced its version of SAF-T, known as Jednolity Plik Kontrolny (JPK), in 2016, making monthly submissions of JPK_VAT compulsory for all taxpayers in 2018.

In 2020, JPK_VAT combined with the VAT return and is submitted with a declaration per the frequency of the VAT Return (monthly or quarterly).

Submission of the remaining seven JPK structures is upon request of the tax authority in the event of an audit.

Please note: JPK_VAT with the declaration is in the process of changing as a result of the introduction of mandatory e-invoicing via KSeF in Poland.

The legal framework of SAF-T in Poland

The Poland SAF-T framework consists of eight JPK structures:

JPK_V7M/K

declaration for records of VAT purchases and sales combined

JPK_FA

for VAT and VAT invoices

JPK_WB

for bank statements

JPK_PKPIR

for revenue and expense ledger

JPK_EWP

for revenue account

JPK_KR

for accounting books

JPK_MAG

for warehouses

JPK_FA_RR

for flat rate VAT invoices

Other than the monthly or quarterly periodic submission of JPK_V7M/K, submission of all other JPK structures is on demand.

However, from 1 January 2025, reporting of JPK EWP, JPW PKPIR, and JPK_KR will become a periodic reporting obligation.

Timeline SAF-T in Poland

  • 1 July 2016: SAF-T introduced in Poland in the form of JPK files
  • 1 January 2018: Poland mandated JPK_VAT for all taxable persons
  • 1 July 2018: Taxpayers must be able to produce accounting documents in JPK structures
  • 1 October 2020:  JPK_VAT with declaration consolidates the VAT Return and JPK_V7M/K
  • 1 July 2021: Amendments to the mandatory JPK_V7M/K adopted
  • 1 January 2022: Amendments to the JPK_V7M/K structure including changes to better align it with the EU VAT e-Commerce package
  • 1 January 2025: Reporting of JPK EWP, JPW PKPIR, and JPK_KR becomes a periodic obligation

Understanding JPK VAT and SAF-T in Poland

One of the eight JPK structures in Poland is JPK_VAT, a declaration combining VAT purchase and sales records. As of 2020, JPK_VAT must be sent alongside VAT returns to the tax authority.

JPK_VAT with the declaration has two variants, depending on the submission frequency of the VAT return:

  • JPK_V7M for taxpayers settling VAT monthly.
  • JPK_V7K for taxpayers who settle VAT quarterly.

Submission of JPK_V7M and JPK_V7K is on the 25th of the month following the reporting period.

The other SAF-T JPK structures for VAT are JPK_FA for VAT invoices and JPK_FA_RR for flat-rate VAT invoices. JPK_FA and JPK_FA_RR are both submitted on demand.

Implementing SAF-T as a business

SAF-T requires additional data to analyse and authenticate the accuracy of documentation. All data submitted in the SAF-T consolidated submission must be accurate and complete to ensure compliance.

Data for SAF-T requirements is often extracted from multiple sources for a single report and combining this data can be difficult.

The data required for SAF-T differs significantly from other reporting obligations that businesses might be familiar with. The XML format required for reports makes it difficult to review, compare or test reports ahead of submissions.

Other requirements for VAT compliance in Poland

As well as Poland’s SAF-T requirements, taxpayers need to also be aware of the KSeF e-invoicing mandate. Poland’s continuous transaction control (CTC) e-invoicing system is mandatory as of 1 July 2024, expanding to VAT-exempt taxpayers in 2025. Read this overview for a general introduction to Poland VAT compliance.

FAQ

JPK_VAT with a declaration is an electronic document that includes both VAT records, combining information on purchases and sales and VAT returns (VAT-7M and VAT-7K).

JPK_VAT is submitted on a monthly or quarterly basis.

Yes, SAF-T is mandatory in Poland. JPK VAT with a declaration must be sent to the tax authority on a periodic basis, while other types of JPKs are sent on demand.

Failure to comply with the SAF-T requirements in Poland can lead to penal and fiscal sanctions, based on a misdemeanor or a felony. If the value of the reduction of the tax liability exceeds PLN 10,000, it is a crime.

Submission of JPK_VAT with the declaration (JPK_V7M and JPK_V7K) is on the 25th day of the month following the reporting period. Other JPKs are submitted to tax authorities within three days after receiving a request from the tax authority.

Our Solution capabilities for Poland SAF-T

Data Extraction

Painlessly aggregate and consolidate data from a wide range of source systems complying with Poland’s SAF-T requirements including JPK files.

More about data extraction

Data Analytics

Check the accuracy, integrity and quality of complex data structures required by Poland SAF-T to give you peace of mind before you submit your JPK files to the tax authority.

More about data analytics

File Generation

Ensure that all required data sets from accounting entries, sales and purchase transactions, asset depreciation, stock movements and more, are mapped seamlessly into Poland’s JPK schema, ready to be analyzed and submitted to the tax authority.

More about file generation

Get the information you need

Romania e-invoicing

E-invoicing in Romania is developing fast. With a current B2G and High Fiscal Risk B2B mandate already in place and a new obligation facing all companies with operations in Romania from 1 Jan. 2024, it can be hard to stay on top of your business’ requirements. Failing to comply with Romania’s e-invoicing and e-reporting mandates will result in penalties, but more importantly, it will lead to invalid tax invoices – which don’t allow for VAT deduction – and, ultimately, may also trigger protracted tax audits, so it is crucial that you are aware of your requirements.

Read on to learn about the current state of Romania e-invoicing – from continuous transaction controls (CTC) and e-Factura to B2B e-invoicing developments – and what’s to come.

At a glance: Romania e-invoicing

Romania B2G e-invoicing

CTC Type
E-invoice clearance coupled with e-reporting requirements for transactions carried out between January and July 2024 with public institutions

Network
Centralised network where the e-invoice exchange is primarily processed through the RO e-Factura platform

Format
UBL 2.1 XML format file following CIUS RO national validation rules

eSignature Requirement
Digital Seal applied by the Ministry of Finance

Romania B2B e-invoicing

CTC Type
E-invoice clearance coupled with e-reporting requirements for transactions carried out by VAT-registered entities

Network
Centralised network where e-invoice exchange is primarily processed through the RO e-Factura platform

Format
UBL 2.1 XML format file following CIUS RO national validation rules

eSignature Requirement
Digital Seal applied by the Ministry Of Finance

Archiving Requirement
10 years

E-invoicing and e-reporting regulations in Romania

Romania introduced e-invoicing on a voluntary basis in November 2021 for B2G and April 2022 for B2B transactions. Romania’s Government Emergency Order no. 120/2021 implemented the RO E-Factura platform, the country’s e-invoicing system.

From July 2022, e-invoicing became mandatory for B2G and B2B transactions of so-called ‘high fiscal risk products’ following article II of Law no. 139/2022.

Romania applied for a derogation from the EU VAT Directive, aiming to implement a broader B2G and B2B e-invoicing and e-reporting mandate. The EU Council granted derogation in July 2023, allowing Romania to implement mandatory e-invoicing from 2024. The enacting of Law no. 296/2023 provides a new B2G and B2B e-invoicing mandate coupled with e-reporting requirements.

What is RO e-Factura?

RO e-Factura was officially launched in November 2021 as a voluntary clearance program for e-invoices, devised in an effort to streamline Romania’s tax collection. Users of e-Factura issue and submit their electronic invoices in a structured XML format through the system. Invoices are then cleared (following certain schema checks) and a digital seal is applied.

The RO E-Factura platform enables the automatic exchange of electronically issued invoices between entities registered in the system.

Romania B2B e-invoicing and e-reporting

B2B e-invoicing is already in play for transactions that include products deemed a high tax risk, including:

  • Fruit and vegetables
  • Alcoholic beverages
  • Mineral products
  • Construction materials
  • Clothing and footwear

Following the recently published mandate, B2B e-invoicing requirements will extend to all products. From January 2024, established and VAT-registered entities are required to report B2B domestic transaction invoices to the RO E-Factura platform within five days of issuance. From July 2024, invoices issued in transactions between established entities must be issued electronically through the RO E-Factura platform.

If, however, taxpayers fail to issue the invoice electronically through the RO E-factura platform, they are obligated to submit it to the RO e-Factura platform within five calendar days.

Romania B2G e-invoicing

From 1 July 2022, Romanian taxpayers were obliged to issue e-invoices, submitting them through the RO e-Factura system, when conducting business with the public sector. This obligation was namely within the context of certain public procurement contracts.

Romania’s e-invoicing mandate has expanded the scope of B2G invoicing in Romania which will apply to all transactions with public institutions from 2024.

Romania e-Transport system

Romania’s e-Transport system, often referred to as RO e-Transport, is used to monitor products when they are being transported. Coupled with the implementation of the CTC mandate, this is another reform that the nation has devised as part of its plan to combat tax fraud and evasion.

The application procedure of the RO e-Transport system has been approved by the joint Order of the National Agency for Fiscal Administration (ANAF) and the Romanian Customs Authority (AVR) no. 1190/4625/2022, with penalties applicable from October 2022.

The RO e-Transport system requires taxpayers to declare the movement of goods from one location to another, in advance of said movement. Once declared, it issues a number on the transport documents which is to be verified by authorities en route.

Read more about the e-transport system.

Timeline: e-invoicing & e-reporting adoption in Romania

The implementation of e-invoicing in Romania has been done in stages. This is a brief timeline of its adoption:

  • March 2020: E-invoicing system e-Factura is launched as a pilot program.
  • October 2020: Government Emergency Ordinance (GEO) no. 120/2021 introduced the legal framework for the implementation of e-Factura.
  • November 2021: Start of the voluntary phase for issuance of e-invoices for B2G transactions.
  • April 2022: Invoices for B2B transactions of high fiscal risk transactions can be voluntarily submitted in e-Factura.
  • July 2022: It is now mandatory to issue invoices for B2B transactions of high fiscal risk products through the RO e-Factura platform.
  • January 2024: For B2B transactions, established taxable persons and VAT registered entities must report invoices in the e-Factura system within five days of issuance.
  • April 2024: End of three-month grace period for e-invoicing mandate. Penalties will apply to non-compliant taxpayers.
  • July 2024: The system will shift to an invoice clearance system for B2B transactions between established taxpayers.

Benefits of e-invoicing

From a business perspective, e-invoicing offers several benefits when compared to traditional invoicing. Benefits may include:

  • Saving costs by reducing paper, postage and manual labour
  • Saving time by using structured, automated electronic systems and processes
  • Increased compatibility and interoperability across businesses with initiatives like PEPPOL
  • Enhanced security can be achieved with the validation and authentication of systems like e-Factura

How to choose the right e-invoicing software in Romania

Considering the ever-evolving nature of regulations and mandates surrounding newer technologies and platforms like RO e-Factura, it is important that your business identifies and utilises the right software. The cost of using e-invoicing software that does not update with changes to regulations is not desirable for any organisation.

Setting up e-invoicing and e-reporting in Romania with Sovos

Get in touch with a Sovos expert to explore setting up e-invoicing and e-reporting in Romania.

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Future of e-invoicing in Romania

The future of e-invoicing in Romania has already arrived. Following the EU Council’s derogatory decision to allow Romania to implement mandatory e-invoicing, Romania published a more comprehensive B2B mandate with a 2024 roll-out date. The new law requires businesses to issue structured electronic invoices for transactions to both business and public sector entities, and it applies to established and VAT-registered entities.

The looming implementation of VAT in the Digital Age in the EU may deliver more changes in Romania, however. Aiming to digitise the European VAT system, this proposal is generating a lot of uncertainty for businesses that conduct operations in the EU as it includes requirements for digital reporting and e-invoicing – as well as changes to VAT registration

While the future of tax in the European Union may be uncertain, you can rely on Sovos to help you navigate the digital landscape. Bookmark this page to stay up to date with the latest developments.

Additional obligations for VAT compliance in Romania

While it’s important to ensure your business complies with Romania’s e-invoicing requirements should it qualify, there are other obligations that require attention – including general VAT Compliance and the Romanian SAF-T mandate.

The cost of non-compliance may be severe, but our materials and experts can be the helping hand you need to ensure you are meeting your obligations.

FAQ

E-invoicing will be mandatory for all B2B transactions in Romania from 1 July 2024, adding to the existing electronic invoicing requirements for B2G and high fiscal risk B2B transactions.

Between January and June 2024, established entities are required to report their B2B invoices to the RO e-Factura platform within five days of issuance. This reporting obligation applies to VAT-registered entities from January 2024 onwards.

There are numerous requirements for invoices in Romania, including:

  • Date of issuance
  • VAT number of both supplier and customer
  • Full name and address of both supplier and customer
  • Full description of applicable goods or services, including quantities
  • The net supply value
  • The gross invoice value
  • The applicable VAT rate

The Romanian e-Factura is a clearance system which sees e-invoices sent, cleared and received through the central platform.

Should a taxpayer in scope of the e-invoicing and e-reporting mandate not comply with its e-invoicing obligations, they may receive a fine. From April 2024 (at which time the 3-month grace period ends) 2024, large non-compliant taxpayers may be fined between 5,000-10,000 RON, and others may expect a financial penalty between 500-2,500 RON, when failing to meet the e-reporting requirements set forth. From July 2024, non-compliance with the with the issuance and receipt of e-invoices will result in a fine equal to 15% of the total invoice amount.

E-invoice and e-report in Romania with Sovos

Sovos’ continuous transaction controls (CTC) software was purpose-built to help customers stay on top of their obligations, wherever they do business, even as the rules change.

As CTCs and e-invoicing continue to grow in global adoption, it is vital to partner with a provider that closely monitors the decisions of tax administrations and understands the regulations you face. Sovos can help.

One of the largest spirits companies in the world, Brown-Forman turned to Sovos for help with several challenges it was facing surrounding changing e-invoicing regulations. The company needed a solution that would monitor and implement the fiscal requirements of the countries it operated in.

With Sovos e-invoicing compliance in place, Brown-Forman was able to redeploy its resources to core business functions knowing that its e-invoicing requirements were being met – both in the present and the future.

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Romania SAF-T declaration

Since 2022, medium and large taxpayers in Romania have had to report their VAT electronically to the tax authority under the international standard known as SAF-T (Standard Audit File for Tax).

Romania implemented SAF-T to improve the data it receives in VAT returns, requiring more granular detail that is reported in real time. As well as benefiting the Romanian tax authority, the electronic submission of the D406 streamlines tax compliance and reporting for businesses.

The legal framework of SAF-T in Romania

The SAF-T mandate in Romania has been introduced through the amendment of the Fiscal Procedure Code, which foresees the obligation for taxpayers to submit a declaration containing information from the accounting and tax records.

The Fiscal Procedure Code also determines that the submission of the SAF-T file must be done electronically, leaving the remaining conditions to be determined by order of the ANAF.

Accordingly, ANAF has issued Order No. 1783, of 4 November 2021, which introduced the SAF-T reporting requirement from 1 January 2022. The Order provided the SAF-T Form D406, as well as the legal deadlines for submitting the various SAF-T files and the procedure and conditions for submission.

In these terms, the D406 file must be submitted electronically by generating an XML format file, which is submitted to a validation procedure, and preparing the corresponding D406 Form in PDF format.

The various SAF-T files can be submitted monthly, quarterly, annually and on-demand, depending on the VAT regime applicable to the taxpayer as well as on the type of file being submitted.

How to declare tax information with the SAF-T in Romania

Transaction and accounting data must be reported through Declaratiei Informative D406. Taxpayers are required to submit the information electronically in PDF format with an XML attachment and electronic signature.

What information must be declared to the ANAF?

The Romanian SAF-T file, the D406, is comprised of five sections:

  1. General Ledger
  2. Accounts Receivable
  3. Accounts Payable
  4. Fixed Assets
  5. Inventory

The SAF-T D406 file to be submitted on a quarterly/monthly basis does not include information on Fixed Assets or Inventory. That data will be part of separate SAF-T files with different filling frequencies, namely the D406 Assets and the D406 Stocks.

Non-resident and small taxpayers will be required to submit a simplified SAF-T file from 2025 that will only account for the purchases and sales carried out through their Romanian VAT ID.

When to submit a SAF-T declaration in Romania

Submission deadlines for SAF-T in Romania can be monthly/quarterly, annual or on demand by the tax authorities.

Monthly or quarterly: The D406 file, except for the ‘Assets’ and ‘Stocks’ sections, shall be submitted monthly or quarterly by resident taxpayers, depending on the applicable VAT regime. The deadline for submission is the last calendar day of the month following the end of the reporting period.

Annual: The ‘Assets’ section can be submitted autonomously and must be filled annually by resident taxpayers within the deadline for submitting the annual financial statements.

On request: The ‘Stocks’ section shall be submitted only if requested by the tax authorities within the deadline established by that request, which cannot be shorter than 30 days.

Timeline of SAF-T in Romania

Romania’s implementation of SAF-T began on 1 January 2022 but only for a specific category of taxpayers. The following dates are when the SAF-T obligation applies to different types of taxpayers:

  • September 2021: Voluntary test period began
  • 1 January 2022: Large taxpayers included in the tax authority’s list from 2021 must file SAF-T
  • 1 July 2022: Large taxpayers who were not in this category on 1 January 2022 must file SAF-T
  • 1 January 2023: Medium-sized taxpayers, financial institutions and insurance firms categorised as large taxpayers must file SAF-T
  • 1 January 2025: Small taxpayers and non-resident taxpayers registered for VAT in Romania must file SAF-T

Understanding SAF-T D406 in Romania

The SAF-T D406 statement is required to be submitted each month or quarter to the Romanian tax authority (ANAF). The submission frequency is dependent on the company’s VAT regime, and it can either be monthly or quarterly.

There is also an annual SAF-T report under D406 – based on the taxpayer’s financial year – which includes asset information from the previous year, as well as a D406 Stock information report which is to be created based on the ANAF’s request.

The SAF-T file must be submitted electronically, through the tax authorities’ public service “Servicii online – Depunere declarații”​.

Implementing SAF-T as a business

Compliance is important for businesses if they are to avoid fines and other penalties from Romania’s tax authorities. To comply with SAF-T, taxpayers must meet reporting deadlines with relevant and complete information – the use of purpose-built solutions can help with this.

Sovos SAF-T solutions can help your organization save time and effort when ensuring compliance with the mandate. Automating the process of preparing files helps not only with efficiency but also accuracy and compliance, providing peace of mind and freeing up valuable time.

For taxpayers established outside of the EU, complying with Romania’s VAT rules requires the appointment of a fiscal representative should they sell in the country. Sovos can help here too – contact us for more information.

Other requirements for VAT compliance in Romania

Tax compliance in Romania goes beyond the SAF-T obligation, especially with Romania’s big push into e-invoicing.

The country introduced an e-invoicing requirement for B2B transactions of high-fiscal risk products in December 2021 and followed that up with an obligation for B2G transactions in May 2022. Both were implemented in July 2022.

Romania is aiming to make e-invoicing mandatory for B2B transactions of all types. Following the EU Council’s derogatory decision, allowing Romania to implement mandatory e-invoicing, Romania published a new B2B mandate with a 2024 oll-out date. The new law also introduces a new reporting system that will operate within the first six months of the introduction of the RO e-Factura e-invoicing system in July 2024. Read more in this overview about e-invoicing in Romania or take a look at this overview about VAT compliance in Romania.

Get in touch with our experts if you need help.

FAQ

SAF-T became mandatory for large resident taxpayers in Romania in January 2022, and for medium-sized resident taxpayers in January 2023. Small and non-resident taxpayers will be obligated under the SAF-T mandate in January 2025.

While SAF-T has a similar reporting format across countries, each country as its own mandatory fields. In Romania, three different declarations are submitted by taxpayers: the general D406 file, the D406 Assets and the D406 Stocks.

SAF-T in Romania currently applies to medium-sized and large resident taxpayers. Small and non-resident taxpayers will need to comply with SAF-T from 2025.

Taxpayers who fail to comply with SAF-T in Romania by not submitting the D406 report may be fined by the tax authority. There is a three-month grace period for non-submission in which no fines will be issued, but after the period a fine of 1,000-5,000 RON may be imposed. For an incorrect or incomplete submission, taxpayers may receive a fine of 500-1,500 RON.

The submission deadline for SAF-T in Romania ends on the last day of the month following the reporting period, which is either a month or a quarter for information outside of stocks and assets.The D406 Assets declaration is to be submitted within the deadline for the yearly submission of the taxpayer’s financial statements.

The D406 Stocks declaration is to be submitted on demand, within the deadline prescribed by the Tax Authorities (a minimum 30-day deadline).

Our Solution capabilities for Romania SAF-T

Data Extraction

Painlessly aggregate and consolidate data from a wide range of source systems across General Ledgers, Accounts Receivable, Accounts Payable (for monthly or quarterly submissions), Fixed Assets (for annual submissions) and Inventory (submitted on demand) complying with Romania’s standard tax control file, D406.

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Data Analytics

Check the accuracy, integrity and quality of complex data structures required by Romania SAF-T to give you peace of mind before you submit your D406 file to be audited by the ANAF.

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File Generation

Ensure that all required data sets from accounting entries, sales and purchase transactions, asset depreciation, stock movements and more, are mapped seamlessly into Romania’s D406 schema, ready to be analyzed and submitted punctually to the ANAF.

More about file generation

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Spain e-invoicing: What you need to know

Spain e-invoicing

Spain is one of many European countries to adopt e-invoicing for taxpayers. With several standards to comply with and additional regional VAT compliance, understanding Spain’s e-invoicing requirements can be complex.

Our regulatory experts break down what you need to know, from specific B2B and B2G standards to required formats. Bookmark this page to stay up to date with the latest e-invoicing requirements in Spain.

Get the information you need

Contents

Who must use e-invoicing in Spain?

Electronic invoicing in Spain has been mandatory for all transactions between public administrations and their suppliers since 2015.

Businesses are under varying e-invoicing obligations depending on the nature of their transactions. Electronic invoices will soon be mandated for business-to-business (B2B) transactions, whereas business-to-government (B2G) transactions may already qualify for e-invoicing. More information on the specifics of a company’s compliance obligations can be found below.

How does e-invoicing in Spain work?

From an e-invoicing perspective, Spain is a post-audit country. There is not an e-invoice clearance requirement, but Spain has been an early adopter of the CTC method in the EU with the introduction of mandatory near real-time invoice data reporting.

Currently, Spain’s tax authority is transitioning to adopt a mandatory B2B e-invoicing requirement that will significantly affect the country’s e-invoicing process.

Spain B2B E-invoicing

Spain originally planned to launch its B2B e-invoicing mandate in July 2024 but postponed it. As the Spanish government commits to giving a year’s notice before implementing a passed law, businesses can currently expect a 2025 launch for the mandate.

The country is expected to implement B2B e-invoicing in a phased approach, with it initially affecting large taxpayers and all other taxpayers joining them a year later.

Read more on Spain B2B e-invoicing.

Spain B2G e-invoicing

Since 2015, e-invoicing has been mandatory in Spain in the public sector. Law 25/2013 mandates that all invoices sent to public sector entities must be sent electronically and signed with an eSignature. All public entities receive invoices through one common point of entry, namely FACe.

An exception to the rule allows paper invoices to be sent to public administrations if the transaction amount is under 5,000 euros.

Timeline for e-invoicing requirements in Spain

The mandatory B2B electronic invoicing requirement will be effective according to the annual turnover of the taxpayer:

  • Entrepreneurs and professionals whose annual turnover exceeds €8 million will have one year after the regulatory framework is approved
  • For the rest of the entrepreneurs and professionals, the electronic invoicing obligation will take effect two years after the regulatory framework is approved

This timeline will be updated when official implementation dates are announced.

What is the required format for an e-invoice in Spain?

Spain’s approved e-invoicing format for B2G transactions is FacturaE and it follows the XAdES standard and uses XML signatures. The central platform to send e-invoices to public administrations is FACe, though business transactions are to be processed through web service FACeB2B.

E-invoices in Spain must comply with EN 16931 and are required to include set information, including:

  • QR code
  • VAT number
  • Date and time
  • Invoice number
  • Total invoice amount including taxes
  • Unique identification number (Número de Identificación Fiscal or NIF)

The e-invoice issuer must archive the electronic document for a minimum of six years.

Standards and communications for e-invoicing in Spain

There are several e-invoicing standards in play in Spain, governing how the process is carried out by taxpayers.

The format of e-invoices for B2G transactions must meet set standards, for example. Namely, electronic invoices must follow the FacturaE format – an XML-based national standard that is used in tandem with a secure eSignature which follows the XAdES standard.

Once e-invoicing for B2B transactions comes into effect, the format of e-invoices must comply with the EN 16931 standard. The following will be accepted:

  • EDIFACT invoice messages compliant with ISO 0735
  • UBL Invoice and Credit note messages in accordance with ISO/IEC 19845:2015

In terms of communication for e-invoicing in Spain, FACe is the singular hub for submitting electronic invoices in B2G supplies.

How Sovos can help

By now, you will be fully aware that tax compliance in Spain isn’t simple for many businesses. You don’t have to do things alone, though – Sovos can help, combining local tax expertise with complete compliance solutions.

Speak with a member of our team today to free yourself up and focus on what truly matters: your business.

Would you like to learn more about e-invoicing compliance in general? Our dedicated guide for e-invoicing can help you.

When it was announced recently that the introduction of a new French e-invoicing mandate had been delayed until September 2026 there was a collective sigh of relief amongst many in the tax and finance world. More time to adequately prepare, put systems and methodologies in place and have your business ready to be compliant from the get-go.

Sounds optimal, but let’s focus on reality. First, the reported delay is a bit deceiving. While it may not officially take effect until 2026, you only have a matter of months to get prepared to participate in the extended trial. Human nature may be to push it to the side and focus on more short-term deadlines. However, to not take advantage of the extra time provided would be shortsighted at best.

Here are five ways you can make this extra time work for you: 

  1. Take time to fully understand the mandate and how it impacts your organization. Be prepared to answer questions such as, where will e-invoicing and e-reporting data come from? Do we need to involve IT. Use this time to eliminate surprises.
  2. Study and consider what other aspects of the business may be impacted by this mandate. Understand what other business data is required for a smooth integration and approvals. Consider confidentiality and data privacy.
  3. Begin to align internal processes, workflows and systems in preparation for impending changes. This is your opportunity to test different approaches and workstreams to ensure a high-level of efficiency. How will you manage the process and who in your organization will have operational responsibility when extended trials go live?
  4. The first list of officially registered service providers will go live in spring, 2024. Use this time to do your research on which service providers make sense for your organization, both during the trial period and as a potential long-term partner.
  5. Evaluate your current compliance management strategy. As you begin working with a registered service provider through the trial period, consider how this differs from your approach to other government mandates. What can you learn from this experience and what other areas might you be able to improve upon?

 

More on the France B2B E-Invoicing Mandate

Note: portions of this section originally appeared in the Sovos blog, France: B2B E-Invoicing Mandate Postponed, updated 19 September 23.

Businesses will soon be able to register proactively for the pilot program, which has been designed to allow businesses to test the PDP platform. This program is intended to build knowledge and confidence and ensure businesses are on the path to readiness.

Therefore, it would be prudent to regard the delay as a mere six-month postponement, with the beginning of the pilot program acting as the de facto starting date. To understand the full impact on their business processes and data flows, companies will need to thoroughly test up to 36 use-cases.

The good news is that the many software vendors helping companies to streamline their purchase-to-pay and order-to-cash processes will be eager to test the compliance of their solutions as early as possible in what has become a completely new ecosystem.

We are proud to say that Sovos is one of the first 20 candidates for service provider (PDP) accreditation in France and as such, will be fully prepared to assist your organization through the trial process and beyond.

Take action:

Looking for more information about how to comply with the French Mandate?

Download our French Mandate eBook or Contact our expert team.

E-documents or electronic documents are rapidly growing in usage across businesses of all shapes and sizes, in countries around the world.

While the automated exchange of e-documents is a relatively new phenomenon which is being adopted on a country-by-country basis, there is basic universal information that your business would benefit from understanding – and potentially utilizing.

This blog will serve as your one-stop shop for required e-document knowledge.

What is an e-document?

An e-document is an electronic transactional document or message and is typically used in an automated business process.

As the digitisation of business accelerates, so too does the use of electronic documents – whether that be an electronic invoice sent in real-time to a national tax authority or an electronic goods receipt note exchanged between companies.

The difference between electronic documents and other digital documents such as PDFs is that e-documents are machine-readable and are generally exchanged by online platforms or software.

That said, there are numerous types of e-documents and there is little standardisation as each country has its own stance and potential mandate on their adoption. The European Union has long been working on its approach to e-documents for increased interoperability with definitions and rules as part of its efforts under the eGovernment Action plan and eIDAS regulation to facilitate digital transactions and services in the EU.

In addition, the UK recently adopted the UK’s Electronic Document Trade Act which is a huge step towards the digitization of trade documents and potentially paperless global trade.

Types of e-documents

There is a wide variety of electronic documents to suit a number of applications across business, helping to streamline workflows and operations, facilitate cross-border trade and save on costs.

E-document mandates in Turkey, for example, include:

Other electronic documents that are used in some countries include:

There has been a notable implementation of e-documents in transport in recent years, with the likes of Romania adopting a system that requires taxpayers to use an electronic waybill system to obtain clearance of the transport document before the transport of goods begins. Read our dedicated blog to find out more about the global rise of e-transport documents.

One particular e-document that has had an exponential rise in utility over the past few years is the e-invoice. Electronic invoices have grown in popularity as countries develop their continuous transaction controls (CTC) and e-invoicing regulatory obligations. The likes of France, Spain and Poland all plan to introduce e-invoice mandates, requiring taxpayers to send invoices electronically.

Read our comprehensive e-invoicing guide for more information.

Why use electronic documents?

There is a host of reasons that electronic documents can be beneficial, which explains why tax administrations globally are implementing e-document mandates.

A primary reason for the use of e-documents is that they generally allow for the automation of workflows, increasing safety, accuracy, transparency and cost-saving for the involved parties. Automating the process of generating and exchanging documentation reduces the risk of error, allows for seamless transmission of information (including to tax authorities who seek greater transparency) and reduces the reliance on paper (providing an environmental benefit).

Another reason businesses use electronic documents is simply because they are mandated to do so as part of tax digitization controls. An increasing amount of tax authorities are making it an obligation to send documents electronically, and facing a penalty due to non-compliance is not desirable. As CTC regime adoption grows, so too does the need for businesses to meet their new e-document obligations.

Compliance conditions of e-documents

The compliance conditions of e-documents vary depending on the national rules, but there are some typical conditions across regimes.

In the context of tax digitization controls, the conditions that apply to some of the most regulated e-document types, such as the e-invoice, include:

What’s the difference between a digital document and an electronic document?

The difference between electronic documents and digital documents is a hot topic. It’s easy to get confused between the two considering that “digital” and “electronic” are used interchangeably by many, but it’s important to understand the difference.

Digital documents are often a digital analogue of a physical document – think a scanned document, photograph, or PDF – and oftentimes are simple for people to read and digest. An example of a digital document would be an invoice sent as a PDF via email.

Electronic documents are files of data that are generated by and for computers, making them hard for people to read due to their formatting. Such data – like that seen in a structured e-invoice (e.g. XML) – is meant to be sent from one system to another without interference from humans.

How Sovos can help

Sovos’ software allows businesses to manage CTC obligations, including e-invoicing compliance and archiving.

As the world continues its digitisation, it’s important to stay on top of evolving regulations and to keep up with best practices for your business. Working with Sovos, your business can:

Find out more about Sovos’ CTC solutions.

With the rate of change in tax digitization not set to slow down any time soon, it’s more important than ever to keep up with what’s happening where you do business.

This quarter, our VAT Snapshot webinar looks in detail at CTC and e-invoicing implementation timelines across six different countries.

Join Dilara İnal and Carolina Silva from our Regulatory Analysis and Design team for an examination of scope, key timelines and essential milestones for compliance across these jurisdictions.

The webinar will cover:

As always, please bring your questions for our experts in the Q&A at the end.

Stay up to date with the evolving landscape of tax mandates by registering today.

Register now.

Extension of the implementation dates of the B2B e-invoicing Mandate.

Update: 2 January 2024 

The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. With the finalization of the law, the new implementation dates are as follows: 

Receipt of e-invoices: Starting from 1 September 2026, ALL taxpayers, regardless of their size, will be required to be capable of receiving e-invoices. This date may be extended to December 1, 2026, at the latest, but only by decree. 

Issuing e-invoices: 

International B2B, B2C transaction and payment data transmission: 

The e-reporting obligation for international B2B (sales and purchases) and B2C transactions and Payment data follows the same timetable as that for issuing electronic invoices (September 1, 2026 or September 1, 2027 depending on the size of the company). 

The implementing decree that will formally ratify this new schedule is expected during the first quarter of 2024. 

Looking for more information about how to comply with the French Mandate? Contact our expert team.

 

Update: 19 October 2023

The long-awaited new implementation timeline regarding the e-invoicing and e-reporting within the draft Finance Law for 2024 has been unveiled on 17 October 2023. 

According to the draft amending General Tax Code and Law No. 2022-1157, the new dates are as follows: 

Implementation phases: The roll out of the mandate will now occur in two phases, as opposed to the previously planned three phases. 

Issuing e-invoices: 

Receipt of e-invoices: Starting from 1 September 2026, all taxpayers will be required to be capable of receiving e-invoices. 

E-reporting obligations: The enforcement of e-reporting obligations will follow the same revised dates. 

It is important to note that the above-mentioned dates, September 2026 and September 2027, may be subject to readjustment with the possibility of rescheduling to the 1st of December as the latest date, in the respective years. 

After the adoption of Finance Law for 2024, a Decree complementing the law is expected to be issued in the first quarter of the upcoming year for full enforcement of aforementioned obligations. 

Companies need to take advantage of the additional time through active participation in the pilot phase during which all relevant use cases should be tested so that changes to applications, processes and systems can be taken care of and fine-tuned in good time to ensure compliance.  

Looking for more information about how to comply with the French Mandate? Contact our expert team.

 

Update: 15 September 2023

In a recent meeting of the Communauté des Relais, the tax authority released additional details surrounding the previously communicated postponement of the B2B e-invoicing mandate in France.

This delay is a result of the tax authority listening to feedback from French businesses who have struggled to meet the original timeline. It’s further evidence, as previously iterated by the ICC of just how much time and effort is required for most businesses to compare for the complexities of a new mandate.

While the formal dates are still to be defined, the revised main timeline was presented as part of a roll-out in 3 stages:

2024: The authorities will publish the first list of officially registered service providers (PDPs – Plateformes de Dématérialisation Partenaires) by the spring of 2024. During the course of 2024, the development of the public portal (PPF – Portail Public de Facturation) will be completed.

2025: During this year, a large-scale pilot project, involving companies of all sizes will be conducted. The tax authority views this pilot as an opportunity for taxpayers to fine-tune their e-invoicing and e-reporting processes and systems to comply with what has grown to be, a complex and sophisticated CTC framework.

2026: The roll-out of the obligation for the entire economy will largely take place during 2026. However, at what pace remains to be seen once the Finance Law is adopted by Parliament at the end of 2023.

Businesses impacted by the French mandate, headquartered in France and elsewhere, will now be in a better position to successfully comply with the new reform, assuming they make use of the added time provided by the French authorities. In particular, by proactively using the pilot program to build confidence and knowledge on the critical path to readiness. For the largest taxpayers facing these obligations, it would be prudent to regard these changes as a mere 6-month postponement, with the beginning of the pilot program acting as the de facto starting date. To understand the full impact on their business processes and data flows, companies will need to thoroughly test up to 36 use-cases. The many software vendors helping companies to streamline their purchase-to-pay and order-to-cash processes will certainly be eager to test the compliance of their solutions as early as possible in what has become a completely new ecosystem.

Participation in the extended pilot, with professional support from Sovos, provides a risk-free environment to assess and then conduct the essential finetuning.

Sovos is one of the first 20 candidates for service provider (PDP) accreditation in France, and as such will be ready to sustain our customers as they take the numerous steps needed to fully comply with the new CTC framework, drawing on its rich experience of keeping customers compliant with complicated e-invoicing obligations around the world.

Looking for more information about how to comply with the French Mandate? Contact our expert team.

 

10 August 2023

The French Directorate General of Public Finances (DGFiP) officially postponed the implementation of the country’s electronic invoicing mandate on 28 July. The postponement is in order to provide necessary time for taxpayers to comply with the mandate.

The latest official word states that the revised timeline for the mandate will be provided within the framework of the Finance Law for 2024. We expect this law to be adopted in late 2023.

In addition, on 31 July the DGFiP published updated ‘External specifications file for electronic invoicing’(version 2.3). Despite deferral of the initial go-live, these updates demonstrate the authorities’ commitment to developing the mandate and set the expectation that preparations by taxpayers, vendors, PDP candidates and professional organizations must continue.

The French Mandate is one of the most complex tax digitization initiatives seen in EMEA to date. It’s essential that companies continue their preparations. Compliance with this mandate requires readying applications, processes and systems to a complex set of requirements. According to the ICC, businesses need at least 12-18 months to prepare for the shift to e-invoicing and e-reporting.

Please note that this information is subject to any further updates or changes from the French authorities and no further details are available at present. We will communicate any additional information once it is made available.

Sovos is experienced in helping our customers navigate digitization regulations around the world, including the French Mandate.

Looking for more information about how to comply with the French Mandate? Contact our expert team.

The Portuguese government has been working on introducing mandatory B2G (Business-to-Government) electronic invoicing in recent years, alongside other obligations for the digitization of VAT compliance in the country.

This aligns with the European Union’s efforts towards harmonising the adoption of e-invoicing in public procurement. To achieve this goal, the EU has implemented Directive 2014/55/EU to outline the responsibilities and criteria for e-invoicing in public procurement processes. The EU requires Member States to enforce an obligation for the Public Administration to receive invoices electronically.

However, several Member States, such as Portugal, have taken a step forward by making the issuance of electronic invoices mandatory for suppliers of the Public Administration. The Portuguese mandate, known as “Electronic Invoicing to the Public Administration” (Fatura Eletrónica à Administração Pública – FEAP), was introduced to streamline invoicing processes and improve efficiency in transactions between businesses and the public sector.

What is B2G e-invoicing in Portugal?

In Portugal, Law Decree 111-B/2017 and subsequent amendments established the beginning of the obligation to issue, receive and process electronic invoices in public procurement. ESPAP (Entidade de Serviços Partilhados da Administração Pública) is the Portuguese entity responsible for the implementation and management of B2G e-invoicing.

This obligation is also present in the Public Contracts Code and requires suppliers of the Public Administration to issue all invoices to public sector entities in electronic format. This excluded contracts declared secret or accompanied by special security measures and contracts concluded following the simplified direct award process (contracts below EUR 5,000).

The implementation of this regime was gradual, starting with the mandatory receipt of electronic invoices by the Public Administration in April 2019. This was followed by a phased introduction of compulsory issuance of e-invoices for suppliers of the Public Administration, starting with large companies in January 2021. The implementation calendar has been postponed several times for small, medium and microenterprises. Currently, only large companies are required to issue invoices electronically.

What is a B2G e-invoice?

An e-invoice, according to the EU Directive on e-invoicing in public procurement, is an invoice issued, transmitted and received in a structured electronic format.

Electronic invoicing requires data creation in a structured format and its transmission from the seller’s system to the buyer’s system in an automated manner. As a result, the invoice can be automatically imported into the public entity’s system.

As per Portuguese regulations, the e-invoicing model to be adopted is the semantic data model proposed for the Portuguese standard known as CIUS-PT. There is no obligation to send a PDF document attached to the electronic invoice. An invoice in PDF format is not considered an electronic invoice as they do not comply with European standards.

Suppliers must also archive electronic invoices and ensure they are accessible for the period required by the tax authority, which is typically 10 years.

What are the consequences of non-compliance?

Considering the general obligation to issue e-invoices in the B2G sector, it is possible to identify four main legal consequences for non-compliance with this legal obligation:

  1. Judicial fulfilment of the obligation: an invoice that does not comply with B2G e-invoicing rules is in breach of a legal obligation and the issuer may be required to fulfil this obligation by judicial means.
  2. Non-payment of the invoice: the public contractor must refuse to pay a non-compliant invoice since this constitutes a violation of rules applicable to the payment of public expenditure.
  3. Inability to demand payment: the supplier will not be able to demand the fulfilment of the contract by the debtor since the established legal form has not been observed.
  4. Non-performance of the contract: if the contract also includes the legal obligation to issue and receive e-invoices in CIUS-PT, non-compliance may lead to an additional breach of contract and the application of contractual sanctions. Ultimately, it may also result in contract cancellation and impede participation in future public procurement processes.

When do companies need to comply with B2G e-invoicing in Portugal?

Currently, all public administration entities are obligated to receive e-invoices in the structured CIUS-PT format. Additionally, all large company suppliers to the public administration must issue e-invoices in the same format.

Although B2G e-invoicing became mandatory on 1 January 2023, Law Decree no. 54/2023 published in July 2023 postponed the obligation for micro, small and medium-sized enterprises once again – granting taxpayers a new deadline for compliance.

The postponement was first announced during the press conference of the Council of Ministers, without a new deadline for the entry into force of the obligation. However, with the decree’s publication, the new deadline of 31 December 2023 has been established.

Until then, micro, small and medium-sized companies can use invoicing mechanisms other than e-invoicing in the structured CIUS-PT schema when contracting with the Public Administration.

Need more information on B2G e-invoicing in Portugal? Speak with our expert team.

Sovos is one of a short list of applicants to register as a Partner Dematerialization Platform (PDP). The company, with its 20 years of international business process and data expertise in international tax compliance, will benefit from an SAP extension, one of the few available on the market. 

London, 27, June 2023 – International tax compliance software provider Sovos announces its application for registration as a dematerialization platform partner (PDP).

France is introducing a major e-invoicing and e-reporting reform which will be rolled out in a phased approach initially to the largest companies from 1 July 2024 and run beyond 2026.  Since the beginning of May this year various software publishers and ERPs have been able to submit their applications to the French government to become an approved PDP.

PDPs are playing a key role in this VAT reform. As trusted third parties, these portals will act as the interface between companies and the French government and will be directly involved in issuing and receiving invoices. The aim is for companies to choose the methods and formats for exchanging their electronic invoices (incoming/outgoing) with the obligation to communicate invoicing, transaction and payment data to the authorities.

International e-invoicing experience 

Sovos has 20 years of business process and data expertise and a global reach with modern cloud architecture that currently processes over 6 billion compliant transactions a year.

The company has extensive experience as a delegate of tax authorities around the world, with several certifications already obtained in various countries in Latin America, as well as in Turkey, where electronic invoicing is now well established. In addition, Sovos is set to be one of the only platforms to feature an extension for SAP, which is designed to provide dematerialization operator (DO) capabilities.

“We’ve seen high demand for a demo of our solution and initial demonstrations to many of the companies that rely on Sovos have been extremely positive and have provided valuable feedback. Our solution not only integrates the legal and technical requirements for France, but also leverages all the best practices from our decades of experience, and the compliance suite we’ve built, supporting complex obligations for tens of thousands of companies in other jurisdictions” says Cyril Broutin, Product Manager at Sovos.

Providing agility and anticipating future regulatory changes 

E-invoicing regulations are regularly modified and updated and are therefore constantly evolving. In Italy, for example, the e-invoicing mandate has been revised more than 40 times. In France, the tax authorities have already published four versions of the specifications for the next reform, which are likely to be further amended or supplemented. Added to this is the European “VAT in the Digital Age” (ViDA) initiative and the many changes it will bring. Sovos intends to assert itself as a PDP capable of supporting companies over the long term, taking into account the regulatory changes which will occur after the application of the reform, at both national and European level. Indeed, the e-invoicing reform is part of a more global drive to digitalize taxation.

“Sovos believes that companies want to remain agile and not be held back by the changing compliance requirements they face in France and around the world. That’s why we’ve adopted a deliberate strategy of loosely coupling tax compliance obligations with the process automation requirements sought by businesses. Our aim is to enable companies to focus on their core business by removing the friction of complex tax digitization mandates. ” explains Cyril Broutin.

About Sovos
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting, and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe and is owned by Hg and TA Associates. For more information visit sovos.com and follow us on LinkedIn and Twitter.

The Spanish government has published the much-anticipated draft regulation with the framework for implementing mandatory B2B e-invoicing.

The proposed legislation outlines the operation of the Spanish e-invoicing system. Its main feature is the reliance on the principles of interoperability of e-invoice formats and interconnectivity of e-invoicing platforms. The goal is to promote digitalization (particularly for smaller companies), reduce late invoice payments and save on administrative costs such as the management of invoices.

The draft Royal Decree provides further details to the Law for Creation and Growth of companies published in September 2022, which initially establishes the e-invoicing obligation for companies and professionals.

Scope of the Spanish B2B e-invoicing mandate

All companies and professionals required to issue invoices under Spanish law will be obliged to do so electronically. This applies to B2B operations with a few excluded transactions, such as: when issuing a simplified invoice, issuing an invoice voluntarily when there is no such obligation to do so under Spanish rules and in other cases that the government may regulate in the future.

However, the obligation does not apply if one of the parties to the transaction does not have an established business, a fixed establishment or habitual business residence in Spanish territory where invoices are directly issued.

Main requirements of the Spanish e-invoicing system

The Spanish e-invoicing system will consist of privately owned electronic invoicing platforms and the public electronic invoicing solution managed by the State Tax Administration Agency. Taxpayers under scope must send and receive e-invoices through one of these two means and will be able to use both in parallel.

Other important characteristics and requirements of this system are:

Accepted e-invoice formats

The proposed Royal Decree defines an e-invoice as a structured document, which means that a PDF will no longer be considered an electronic invoice. Taxpayers will be required to issue e-invoices using one of the accepted formats:

  1. XML CEFACT/ONU as specified in the XML schemas 16B (SCRDM – CII)
  2. UBL as defined in the ISO/IEC 19845:2015 standard
  3. EDIFACT per the ISO 9735 standard
  4. Facturae, in the version for invoicing between entrepreneurs and professionals in force at any given time

Additionally, in line with the principle of interoperability, private e-invoicing platforms must be able to convert e-invoices into all supported formats while preserving I&A.

Communication of e-invoice status

The invoice recipient must communicate the e-invoice status to the invoice issuer within the maximum deadline of four calendar days counted from the date of the reported status.

Mandatory statuses comprise the following:

  1. a) Commercial Acceptance or Rejection of the invoice and its date
  2. b) Full effective payment of the invoice and its date

Additionally, the draft regulation establishes optional statuses:

  1. c) Partial commercial acceptance or rejection of the invoice and its date
  2. d) Partial payment of the invoice, amount paid, and its date
  3. e) Assignment of the invoice to a third party for collection or payment, with identification of the assignee and the date of assignment

Implementation timelines

The Royal Decree is currently in draft form but will be effective 12 months after its official publication on the Spanish Official Gazette (BOE). Following the Law for Creation and Growth of companies, the 12-month-timeline will apply to entrepreneurs and professionals whose annual turnover is over €8 million, and for the remaining taxpayers under scope the deadline is 24 months.

In the first year from the regulation’s effective date, companies under the e-invoicing obligation must attach a PDF file to the legal e-invoice to ensure readability to counterparties not yet in scope – unless the recipient agrees to receive it in the original format.

The obligation to report the e-invoice statuses will come into effect 36 months after the publication of the Royal Decree for entrepreneurs with an annual turnover below €6 million and 48 months after the publication of the Royal Decree for professionals below the same threshold.

Further details are expected concerning how taxpayers under the SII (Suministro Imediato de Información) mandate must inform the mandatory e-invoice statuses.

What’s next?

As this is still a draft and certain details remain to be established, taxpayers can expect changes before publication of the final version. Additionally, until 10 July 2023, the draft regulation is open for comments from the general public.

Another important note is that the entry into force of this draft Royal Decree is subject to Spain obtaining derogation from Articles 218 and 232 of the EU VAT Directive before the EU Commission. Although this is a formal step and there is no indication that the Commission would not grant the derogation, until it happens the new Spanish rules cannot enter into force.

Looking for further information on e-invoicing in Spain? Contact our expert team.

For an overview about other VAT-related requirements in Spain read this comprehensive page about VAT compliance in Spain.

In July 2023, the French authorities postponed the implementation timeline. A new timeline will be announced with the adoption of the finance law for 2024.

When your organisation trades cross-border, regular changes to the regulatory landscape are a given. Whether those changes are brand-new requirements in a country where you do business or the evolution of existing legislation, you must be ahead of the developments to remain compliant.

With global tax authorities continually making progress with their digitization strategies, the e-invoicing revolution continues at speed.

In this quarter’s instalment of our VAT Snapshot webinar, Kelly Muniz and Enis Gencer from Sovos’ Regulatory Analysis and Design team, will look in detail at anticipated changes in countries with emerging digital strategies and discuss updates to some of the more established regimes.

They will cover:

Join our 30-minute update on 13 July for the latest news, and for an opportunity to put your questions to our speakers.

Register today

What is TicketBAI?

TicketBAI is a joint project of the Provincial Treasuries and the Government of the Basque Country with the objective of implementing a series of legal and technical obligations for the taxpayers’ invoicing software.

These obligations allow the tax authorities to control their economic activities, especially those in the sector of sales of goods and provisions of services. TicketBAI is a joint project, but each region has its particularities in the implementation and sending of files.

TicketBAI is an invoicing software that follows specific standards to guarantee the integrity, conservation, traceability and inviolability of records that document the supply of goods and services. This compliant invoicing system is also called “guarantor software”.

 

Who is affected by TicketBAI?

The TicketBAI mandate applies to all taxpayers, whether a person or a business, that operate economically in a way which falls under the Basque Regional Treasuries regulations. However, the details of the mandate and implementation dates are unique across Bizkaia, Álava and Gipuzkoa.

 

What is TicketBAI in Bizkaia?

TicketBAI invoicing is one of the three elements in Bizkaia’s Batuz tax control strategy, devised with the aim of reducing tax tampering in the region.

Taxpayers subject to Batuz will be obliged to issue invoices using TicketBAI-compliant software, which must meet technical specifications and functional characteristics established by law.

Bizkaia’s TicketBAI system has particularities compared with TicketBAI in other regions of the Basque country, so understanding specific requirements in each province is crucial to ensure compliance for affected taxpayers.

 

What are TicketBAi invoice requirements in Bizkaia?

TicketBAI-compliant software must be able to generate the following documents:

The TicketBAI XML file that records sales operations carried out using TicketBAI software. Taxpayers must generate the TicketBAI XML file just before or as they issue the invoice.

The invoice or supporting document which can be issued in either paper or electronically as per invoice requirements already established by Bizkaia regulations.

In Bizkaia, unlike in the other Basque regions, taxpayers do not need to send the TicketBAI XML file to the tax authority. Taxpayers will send the relevant file information via the subchapter of invoices issued with guarantor software in the Ledger of Economic Operations (LROE).

 

How does TicketBAI affect e-invoices?

In Bizkaia, for electronic invoices for relevant transactions to be valid under TicketBAI obligations, they have to be issued by the TicketBAI invoicing software and must contain specific information. The invoices can be issued either paper or electronically in any format as per invoice requirements already established by Bizkaia regulations.

TicketBAI-compliant invoices must also include:

Which operations are subject to TicketBAI issuance rules?

TicketBAI software is required for B2G, B2B and B2C transactions. This applies to all operations considered as a supply of goods or provision of services, under Bizkaia VAT law. Any transaction not considered as such is exempt from TicketBAI requirements.

 

How to comply with TicketBAI invoicing in Bizkaia?

The Bizkaia government has already made the voluntary adoption of Batuz possible. Starting 1 January 2024, taxpayers will be obliged to comply.

Currently, a draft law is being discussed to postpone Batuz obligations, including TicketBAI, for:

As it is still a draft, it needs to be officially published to become effective. The draft, however, does not propose changing the go-live for large companies, which are still expected to comply starting 1 January 2024. For all other groups, a phased implementation is proposed to start on 1 July 2024 and be completed on 1 January 2026.

Taxpayers under the Batuz mandate must develop or acquire TicketBAI-compliant software. They can consult the guarantor software registry, which provides the official list of registered guarantor software.

 

How to comply with TicketBAI invoicing in Álava

TicketBAI’s implementation in Álava came in phases over 2022, starting with a voluntary period that commenced on 1 January. The mandate came into effect for all on 1 December 2022.

As a result, taxpayers in the province of Álava have to comply with TicketBAI invoicing. It is important to note that TicketBAI compliance does not exempt taxpayers who are also obliged to comply with SII.

To comply with TicketBAI, businesses must have software which generates XML files for each transaction it makes.

 

How to comply with TicketBAI invoicing in Gipuzkoa

Gipuzkoa’s implementation of its TicketBAI obligation began on 1 January 2021, starting with a voluntary period for taxpayers. The phased roll out of the mandate was made by sectors of activity and ended on 1 June 2023.

In Gipuzkoa, TicketBAI does not exempt taxpayers from their SII obligations.

As with other Bizkaia provinces, relevant taxpayers in Gipuzkoa must use software which generates XML files for transactions.

 

How Sovos can help with VAT compliance in Spain

Complying with TicketBAI is just one aspect of total VAT compliance in Spain. As previously mentioned in this blog, taxpayers are not exempt from the SII mandate when complying with TicketBAI so it is important to know the rules at play there.

It is also worth noting that TicketBAI is separate from the Spain e-invoicing mandates that are in place across B2G and B2B transactions.

If you need help with VAT compliance in Spain, don’t hesitate and speak to our experts.