E-invoicing isn’t new. It has existed for over three decades. Globally, e-invoicing adoption is growing with new mandates appearing each year and many tax authorities continuing to announce intentions to introduce measures.
This guide is all you need to understand e-invoicing for good.
It will help you to:
Make informed decisions for your business
Cut through the buzzwords and jargon
Continue to grow your business with clarity and confidence
Every country has its own approach to e-invoicing, making the current rules and state of play hard to follow. Add in the software requirements needed to comply with each mandate and things can quickly get complicated.
This e-invoicing guide is a vital part of your tax compliance toolkit.
From e-invoicing basics to understanding the latest developments with the EU’s VAT in the Digital Age proposal, this guide collates and explains essential information on electronic invoicing.
There are lots of resources out there, but this is your essential one-stop shop for all your e-invoicing questions.
E-invoicing, or electronic invoicing, is the exchange of a digital invoice document between a buyer and a supplier. The digitization of paper invoicing and the associated billing processes between suppliers and buyers electronically provides time and resource savings by automating business processes in finance and accounting.
While today many digital invoices are in PDF format, there is a trend towards invoices being in a machine-readable format so that businesses can automate processes and controls for issuance and approval.
A business landscape that fully embraces tax digitization reaps the following benefits:
Increased accuracy, efficiency and transparency by removing manual intervention
Improved record-keeping through third-party audit chains
Improved environmental footprint
Reduction in human errors and risks in business
Increased potential to be compliant with regulatory requirements
Key facts about e-invoicing
E-invoicing in the European Union
In the EU, many countries accepted e-invoicing for VAT purposes before it was formally regulated. All Member States were formally obligated to accept this practice due to changes to the VAT Directive in 2001. Subsequent changes to the VAT Directive in 2010 aimed to create equal treatment between paper and electronic invoices, particularly in relation to integrity and authenticity requirements.
Outside the domain of VAT, Directive 2014/55/EU made the adoption of e-invoicing in public procurement mandatory for public authorities in the Member States and outlined a European e-invoicing standard.
Several Member States took the opportunity to also introduce mandatory e-invoicing on the supplier side of the public procurement transaction. However, as EU Directives must be transposed into national legislation to be legally enforced, there still isn’t full harmonisation of e-invoicing in the EU.
The scope of these Directives leaves out important aspects such as reporting invoice data to the tax authority, leaving it up to each Member State to regulate as they see fit. Accordingly, it’s still important to check e-invoicing requirements for each country to ensure compliance.
The upcoming VAT in the Digital Age (ViDA) proposal aims to achieve a more harmonised approach to e-reporting and e-invoicing in the EU. With the aim of making e-invoicing the default system for the issuance of invoices, the ViDA proposal aims to introduce electronic invoicing and reporting requirements for intra-Community B2B transactions, using the EU Standard for Electronic Invoicing (EN16931).
Under ViDA, if a Member State introduces digital reporting requirements for domestic transactions, e-invoicing will be mandatory for the transactions in scope. This change will affect European businesses as well as non-EU companies trading in the EU.
What is an e-invoice?
An e-invoice is an electronic document that has been issued, exchanged and stored electronically. Under current regulation in the EU, this might be done in a structured format (such as an XML) or non-structured (such as a PDF). When paper invoices exchanged between trading partners are subsequently scanned and digitized by the buyer, these are not considered e-invoices even if the buyer only stores the digital file.
Country-specific regulations dictate the issuance format and manner of exchange of an e-invoice. More countries are moving towards systems that impose more frequent and granular controls, known as continuous transaction controls (CTCs).
In the European Union, the e-invoicing standard (EN 16931) established by Directive 2014/55, harmonises the meaning of fields used in electronic invoice documents for public procurement. This so-called semantic standard is translated into a number of technical invoice formats, also referred to as syntactic standards.
The European Commission’s VAT in the Digital Age proposals published in December 2022 aims to bring in several changes to e-invoicing requirements across Europe. One example of such changes is the amendment of the definition of e-invoicing, requiring e-invoices to always be in a structured format, aligning with Directive 2014/55 on electronic invoicing in public procurement.
Another change ViDA proposes, if approved, is that the VAT Directive will only consider structured electronic files as e-invoices, whereas non-structured formats like PDF will no longer represent electronic invoices from a VAT perspective.
What are continuous transaction controls?
Continuous transaction controls is an approach to tax enforcement based on the electronic submission of transactional data, normally in the form of an e-invoice (or a subset thereof). A taxpayer’s system submits the data to a tax administration’s designated platform before, during or just after the actual exchange of data from the transaction.
CTCs are typically used by tax authorities to improve VAT controls and can lower the administrative burden of compliance. Examples include the use of data to prefill VAT returns or replace existing declarations, automated and faster VAT refunds, reduction of errors due to validation controls, and other composite fiscal benefits.
However, the continuous data transmission requirements can be challenging for organisations. The initial system and process adjustments can be cumbersome. Mandate requirements evolve and expand frequently and, as no two countries have the same approach to CTCs, a company trading in multiple countries has to pay close attention to each jurisdiction’s specific rules and changes.
Where is e-invoicing mandatory?
In Europe, many tax authorities started their mandatory e-invoicing programs with business-to-government (B2G), gradually expanding requirements to business-to-business (B2B) and business-to-consumer (B2C).
Roll-out usually starts with large companies with a specific annual turnover, before staggering requirements to additional groups and eventually becoming mandatory for all businesses.
Mandatory B2G e-invoicing in EU
In public procurement, it is mandatory for the public sector to receive e-invoices that follow one of the technical formats under the EU Standard for Electronic Invoicing (EN16931). More countries are expanding the obligation to suppliers, who must issue electronic invoices in their operations with public entities.
In most European Union countries, B2B trading parties are free to exchange e-invoices in any form and format agreed upon. B2B e-invoicing is mandatory in Italy, while countries like Poland and France have published a timeline for the roll-out of a B2B e-invoicing mandate. More countries are seeking a derogation from certain provisions of the VAT Directive with the EU Commission to implement mandatory e-invoicing.
This allows the countries to introduce continuous transaction controls requirements in some form, alongside mandatory e-invoicing. In Italy, for example, taxpayers must issue invoices electronically in a structured format and submit them to the tax authority for clearance before sending to the recipient. As of 2023, countries following in the footsteps of Italy by announcing the introduction of mandatory B2B e-invoicing in the upcoming years are Belgium, Germany, Romania, Poland, France and Spain.
The ViDA proposal aims to make e-invoicing the default method for invoice issuance. The European Commission wants to remove the need for derogation to introduce mandatory B2B e-invoicing in a Member State, as well as the need for buyer acceptance of supplier e-invoicing.
Mandatory B2B e-invoicing in the EU
Mandatory E-invoicing: Italy (IT)
Voluntary E-invoicing: Hungary (HU)
Received EU Derogation: France (FR), Germany (DE), Poland (PL), and Romania (RO)
Announced Plans for Mandatory E-invoicing: Belgium (BE), Croatia (HR), Slovakia (SK), Slovenia (SI), and Spain (ES)
How can I benefit from an e-invoicing solution?
There are a host of potential benefits to using e-invoicing software solutions. The real advantages go beyond eliminating printing, envelope stuffing and the dependency on physical mail delivery.
First of all, electronic invoicing allows you to send invoices to a buyer quickly and securely directly from your source information system.
Exchanging invoices in a standardised structure format, allowing for automated end-to-end processing, provides the biggest process benefits and financial savings. Handling processes related to invoice sending, approvals and payment is more effective without manual intervention – which can be error-prone, slower and costlier.
E-invoicing also allows businesses to validate data, ensuring compliance with tax authority requirements. Automation ensures consistency between invoice exchange and reporting processes and accounting records. Automating tax determination and reporting codes can provide significant compliance benefits at a much lower cost than paper-based invoicing.
What are other types of e-documents?
As well as e-invoicing, there are other electronic documents used by tax and other authorities as part of tax digitization initiatives. The following is a non-exhaustive list:
E-receipt is the consumer receipt equivalent of an electronic invoice.
E-transport document is an electronic document identifying goods transported, as well as the taxable person and/or carrier responsible for the transport. This allows tax administration controls in relation to the transport.
Electronic credit and debit notes are correctional documents often used to adjust errors in previously issued e-invoices.
E-payroll document is a digital document with the same properties as a traditional payroll but the tax authority must clear it, just like an e-invoice.
E-accounting documents comprise business accounting ledgers submitted at a specific moment in time via a network to the tax administration, as a batch/file or data.
For more information read this blog about e-documents.
What is e-archiving?
Primarily, e-archiving removes paper documents and physical storage from the tax process by storing and preserving digital records. Tax authorities set their own requirements for the conditions and the number of years companies must archive documents. In the EU, this area of law is not harmonised.
Although e-invoicing rules vary, nearly all require archiving the ‘original’ invoice in the form and format the trading partners exchanged it in.
The pressure for e-invoicing compliance is increasing globally. Tax administrations around the world are spending billions on invoice control systems, and it’s the responsibility of businesses to meet requirements and build an audit-proof archive. Sovos delivers an e-archiving solution that keeps companies compliant across over 60 countries.
What is PEPPOL?
PEPPOL (Pan-European Public Procurement On-Line) is an e-delivery network that operates with a set of technical specifications called PEPPOL BIS (Business Interoperability Specifications). OpenPEPPOL is an association that has assumed full responsibility for developing and maintaining the PEPPOL network and specifications.
PEPPOL’s primary purpose is to facilitate the exchange of business documents, allowing businesses to communicate electronically with any European government institution involved in the procurement process. PEPPOL has several domains that cover pre-award procurement communications and post-award processes such as invoicing.
Initially designed for public procurement in the EU, PEPPOL’s open and interoperable network has gained popularity in the private sector. Gradually, many governments have also extended the use of this e-procurement network by making PEPPOL mandatory for the transmission of B2B e-invoices. As a result, its usage is on the rise in a growing number of countries, both within and outside the EU.
What is the future of e-invoicing?
The European Commission announced a reform of the invoicing and reporting framework named VAT in the Digital Age in December 2022. As of now, there are still processes to go through before the Commission makes any legislative updates.
The proposal amends the VAT Directive and regulations related to three distinct areas, one of which is digital reporting obligations and e-invoicing. Among other measures, the proposal includes:
Introducing mandatory Digital Reporting Requirements (DRR) for intra-EU cross-border B2B transactions.
Using the EU Standard for Electronic Invoicing (EN16931) as the reporting format.
Pairing the Digital Reporting Requirements with mandatory e-invoicing for intra-EU transactions between businesses.
Only electronic invoices issued in a structured format will be considered e-invoices, and the EN16931 will be the generally accepted standard.
Obtaining buyers’ approval to receive e-invoices will no longer be required by suppliers.
Very few countries in the world do not allow e-invoice issuance or have significant limitations that make adopting e-invoicing difficult. For instance, in Morocco e-invoicing without prior consultation with the tax authority is not recommended. In Venezuela, e-invoicing is only allowed for certain industries and also requires the tax authority’s approval.
E-invoicing mandates are in place in many countries including Italy, Saudi Arabia, South Korea, Brazil, Chile, Colombia, Mexico, Ecuador, Costa Rica, and Peru. In Europe, upcoming e-invoicing mandates include France, Poland, Serbia, Spain, Belgium and Germany.
E-invoicing requirements vary depending on where your business is based and where you operate. Even the individual Member States of the EU have their own rules and nuances. Examples of rules around e-invoicing include ensuring that the invoice includes certain mandatory invoice content, obtaining buyer’s acceptance of exchanging e-invoices, storing the invoice in compliance with security requirements and other local requirements, etc.
The digitization of tax has far-reaching implications for companies’ applications, processes and systems. Sovos works alongside companies who want to ensure these aspects of their business are optimised and ready to embrace the compliance challenges of the future, using the most appropriate integration methodology (API, SAP connectors or IaaS) for their business.
Our global solution for e-invoicing ensures compliance across over 60 countries. Sovos eInvoice simplifies global e-invoicing compliance to keep you updated with today’s constantly changing regulatory environment.
Businesses create e-invoices using billing software. Each solution has its own specific format and flow, though sending and receiving systems use standardised formats.
E-invoicing clearance refers to systems in which a relevant tax authority must approve and clear an e-invoice before it can be sent to the recipient. The cleared electronic invoice becomes the only acceptable fiscal document and any other version of it has no validity. CTC e-invoicing clearance is a form of continuous transaction controls.
Malaysia has expanded the scope of its mandatory e-invoicing requirements to include additional types of activities/transactions, according to the latest E-Invoice Specific Guideline (Version 4.4) released on 12 September 2025 by the Inland Revenue Board of Malaysia (IRBM).
Key Updates
Effective 1 January 2026, two additional categories of transactions will require individual e-invoices to be issued for each transaction, rather than consolidated e-invoices:
Electricity sector: Distribution, supply, or sale of electricity by electricity service providers
Telecommunications sector: Telecommunication services related to postpaid plans and internet subscriptions, and sales of electronic devices
These additions increase the total number of specific industry activities requiring individual e-invoices, joining existing categories such as automotive, aviation, construction, luxury goods, betting/gaming, and high-value transactions.
Compliance Implications
Businesses operating in these newly added sectors will need to:
Collect complete buyer information for each transaction
Issue individual e-invoices rather than consolidated invoices
Ensure their systems are ready to comply by 1 January 2026
Malaysia continues to implement mandatory e-invoicing and e-reporting through its phased approach, where different taxpayer groups are onboarded according to their annual turnover thresholds. Each group receives a six-month “relaxation period” from their respective mandatory implementation dates, during which businesses can issue consolidated e-invoices for all transactions, including those that would normally require individual e-invoices. Click here to learn more about the current Malaysian e-invoicing timeline.
For future updates on Malaysia and similar developments in other countries, follow our Regulatory Analysis page.
Update: 20 August 2025
Confirmation of Sovos Accreditation
Sovos has been granted accreditation as a Peppol Service Provider by the Malaysia Digital Economy Corporation (MDEC). We are authorized to register end-user participants in Malaysia Service Metadata Publisher (SMP).
Peppol Service Providers, or Peppol Access Points (APs), are tasked with establishing and managing the connectivity gateways that serve as access nodes within the e-invoicing network. They ensure compliance with Peppol standards, facilitate the routing of e-invoices to the appropriate destination APs, and handle the registration and updating of participant information in the Malaysia SMP.
Update: 9 June 2025
Malaysia Updates E-invoicing Timeline for Smaller Taxpayers
The Inland Revenue Board of Malaysia (IRBM) has released updated e-Invoice Guidelines, revising the implementation timeline and introducing more granular turnover-based categories.
Updated Implementation Schedule:
The phased rollout is based on annual turnover thresholds, with delayed start dates for smaller businesses:
No Change:
Over RM100 million(~€20 million): Implementation began August 1, 2024.
RM25 million to RM100 million (~€5–20 million): Implementation began January 1, 2025.
Updated Timeline:
RM5 million to RM25 million (~€1–5 million): Implementation begins July 1, 2025.
(Previous lower threshold was RM500,000.)
RM1 million to RM5 million (~€200,000–1 million): Implementation begins January 1, 2026.
Up to RM1 million: Implementation begins July 1, 2026.
Bellow RM500,000: businesses remain exempt from e-Invoice requirements
New Businesses:
Started between 2023–2025, with turnover ≥RM500,000: July 1, 2026.
From 2026 onwards:
If turnover ≥RM500,000: July 1, 2026, or upon commencement.
If turnover <RM500,000: January 1 of the second year after turnover reaches RM500,000.
Additional Updates:
As of January 1, 2026, individual transactions exceeding RM10,000 (~€2,000) must be invoiced separately – consolidated e-invoices are no longer permitted.
The previously announced six-month grace period post-mandate remains but has been adjusted to align with the revised taxpayer categories.
Update: 23 February 2024 by Carolina Silva
Changes to Malaysia’s CTC E-invoice Reporting Mandate Announced
On 9 February 2024, the Inland Revenue Board of Malaysia (IRBM) published long-awaited updates on the upcoming continuous transaction controls (CTC) reform. More specifically, the IRBM has released its Software Development Kit (SDK), along with new versions of the e-invoicing and e-invoicing specific guidelines containing significant changes to the CTC mandate beginning in August 2024.
Updates to CTC e-invoice reporting mandate
The new versions of the e-invoicing documentation define the scope of sectors and transactions subject to mandatory e-invoicing and clearance through the IRBM platform, MyInvois.
Sectors in scope are:
Automotive
Aviation
Luxury goods and jewellery
Construction
Licensed betting and gaming
Payments to agents, dealers and distributors
Transactions with individual buyers (B2C) fall outside of the e-invoicing mandate scope. Any e-invoices for transactions not in scope are subject to the buyer’s request.
Consolidated e-invoice requirement
In cases where the buyer does not request an e-invoice, suppliers can continue to issue an invoice or receipt as they do today. Initially, this exception was only foreseen for B2C transactions, but has now been extended to all transactions besides the ones included in the mandatory e-invoice scope.
However, suppliers will be subject to an invoice data reporting obligation and will be required to issue a monthly consolidated e-invoice (within 7 days of the month end) aggregating all invoices and receipts issued during the period.
Foreign parties are not mandated to implement Malaysia’s CTC system but Malaysian buyers must issue a self-billed e-invoice to document the expense. This should be in the same structured XML or JSON format and submitted to the MyInvois platform, similar to a reporting obligation for cross-border transactions.
Rejections and cancellations
The Malaysian CTC system will allow buyers to reject incoming invoices in their e-invoicing flows, as well as allowing suppliers to issue cancellations. These requests are subject to a 72 hour time limit, after that the invoice is considered issued and any correction or amendment will need to be through credit, debit or refund notes.
According to the IRBM, these functionalities were added solely for the convenience of the parties. Corrections can still be done through credit, debit or refund invoices if the supplier prefers.
Additionally, the new documentation has also clarified and explained how self-billing should be handled under the CTC e-invoice reporting mandate scope, as well as specific transactions such as reimbursements, employment benefits, profit distributions, foreign income and e-commerce transactions.
Timeline Changes Proposed for E-Invoicing in Malaysia
The Malaysian 2024 Budget law, which is currently pending parliamentary approval, introduces changes to the implementation timeline of mandatory e-invoicing in the country.
According to the new budget law, implementation of electronic invoicing will be delayed and start for taxpayers with an annual turnover of revenue of more than RM100 million (appx. 20 million euros) on 1 August 2024 – instead of the original planned date of June 2024.
August 2024: Taxpayers with an annual turnover or revenue of more than RM100 million
January 2025: Taxpayers with an annual turnover or revenue between RM25 million and RM100 million
July 2025: All taxpayers
This proposal offers more time for taxpayers to prepare for the new e-invoicing mandate, although these postponements are not significant. Taxpayers in the first implementation group should start preparing imminently for the new e-invoicing system in order to comply by August 2024.
Currently, the IRBM is set to release a software development kit including the relevant technical documentation by the end of 2023.
In October 2022, the Malaysian Ministry of Finance announced in its state budget plans to launch a pilot e-invoicing program in 2023 – starting with selected taxpayers.
The budget statement views e-invoices as the main strategy to improve the country’s tax revenue and digital services infrastructure. The Inland Revenue Board of Malaysia (IRBM) and the Malaysian Digital Economy Corporation (MDEC) have been working on the e-invoicing project to meet this goal. They have organised engagement sessions with stakeholders to share details regarding the project.
Following the engagement sessions, the IRBM has published a guideline regarding the implementation details of the upcoming e-invoicing system. The Malaysian e-invoicing system will be a CTC clearance model scheduled to begin in June 2024, with approximately 4,000 companies exceeding the determined threshold.
The new e-invoicing system, called MyInvois, will require all taxpayers engaged in commercial activities to issue invoices electronically in Malaysia. This applies to all individuals and organisations including, but not limited to, associations, corporations and limited liability partnerships.
The transactional scope of the requirements covers all B2B, B2G and B2C transactions – both domestic and cross-border.
The following will be subject to e-invoicing:
Invoices
Credit notes
Debit notes
Refund invoices
A separate guideline will provide further details on the treatment of cross-border transactions.
B2B and B2G e-invoicing will follow a similar workflow, as described below.
For B2C transactions where end consumers do not request e-invoices, suppliers will be allowed to issue receipts or invoices as per the current practices. However, taxpayers must aggregate the receipts or invoices issued to consumers and report them through the e-invoicing system within a set timeframe.
How will businesses issue e-invoices?
To generate e-invoices, taxpayers must use the MyInvois platform through the free solution provided by IRBM or via APIs. The authentication with the platform is based on digital certificates issued by IRBM.
Taxpayers must create and submit their e-invoices in either XML or JSON format to the MyInvois platform. After successful submission, the platform performs schema checks and assigns a unique ID to each e-invoice.
It’s important to understand that the exchange of e-invoices will not be handled by the MyInvois platform. Instead, suppliers will be responsible for including the validation link provided by IRBM, in the form of a QR Code, on the e-invoice and sending it to buyers. Buyers will utilise this QR Code to validate the existence and status of the e-invoice via the MyInvois platform.
Key requirements for Malaysia’s e-invoicing system
The guideline defines an e-invoice as a file created in the format specified by IRBM (XML and JSON) that the relevant accounting systems can automatically process. This means PDFs, JPGs or other electronic formats will no longer be considered an e-invoice.
A key component of the new e-invoicing system is the validation of the customers’ Tax Identification Number (TIN), which the issuer should validate before issuing the invoice.
Taxpayers will be able to request and retrieve essential invoice data from the MyInvois platform in certain formats through API integration.
IRBM will store all e-invoices. However, this doesn’t exempt taxpayers from maintaining their records during the storage period.
Certain non-business transactions between individual taxpayers will also be subject to e-invoicing requirements.
Currently, no registration or certification is required for service providers but this may change in the future.
Cancellation and rejection of e-invoices will be performed through the MyInvois system within 72 hours following the clearance process.
While the guideline does not explicitly mention PEPPOL, efforts are being made to establish a PEPPOL Authority in the country.
Implementation Timeline
The roll-out of the mandate will follow this schedule:
From June 2024: Mandatory implementation for taxpayers with an annual turnover or revenue of more than RM100 million (appx. 20 million Euros)
From January 2025: Mandatory implementation for taxpayers with an annual turnover or revenue of more than RM50 million
From January 2026: Mandatory implementation for taxpayers with an annual turnover or revenue of more than RM25 million
From January 2027: Mandatory implementation for all businesses
The annual turnover or revenue will be based on audited financial statements or tax returns from 2022. Once a taxpayer’s implementation timeline has been set using the 2022 financial statements, any subsequent changes to their annual turnover or revenue will not impact their go-live date.
What’s next?
With more detailed information now available about the implementation of e-invoicing in Malaysia, taxpayers must begin preparing their systems for the upcoming changes.
In Q4 2023, the IRBM is set to release a Software Development Kit including the relevant technical documentation and APIs. Furthermore, additional guidance on certain aspects of the implementation and anticipated legislative changes are expected in due course.
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:
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.
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.
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.
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?
All public administration entities are currently 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.
Once again, the obligation for small, medium and microenterprises was postponed in 2025 and is now poised to enter into force on 1 January 2026.
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.
The law was published in the Official Gazette, whose purpose is to regulate the mandatory use of electronic invoicing in the Dominican Republic, including the establishment of the electronic invoicing tax system and its characteristics, optimisation results and contingencies, as well as the entry periods and tax facilities that taxpayers who take advantage of this system will be granted.
The law includes a Chapter on the Criminal and Tax infractions and penalties for non-compliance and still allows using paper invoices for certain contingencies.
Scope of application for e-invoicing in the Dominican Republic
The law applies to natural and legal persons, public or private. It’s also applicable 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.
Recognition and authorisation
All electronic invoice issuers in the country shall:
Be recognised and authorised as such by the General Directorate of Internal Taxes (DGII)
Have a digital certificate for Tax Procedure, issued and signed digitally, by a certification entity authorised by the Dominican Institute of Telecommunications (INDOTEL).
The requirement for holographic or handwritten signatures and commercial seals for electronic invoices is fulfilled by using digital signatures supported by a digital certificate.
Electronic invoices cannot be modified once signed digitally and sent to the DGII.
Validation of the electronic invoice in the Dominican Republic
The electronic invoice must comply with the standard format established by the tax authority, which will be validated by computer systems. E-invoices will only be admissible when they comply with this validation.
Electronic invoices will be sent to the authority and the electronic receiver through electronic applications connected to the internet and in an XML file.
The electronic invoice will have a Printed Representation (RI) of the E-CF which will be delivered as a physical document to non-electronic receivers in exceptions. Otherwise, it will be delivered to electronic receivers when they are in contingency so that they can prove and report purchase transactions to the authority and third parties – as well as support tax credit or consumption, and keep the indicated documents as established by current legislation.
The General Directorate of Internal Taxes (DGII) will be the competent authority for validating and certifying the content and integrity of the electronic invoice.
Dominican Republic: Electronic Invoicing Tax System
The Electronic Invoicing Tax System is administered by the DGII and will be used to validate and accredit all electronic tax receipts resulting from electronic invoices. It will also validate legal forms or electronic tax documents that modify them and that serve as support to back up expenses and tax credits.
The DGII is also responsible for ensuring the integrity of information that is sent instantly for validation and the accreditation of electronic tax receipts (E-CF).
Issuance, conservation, types and sequence of electronic tax receipts
The three forms of Issuance of Electronic Tax Receipts (E-CF) are as follows:
Self-developed systems: The DGII will authorise taxpayers who wish to join electronic invoicing through its own development system, if they meet the requirements established for the issuance and receipt of E-CF
Electronic invoicing service providers: The taxpayer may implement an electronic invoicing system through a service provider that has been certified in compliance with the current regulations established by the DGII
Free billing: The DGII will have a free technological facility for issuing electronic tax receipts, aimed at taxpayers who meet the criteria defined for the use of this tool and dictated by the means established by the DGII
Online validation
The electronic tax receipts sent to the DGII will be validated online through the information system, according to the schemes published by the technical documentation and complementary standards that define their structure and behaviour.
Once they’ve been compared and validated against the criteria, the DGII will respond by delivering a response number identified as “trackID” with which the E-CF issuer can consult the document’s status.
Types of electronic tax receipt (E-CF) or electronic tax documents
There are 10 types of electronic tax receipts or documents as part of the law. These include:
Electronic Tax Credit Invoice
Electronic Consumption Bill
Electronic Debit Note
Electronic Credit Note
Electronic Voucher for Special Regimes
Electronic Government Receipt
Electronic Proof of Purchase
Electronic Receipt for Small Expenses
Electronic Receipt for Foreign Payments
Electronic Proof for Exports
Sequence of electronic tax receipts
All E-CFs must have an electronic tax receipt number (E-NCF), authorised by the DGII, which consists of an alphanumeric sequence.
The number and type of electronic tax receipt numbers will be authorised according to the economic activity registered in the National Taxpayer Registry (RNC), operational volume, and level of compliance of the taxpayer – as well as the risk profile of the taxpayer, in accordance with the parameters established by the DGII.
Duties of Electronic Issuers
The duties required of electronic issues, in order, consist of:
Sign all E-CFs issued with a valid Digital Certificate
Receive all E-CFs from their suppliers that are validly issued
Comply with the technical requirements that the DGII provides
To exhibit all the information that the DGII requires
Keep the E-CF in accordance with the provisions of the Tax Code
Standard format for the structure
The standard format for the structure of E-CFs is as follows:
Document identification data
Data relating to the Electronic Issuer
Data relating to the Electronic Receiving Buyer
Data relating to the good or service traded
Data relating to the value of the transaction
Tax data
Date and time of the digital signature
Digital signature
Taxpayers must indicate data that modifies or affects electronic tax receipts of credit and debit notes.
Implementation schedule for e-invoicing in the Dominican Republic
Large national taxpayers: 12 months from the law’s entry into force (18 May 2024).
Large local and medium-sized taxpayers: 24 months from the law’s entry into force (18 May 2025).
Small, micro and unclassified taxpayers: 36 months from the law’s entry into force (18 May 2026).
The DGII will publish the list of taxpayers required by law to issue E-CF. With the approval of the DGII, taxpayers may agree to extend the deadline for compliance with electronic invoicing regulations.
Voluntary period and incentives
A voluntary period is provided for all taxpayers who wish to be issuers of electronic invoices before implement the previous calendar. The DGII is providing incentives consisting of tax credits for MIPYMES and Large National Taxpayers.
Looking for further information on e-invoicing in the Dominican Republic? Contact 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:
E-invoices can be issued in different accepted formats.
Regardless of the chosen method, issuers must send an exact copy of each e-invoice to the public e-invoicing solution, in the Facturae format, which will serve as a central repository.
Application of an advanced electronic signature on e-invoices transmitted via a private platform will be mandatory to ensure integrity and authenticity (I&A).
All e-invoices must be identified with a unique code.
The invoice recipient must report e-invoice acceptance or refusal and the effective payment date.
There are minimum requirements for operating as a private e-invoice platform, such as a proven capacity to connect with the public e-invoicing solution, providing free interconnection and interoperability with other platforms.
Private e-invoice platform operators will be obligated to interconnect with any other private platform within the Spanish e-invoicing system within one month of their request.
The public e-invoicing solution will be deemed as the default exchange system for taxpayers who do not explicitly choose to receive e-invoices through a private platform.
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:
XML CEFACT/ONU as specified in the XML schemas 16B (SCRDM – CII)
UBL as defined in the ISO/IEC 19845:2015 standard
EDIFACT per the ISO 9735 standard
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:
a) Commercial Acceptance or Rejection of the invoice and its date
b) Full effective payment of the invoice and its date
Additionally, the draft regulation establishes optional statuses:
c) Partial commercial acceptance or rejection of the invoice and its date
d) Partial payment of the invoice, amount paid, and its date
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.
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.
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:
The introduction of continuous transaction controls (CTCs) in Israel and Malaysia in 2024
Expected developments in Spain, including the Bizkaia Batuz mandate effective from January 2024
Latest developments in e-invoicing in France and the role of Partner Dematerialization Platforms (PDP)
Join our 30-minute update on 13 July for the latest news, and for an opportunity to put your questions to our speakers.
According to the latest global market report, Billentis, the Asia Pacific region is expected to achieve the highest annual e-invoice volume growth rates compared to Latin America and Europe until 2025.
This is mainly because the Asian market, outside of South Korea, is new to the tax digitization journey and is accelerating the adoption of e-invoicing as an effective measure for VAT control.
Though the types of e-invoicing strategies implemented in the APAC region vary greatly, we can also identify some common characteristics.
There are jurisdictions with a strong common law legacy, such as Singapore and Japan, which typically focus regulatory measures on record retention. In recent years, many of these countries have started gearing up toward regulating e-invoicing issuance (notably by adhesion to the Peppol system), e.g., Singapore. Associated national standards have been adopted for a wide range of e-invoicing flows for B2B and B2G scenarios.
Conversely, Latin American clearance models and continuous transaction controls (CTCs) influence some countries. Examples of jurisdictions with CTCs are China and Taiwan.
More countries aim to introduce a staged approach to mandatory e-invoicing or CTCs in the coming years. Notable examples are Saudi Arabia, which in January 2023 introduced a clearance regime in multiple phases for different taxpayer groups, and Vietnam, which will be doing the same in the coming years.
Here’s a highlight of the recent e-invoicing developments in Asia Pacific.
E-Invoicing in Malaysia:
In October 2022, the Malaysian Ministry of Finance announced their plans to implement a CTC model.
Malaysia has implemented a CTC clearance model for certain transactions, such as the one implemented in Italy, where e-invoices must be sent to the tax authority in real time to obtain validation before being delivered to buyers. The scope of the system will cover all domestic (B2G, B2B and B2C) and cross-border transactions.
The scope of transactions that are subject, per default, to mandatory e-invoicing are B2B and B2G in the following sectors: automotive, aviation, luxury goods and jewellery, construction, licensed betting and gaming, and payments to agents, dealers and distributors.
Malaysia will also follow a CTC reporting model for all other transactions where e-invoicing is not mandatory and not requested by the buyer. In these cases, taxpayers will be allowed to issue invoices and receipts as per the current practices and then report them monthly through the issuance of a consolidated e-invoice.
The mandate has been rolled out in a phased manner, starting in August 2024, for taxpayers with an annual turnover or revenue of more than MR100 million, and it will apply to taxpayers with an annual turnover or revenue of up to RM500,000 from January 2026.
In Thailand, the government has been working to develop a robust e-invoicing system with a framework that boosts e-invoicing using certified third-party service providers for e-tax issuance.
Using service providers is a viable alternative for businesses as some don’t want to invest or develop their own e-tax systems, whilst others cannot afford to create a compliant invoicing system. This is due to the complex technical and legal steps to maintain their own compliant system. The Electronic Transactions Development Agency (ETDA) started a certification process for electronic service providers to assess whether the applicant’s solution is secure and compliant.
More recently, the Thai Revenue Department (TRD) and the Electronic Transactions Development Agency (ETDA) published new regulations to improve the e-tax invoicing system. The regulations include aspects like the e-tax invoice content and standards for forms, delivery methods, storage and information security for operations relating to electronic invoicing.
Thailand has also recently announced an extension of tax incentives for taxpayers using the current e-tax invoicing system to promote e-invoices in the country. These measures could also signal a future mandatory e-invoicing mandate; however, there is no mandate or defined timeline yet.
E-invoicing has been mandatory in South Korea since 2011 with the implementation of their Electronic Tax Invoice System.
The scope of the e-invoicing obligation covers all corporations as well as individual taxable persons that exceed a certain turnover threshold. Since entering into effect in January 2012, the scope for sole proprietors has been reduced from 1 billion KRW to 0.1 billion KRW in July 2023.
South Korea´s Electronic Tax Invoice System is considered to be a CTC (Continuous Transaction Control) model – not due to the e-invoicing requirements, since the Tax Authority does not interfere in the process of their issuance, as opposed to CTC clearance models. Instead, it has a CTC reporting model in place as all e-tax invoices must be reported to National Tax Service (NTS) within one day of issuance.
The scope of the mandate in the country covers only domestic transactions (B2G, B2B and B2C). Cross-border transactions are out of scope.
E-invoicing has been gradually introduced in China, starting with B2C. In September 2020, the State Taxation Administration (STA) announced a pilot program enabling selected taxpayers operating in China to issue VAT special electronic invoices on a voluntary basis, which are generally used in B2B transactions.
In 2021, the Tax Bureaus of Shanghai, Guangdong Province and Inner Mongolia Autonomous Region announced a new pilot program covering selected taxpayers, introducing a new fully digitized e-invoice.
Following the recent developments in China regarding the Pilot Program for e-Invoicing, which was expanded to new provinces and cities in November 2023, the last province of Tibet has now implemented issuing fully digitalized electronic invoices (e-fapiao) for selected taxpayers.
The State Taxation Administration (STA) in China decided to officially promote the optional adoption of digital electronic invoices throughout the country. The announcement, effective from 1 December 2024, confirms that digital invoices will have the same legal effect as paper invoices.
The announcement also mentions some information, such as the basic contents of the digital invoice, and makes some remarks regarding the number of the digital invoice, which will be 20 digits.
The issuance of digital invoices is still not mandatory and remains optional for taxpayers. However, this announcement marks the end of the previous pilot project for e-invoicing. It is a big step towards the full adoption of electronic invoices, which will optimise the taxpayer’s operations, improve administrative efficiency and promote the digital transformation of the economy and society.
In 2018, the Singapore Government Agency, Infocomm Media Development Authority (IMDA), joined the non-profit international association OpenPeppol, which is responsible for developing and maintaining the Peppol specifications. Singapore became the first National Authority outside Europe to join as a Peppol Authority.
In 2019, the IMDA officially launched a nationwide e-invoicing network (InvoiceNow) with intentions to extend the International Peppol E-Delivery Network by allowing businesses to transact internationally with other companies through this network. The IMDA has been encouraging businesses to use InvoiceNow in B2B and B2G transactions as an efficient, modern solution for invoicing and document delivery.
Additionally, it was recently announced the adoption of a Peppol 5-corner model for invoice data reporting based on InvoiceNow for B2B transactions. The implementation of this mandate sees a move away from a Peppol 4 corner model, with taxpayers instead now transmitting invoice data to the IRAS, the nation’s tax authority. Accredited Access Points (AP) are the only parties allowed to submit invoice data to IRAS using C5 API – Sovos is an accredited AP in Singapore.
It will start voluntarily for GST-registered businesses in May 2025 and will be mandatory for newly incorporated companies and those who register for GST on a voluntary basis from November 2025. This mandate is expected to be rolled out to other categories of taxpayers in the future.
Japan has adopted a voluntary e-invoicing system. The Standard Specification for Digital Invoices (JP PINT) based on the global standard Peppol specification is published for Japanese taxpayers wishing to issue and exchange electronic invoices over the Peppol network. The E-Invoice Promotion Association (EIPA) is encouraging taxpayers to use the Peppol standard.
In line with the country’s efforts to improve tax controls, Japan introduced the so-called Qualified Invoice System (QIS) in October 2023. In this system, the total amount of the consumption tax corresponding to each rate must be included in the invoice along with the registration number of the qualified issuer. Taxpayers must register to issue qualified invoices. The QIS does not mandate taxpayers to issue invoices electronically.
In February 2025, the Philippines Bureau of Internal Revenue (BIR) published new rules on e-invoicing and CTC e-reporting. Key changes include expanding the taxpayer base subject to these obligations and providing tax benefits for compliant taxpayers. Additionally, e-invoices are now redefined to refer only to documents issued in a structured format from which data can be easily extracted and reported to the BIR.
As a result, starting in March 2026, structured e-invoicing becomes mandatory for companies engaged in e-commerce and all large taxpayers. Separate regulations mandating compliance with both structured e-invoicing and CTC e-reporting are still to be issued and will impact all taxpayers subject to the system.
India’s Goods and Services Tax (GST) framework introduced an e-invoicing system which falls under the Continuous Transaction Controls (CTCs) category, to improve tax compliance and reduce evasion.
This system mandates reporting invoice data to an Invoice Registration Portal (IRP) for clearance before the exchange with the trading party. For an invoice to be legally valid, it must include an Invoice Registration Number (IRN) obtained from an IRP. This requirement applies to B2B, B2G and export transactions.
In 2024, the GST recommended an extension of the CTC mandate to B2C and a pilot rollout for B2C e-invoicing. Invoice data must be submitted in JSON format to IRPs, although invoices can be exchanged in JSON, PDF, or paper form, with a mandatory archiving period of eight years.
The e-invoicing rollout began voluntarily in January 2020 for businesses with turnovers exceeding Rs. 500 Crore, gradually extending to smaller businesses. By August 2023, the mandate applied to taxpayers with annual turnovers of Rs. 5 Crore or more. Non-compliance, such as failing to register an invoice on the IRP, incurs penalties of at least Rs. 10,000 per instance, along with additional GST penalties and interest.
In late 2024, a new functionality called the Invoice Management System (IMS) was launched on the GST portal. The IMS allows taxpayers to accept, reject or mark an invoice received as pending. The functionality is available for regular taxpayers and taxpayers using the Quarterly Return Monthly Payment (QRMP) scheme.
Indonesia embraced digital transformation in its tax system by introducing the e-Faktur system in 2014, becoming effective in 2016. This move towards electronic invoicing is a strategic effort to combat tax evasion and narrow the tax gap through continuous transaction controls (CTCs).
Mandatory for all corporate VAT taxpayers since July 2016, e-Faktur requires invoices to be generated through approved systems and validated by the Directorate General of Taxes (DGT) before being issued. Invoices must include tax invoice series number (“NSFP”) allocated by the DGT, and a QR Code. This CTC system enforces the use of electronic signatures and mandates processing through the eFaktur platform.
Vietnam advanced its tax compliance efforts by implementing a nationwide e-invoicing mandate on 1 July 2022, aimed at combating VAT fraud and reducing the VAT gap. The rollout began in March 2022 in select provinces and cities and moved to a full national implementation by July. The initial implementation phase involved technical solutions in six local tax administrations and expanded to all provinces by April 2022, setting a comprehensive framework for e-invoicing compliance across Vietnam.
This mandate requires all businesses, including enterprises, organisations, business households, and individuals, to register for and issue e-invoices in XML format for transactions.
Vietnam’s e-invoicing system distinguishes between authenticated e-invoices, which require a tax authority code before being sent to the buyer, and unauthenticated e-invoices, which do not require said unique code. Most taxpayers in Vietnam must issue authenticated e-invoices to comply with this mandate. E-invoices must be digitally signed by the supplier and archived electronically with secure and reliable methods to ensure integrity and authenticity.
The winds of change in the region are blowing strongly in favour of digitizing invoicing systems. We see influences from different parts of the world, from Latin America with its decentralised clearance models to Europe with the Italian-style centralised clearance system, as well as with Peppol-inspired e-invoicing frameworks.
These are only a few examples of countries in the region adopting a CTC system. Businesses must prepare to adopt the new e-invoice compliance requirements trending around the world, and in particular, across Asia.
Get in touch with our tax experts for a global e-invoicing solution.
Japan’s new e-invoice retention requirements are part of the country’s latest Electronic Record Retention Law (ERRL) reform.
Along with measures such as the Qualified Invoice System (QIS) and the possibility to issue and send invoices electronically via PEPPOL, Japan is implementing different indirect tax control measures, seeking to reduce tax evasion and promote digital transformation.
In line with these objectives, the amended ERRL will require taxable persons in Japan to follow several compliance rules when archiving documents originating from electronic transactions, such as e-invoices.
Scope of the mandatory electronic retention rules in Japan
The reform has abolished the hard-copy retention option for electronic transactions. Starting 1 January 2024, records of electronic transaction information must be archived electronically.
As per the definition of the ERRL, “electronic transactions” includes transaction information carried out via Electronic Data Interchange (EDI), transactions via the Internet, and transactions in which transaction information is exchanged by email, among others.
The scope of such transaction information may include order forms, contracts, invoices, receipts, and other similar documents related to the transaction sent and received electronically.
How to retain e-invoices in Japan
Taxpayers must retain any records of electronic transaction information, including e-invoices, in an electronic archive, as prescribed in the Ordinance for Enforcement of the ERRL.
When retaining e-invoices, the following are alternative ways to ensure compliance with the ERRL:
The issuer can timestamp the e-invoice
The recipient can timestamp the e-invoice within a certain time period after receiving it
Trading parties can use a system for exchange and archiving which either prevents corrections and deletions or keeps track of such corrections and deletions
Trading parties can maintain a guideline explaining how the data is kept, which only allows data correction and deletion in limited situations and enables tracking of data correction and deletion records, if any
Updated retention rules for scanned invoices
Updated rules are also in place for taxable persons who convert their paper invoices into a digitized document and keep the invoice exclusively in electronic format.
One of the following is required to ensure the authenticity and integrity of the scanned invoice:
Applying a timestamp of a vendor certified by the authorities or
Choosing a method that provides the same function as a timestamp and using an electronic archive that ensures no correction or deletion is carried out after the scanning.
Under new rules as of 1 January 2022, there has been an extension to the timestamping deadline to about two months.
What’s next for e-invoicing in Japan?
In addition to enforcement of the QIS and all changes described above, Japan introduced transitional measures for taxable persons to provide a grace period for necessary preparations. The tax authority will abolish transitional measures under the ERRL on 31 December 2023. Invoice issuers should check their compliance with the Japanese tax framework in the meantime.
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 issuance of the TicketBAI XML file must follow the legal format schema, i.e., the sales operation registration XML format or the cancellation XML format.
The application of a digital signature and “chaining” of these files are required, meaning that each TicketBAI XML must identify the previously issued invoice using certain elements.
The invoice or supporting document which can be issued in either paper or electronically as per invoice requirements already established by Bizkaia regulations.
The invoice generated by the TicketBAI software must incorporate the TicketBAI identifier (unique number code) and TicketBAI QR code using part of the digital signature of the issued TicketBAI XML.
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:
QR Code (QR Code on TicketBAI Invoice not required if recipient is a business or professional person or a public Administration and e-invoice is originally issued in a non-readable format (e.g, the facturae format)
TicketBAI ID: Unique ID called “Identificativo TicketBAI” is required on the Invoice generated by the TicketBAI software.
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:
Small and medium-sized companies
Micro-enterprises
Self-employed workers
Small-sized cooperatives
Non-profit entities
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.
Expertise in technology and regulatory provides stability for companies during period of uncertainty
BOSTON – APRIL 20, 2023 – Global tax software provider, Sovos, today announced that world-renowned VAT expert, Christiaan Van Der Valk, vice president of strategy and regulatory will headline the E-Invoicing Exchange Summit Miami, April 24 – 26, 2023. His scheduled presentation, ViDA and the Global Tax Digitization Tsunami: Overcoming Business Pitfalls will be his first public presentation on the topic since the European Commission (EU) announced its plans for ViDA in December of 2022.
VAT in the Digital Age (ViDA) will change how trade within the EU is conducted and reported forever. It will require changes in approach from both a regulatory and technology perspective to remain compliant with all local laws and mandates. To help keep businesses informed of new developments and help guide them through the proposed changes, Sovos has established a ViDA HUB page that will be updated continuously as information becomes available.
As part of Sovos’ ongoing commitment to assist businesses in navigating ViDA successfully, we are working with KPMG to produce a series of video segments that address the primary issues behind ViDA, lessons learned from tax digitization pioneers in Latin America, and what companies need to be doing now to best prepare for ViDA. Participating in these segments will be Kathya Capote Peimbert, Tax Managing Director, Indirect Tax, KPMG, Vinicius Pimentel de Freitas, CTO, Inter-American Centre of Tax Administrations and Christiaan Van Der Valk. Parties interested in receiving this video content can pre-register here and will receive an alert when it is available.
“ViDA, at its core, is about Data. The ViDA proposal is an indication that governments within the EU are no longer content to receive after the fact tax filings that only provide superficial insight into aggregated data,” said Christiaan Van Der Valk, vice president of strategy and regulatory, Sovos. “By leveraging technology, tax administrations can now receive authenticated transaction data detailing every sale and purchase straight from companies’ source systems. By moving tax controls much closer to the actual business operation, tax administrations can also respond to anomalies in near-real-time. My advice? Do not wait, ViDA will be your new reality sooner than you think.”
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 www.sovos.com and follow us on LinkedIn and Twitter.
5 Questions to Ask Yourself
Note: The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. Our blog, France: B2B E-Invoicing Mandate Postponed, is promptly updated whenever there are changes to the rollout of the French mandate.
One significant change for many businesses will be the need to use Partner Dematerialization Platforms, also known as PDPs. The role of a PDP is highly specialised. Indeed, strict legal requirements and technical specifications must be met to become a registered PDP.
The timeline affecting all businesses is clear. However, depending on your industry, you may need to rely on a PDP to ensure you’re fully compliant with the new requirements. Key industries include:
Retail
Aerospace
Automotive
Chemicals
Any sector with significant supply chains
Companies that need to use a PDP to achieve compliance with the French mandate face an additional, critical decision in what is already a complex new process to navigate. The need for a PDP raises the stakes, making it crucial to have dependable answers to the following:
Can my PDP support my business from the go-live date and for the long term?
How can I be sure my PDP meets and keeps up with all our requirements under the French mandate?
What else do I need to consider to find the solution best-suited to our company?
We’ve created a rundown of key questions to consider when choosing a PDP.
1. Can your PDP cope with the growing compliance obligations of these new e-invoicing processes?
In addition to the existing requirement for B2G invoices (Public Procurement), the French Mandate reform will require B2B invoices to be exchanged electronically. As each B2B e-invoice is progressed, its status will shift. There are 14 status possibilities that need to be communicated between trading parties. Of these 14, 4 must also be automatically reported to the tax authority platform. The result will be a huge amount of additional data flowing in multiple directions.
Additionally, the transaction details of B2B cross-border sales and purchases – excluding non-EU imports of goods – and B2C sales and payment data for Services Sales must be reported electronically to the tax authority.
Meeting these processing and capacity demands will be a significant undertaking for solution providers. For context, 100 million B2G e-invoices are processed annually. With the addition of B2B e-invoicing to the French mandate, this number will now be in the billions.
Why does this matter?
You want to be able to trust that your PDP can cope with increased capacity and processing needs as well as evolving compliance requirements. You want to set yourself up for success for France as well as to deal with the growing obligations across Europe and beyond.
2. The only constant is change – is your PDP equipped to handle France’s e-invoicing regulations as these evolve?
The French Mandate is part of a global trend towards tax digitization. E-invoicing mandates are constantly changing, being modified and updated.
Take Italy, for example. Since January 2019, the e-invoicing mandate has been revised over 40 times.
The French tax authority has already released four versions of the upcoming French Mandate specifications and these will continue to evolve. Will your chosen software solution be robust enough to handle these changes so they don’t negatively impact your business? By asking the right questions, you may find that some aspiring PDPs, who also happen to be existing e-invoicing providers, are out of their depth.
On top of this, there’s the EU-wide VAT in the Digital Age initiative and the changes it will bring. Your future PDP must have the bandwidth and agility to keep up with the inevitability of these future developments. You will also need to consider whether this PDP can take care of your compliance needs beyond France too.
Trust is everything. A seasoned partner with experience navigating and solutioning for diverse e-invoicing obligations is important for your business. As government interest in business data grows, it’s essential to avoid blind spots, often created by complex supply chains, across multiple countries, within and beyond the EU. You’ll need a holistic view of your data that’s broader than e-invoicing and CTCs (continuous transaction controls). Think SAF-T and the other domestic obligations you face, alongside compliance challenges like VAT determination and periodic reporting.
If you’re also doing business beyond France, these need your attention too.
3. Are you aware of the total impact not meeting increasingly strict compliance requirements can have?
Let’s be clear. Despite what you may have heard about France’s e-invoicing mandate, this is not more of the same.
Yes, electronic invoice requirements used to be relatively manageable. They needed to be readable and unalterable, providing clear proof of the original supplier’s identity.
The scheme that will be introduced with France’s mandate complicates matters, adding requirements for:
Consistency checks
Specific formats
Deadlines
Routing connectivity
Failure to meet the exact stipulations of the reform will result in invalid invoices.
Without legally valid invoices, not just VAT collection and VAT recovery are jeopardised: This would impact your company revenues and your trading partners, creating cash flow and profitability risks.
Make no mistake, the commercial and reputational impact of not meeting these minimum requirements are even more significant than the potential penalties.
4. Are you 100% confident of e-invoicing continuity?
French companies may be used to correcting e-invoice errors at a later date, but soon that will no longer be an option. The mandate ushers in continuous transaction controls, so any data or syntax errors will be glaring. If problems arise with e-invoicing, it won’t be possible to revert to paper or PDFs producing a significant cash flow risk for suppliers. E-invoices must be correct and compliant first time, every time.
Reliance on an experienced and knowledgeable PDP for e-invoicing and associated compliance obligations doesn’t just join the dots in your data. It makes good business sense.
5. Network size will no longer matter – is your would-be PDP saying otherwise?
For traditional e-invoicing, a large business network has been a supply chain advantage. A large network allows any one business to connect with a multitude of suppliers and buyers that choose to automate billing and invoice payments.
However, the interoperability requirements of the upcoming mandate erode the power of network size. Every supplier and buyer will need to connect through France’s e-invoicing system (Portail public de facturation or PPF) either directly, or indirectly through a PDP. Giving you more freedom when selecting the right PDP for your business.
While each registered PDP is required to cover both inbound and outbound invoice flows, they’re not required to cover all 36 specific use cases mentioned in the official documentation so far. Each use case needs an adapted treatment, which creates complexity that PDPs must address.
It’s important to ask any PDP you’re considering about their plans to address these use cases and any future ones that could arise as requirements evolve.
Looking for a PDP you can genuinely trust to take care of the complex obligations you face due to France’s upcoming e-invoice mandate?
Our experts remain close to the requirements of the French Mandate. Especially as these evolve. Make it easy for yourself; connect with us.
Bizkaia is a province of Spain, and a historical territory of the Basque Country, with its own tax system. Before the approval of the Batuz strategy, the Bizkaia tax authority developed different approaches to implement a comprehensive strategy that would reduce tax fraud. The goal was to stop fraud from affecting revenue generated from economic activities.
This initiative started in the early 2010s when the authority introduced requirements for maintenance of the ledgers of economic operations for individuals with economic activities via model 140, and later by imposing the Immediate Supply of Information (SII) obligation to certain taxpayers in the region.
Batuz represents a significant advancement towards achieving an integral digitized tax control system, covering individuals and entities that carry out economic activities regardless of size. As this article outlines, the system establishes new models that facilitate compliance with fiscal obligations.
What is Batuz?
Batuz is a tax control strategy implemented by the Bizkaia government that applies to all companies and self-employed persons subject to the regulations of Bizkaia – regardless of their size and volume of operations – comprising the following requirements:
Provision of draft tax returns prepared by the tax authority
Batuz characteristics
The tax authority based Batuz on the three pillars listed above. Each one entails the following set of obligations that, together, encompass compliance:
TicketBAI invoicing software: Taxpayers must adjust their invoicing software to comply with specific standards to guarantee the integrity, conservation, traceability and inviolability of records that document the supply of goods and services.
Invoices generated by TicketBAI software must carry a unique identification code and a QR code. Additionally, for every issued invoice, the software must create a record in the XML TicketBAI format schema with a digital signature to be incorporated into the LROE.
The compliant software must be in the TicketBAI guarantor software registry. The tax administrations of Álava, Bizkaia and Gipuzkoa, in collaboration with the Basque Government, manage the TicketBAI initiative. However, each territory has their own rules and timelines for implementing TicketBAI.
Ledger of Economic Operations (Libro Registro de Operaciones Económicas): This is the electronic ledger comprised of six chapters in which income, expenses and invoices of the companies who carry out economic activities will be declared via model 240. Generally, the ledger must be transmitted quarterly to the Bizkaia tax authority. For companies under the SII mandate, however, the deadline is four days from operation completion. Nonetheless, the authority will consider the SII obligation as fulfilled by sending the LROE by the applicable deadline.
Preparation of draft VAT and income tax returns: Finally, with the information from the LROE, the Bizkaia tax authority will prepare drafts of VAT, corporate and income returns and make them available to covered taxpayers.
Batuz deadlines
Voluntary adoption has been possible since 1 January 2022, with tax incentives for those who commit to early compliance.
From 1 January 2024, Batuz will become mandatory in Bizkaia for all taxpayers in scope – meaning there will not be a phased roll-out, as is usually the case.
For an overview about other VAT-related requirements in Spain read this comprehensive page about VAT compliance in Spain.
Update: 8 March 2023
South Korea has recently approved a tax reform which introduces several measures for 2023, among which is the possibility of issuance of self-billing tax invoices.
This tax reform amends the current VAT law to allow the purchaser to issue invoices for the supply of goods and services.
However, this will only be allowed in specific circumstances, such as when the supplier cannot issue the invoice. The purchaser can claim a deduction for the related input VAT by issuing a self-billing invoice.
Therefore, issuing self-billing invoices for VAT-exempted supplies of goods and services will not be permitted. However, the issuance of self-billing invoices by the purchaser depends on confirmation from a district tax office.
What’s next?
This amendment will enter into force and apply to all supplies of goods and services from 1 July 2023.
This South Korean tax reform will expand the transactional scope of the country’s e-invoice issuance and continuous transaction control (CTC) reporting system (e-tax invoicing), as the transactions in the scope of e-tax invoicing are generally the same as those in the scope of VAT invoicing.
Collection of real-time fiscal data is becoming one of the core public finance decision making tools. Transactional data provides a timely and reliable overview of the business sector, enabling governments to rely on analytical data in the decision-making process.
This is what has led many governments to adopt CTC regimes that require taxpayers to transmit their transactional data in real/ near-real time to government services. South Korea was one of the first countries to appreciate the benefits of a CTC regime and mandated reporting of e-invoice data to the government for certain taxpayers as early as 2011.
Mandate scope expanded
The year after the first implementation, the South Korean authorities expanded the mandate scope and the e-invoicing system became mandatory for more taxpayers. 2014 saw another expansion of the CTC mandate to reach its current scope.
The current system requires any business that is a corporate entity or an individual whose aggregate supply value for the immediately preceding tax year is KRW 300,000,000 or more to issue an e-invoice to the recipient of goods or services subject to VAT, as well as to report the invoice data to the government.
The South Korean e-invoicing system mandates the issuance of an e-invoice to the recipient and reporting of this invoice data to the government portal within a day of its issuance. Before e-invoices are transmitted, suppliers must digitally sign them with a PKI electronic signature. E-invoices are reported in an XML format to the National Tax Agency (NTS) Portal. Due to the near-real time reporting time-limit, the South Korean e-invoicing system falls under the category of CTC.
South Korea has implemented a comprehensive e-invoicing system from the beginning and as a result there haven’t been any major changes to the requirements or practices. This is a big relief for taxpayers in South Korea compared to other CTC jurisdictions where there are constant changes.
In addition to the benefits for taxpayers, a considered CTC regime is also less burdensome for the state as the implementation costs of the constant regulatory changes can be significant.
More and more governments are considering the adoption of CTC regimes and should look to South Korea as a success story for this approach which has worked well for both the government and taxpayers.
Take Action
Please get in touch to discuss how Sovos can help your business comply with CTC regime reporting in South Korea or other jurisdictions subject to e-invoicing mandates.
Northern European Jurisdictions: CTC Update
The European Commission’s VAT in the Digital Age (ViDA) proposal continues to unfold with the latest details published on 8 December 2022. As a result, many EU countries are stepping up their efforts towards digitising tax controls – including mandatory e-invoicing.
While we see different approaches to initiate this transition across Northern Europe, the trend towards continuous transaction controls (CTCs) and e-invoicing mandates has accelerated.
Germany plans for e-invoicing mandate
Recent statements indicate that Germany is taking steps towards a B2B e-invoicing mandate, however, without a centralised reporting or clearance element – at least for now. During a VAT conference on 10 March, the Federal Ministry of Finance announced that a draft paper will be published in a couple of weeks for the introduction of the e-invoicing mandate.
It is worth noting that Germany had previously requested a derogatory decision from the European Commission to implement a mandatory e-invoicing regime, as announced by the Ministry of Finance in November 2022.
Sweden edges towards mandatory B2B e-invoicing
Sweden is another country where it would not be surprising to see an e-invoicing requirement emerge. The Swedish Agency for Digital Government (DIGG) has expressed the desire to implement mandatory e-invoicing in the country.
With the Swedish Tax Agency and the Swedish Companies Registration Office, DIGG has requested the government research the conditions for mandating e-invoicing in B2B and G2B flows, which would be added to the current B2G e-invoicing mandate.
The reasoning behind this request is that if the European Commission’s ViDA proposal is adopted, it will result in mandatory e-invoicing in cross-border flows. Therefore the national system should align for efficiency purposes. DIGG does not believe that alignment will occur voluntarily, but a mandate will be necessary.
Finland supports the ViDA package
In Finland, no mandatory B2B e-invoicing mandate is in place. However, buyers can receive a structured electronic invoice from their suppliers if requested. This regulation has been in effect since April 2020 for all Finnish companies with a turnover exceeding €10,000.
Furthermore, the Finnish government recently demonstrated their support of electronic invoicing by sending a letter to Parliament outlining its benefits. The government sees electronic invoicing as a means of increasing business efficiency and combatting VAT fraud through the ViDA package.
Lithuania is laying the groundwork for the broader use of e-invoices. It has announced plans to build a technological solution that complies with the European standard for the transmission of electronic invoices.
The platform is expected to be available free of charge to businesses for at least five years and should be ready by September 2023. Additionally, the platform will meet Peppol Network requirements and comply with Peppol BIS 3.0.
Denmark enables automated e-invoicing via e-bookkeeping systems
Denmark has also been working on digitizing the business processes by implementing a new bookkeeping law. The Danish Business Authority has initiated implementing the Bookkeeping Act’s digital bookkeeping provisions by adopting draft executive orders for standard digital bookkeeping systems and their registration.
As a result, providers of standard digital bookkeeping systems must adapt their systems to the new requirements by 31 October 2023 at the latest. The new provisions stipulate that traditional digital bookkeeping systems must support the automatic sending and receiving of e-invoices in OIOUBL and PEPPOL BIS format.
While Denmark has not announced the final dates, it expects taxpayers to adhere to the digital bookkeeping rules between 2024 and 2026.
Northern Europe Continuous Transaction Controls Update
The recent EU Commission report on the VAT in the Digital Age Initiative indicates that continuous transaction controls (CTCs) will become more prevalent across Europe. The final report suggests introducing an EU-wide CTC e-invoicing system covering both intra-EU and domestic transactions as the best policy option. While Eastern European countries have been at the forefront of local implementations, acting swiftly and introducing CTCs, it’s also worth keeping an eye on some of the developments in Northern Europe.
Germany
Following the 2021 national elections, the new coalition government in Germany identified VAT fraud as a policy question. It announced its intention to introduce a nationwide electronic reporting system as soon as possible, which will be used for the creation, checking, and forwarding of invoices. Although there are no details about the nature of the system, discussions are ongoing with stakeholders from the private sector, mainly focusing on the implementation timeline and the government’s role in such a system.
B2G e-invoicing has been mandatory for invoices issued to the federal administration since 2020. The scope was expanded from 1 January 2022 to include state-owned authorities in Baden-Wurttemberg, Hamburg, and Saarland, with the next states joining in 2023 and 2024. Moreover, the IT Planning Council, the Central Body for the digitization of administration in Germany, issued the decision 2022/31 advising all contracting authorities to accept electronic invoices via the PEPPOL network by 1 October 2023 to connect the entire public area in a uniform manner.
Denmark
Denmark is also aiming to introduce new requirements to digitize the business processes of Danish companies. On 19 May 2022, the Danish Parliament passed a new accounting law requiring taxpayers to make their bookings electronically using a digital accounting system. The mandate will take effect gradually between 2024 and 2026, depending on the company’s form and turnover.
While the new accounting law doesn’t introduce any mandatory e-invoicing or CTC obligations, it is envisaged that the digital accounting systems must support continuous registration of the company’s transactions and the automation of administrative processes, including automatic transmission and receipt of e-invoices. The Ministry of Finance has been authorised to adopt rules requiring companies to register purchase and sales transactions with electronic invoices as the documentation of the transactions, which in practice would amount to an e-invoicing mandate.
The Danish Business Authority, Erhvervsstyrelsen, has prepared drafts for three executive orders concerning the new digital bookkeeping requirements. According to draft regulations, digital accounting systems are required to support the automatic sending and receiving of e-invoices in OIOUBL and PEPPOL BIS format. These systems must be able to share the company’s accounting data by generating a standard file, which is the Danish SAF-T Standard recently published by Erhvervsstyrelsen.
The draft regulations will be available for public consultation until 27 October and the requirements are expected to enter into force on 1 January 2023. There will be a conversion period until 1 October 2023 for digital accounting systems to comply with the requirements.
Sweden
Sweden is another country looking at introducing digital reporting requirements. The Swedish Tax Administration, Skatteverket, is considering different ways to ensure the correct collection of VAT while obtaining useful economic data from businesses. The project is still at an early phase, and while such requirements could mean introducing Standard Tax Audit File (SAF-T) requirements or a type of CTC, e-reporting, or e-invoicing, the tax authorities would still strive to implement a smooth system for businesses.
Latvia
The Latvian Ministry of Finance has been working on digitizing invoicing processes for a while. They conducted a public consultation and took into consideration opinions of companies and non-governmental organizations to find out the readiness to start using e-invoices in Latvia.
As a result, the Ministry of Finance prepared a report discussing the current situation and the implementation of e-invoices, and possible technological solutions. The report focuses on different e-invoicing systems, such as post-audit e-invoicing, centralised e-invoicing, and decentralised e-invoicing, comparing the advantages and disadvantages of such systems.
The report favours the PEPPOL BIS standard for the introduction of mandatory e-invoicing in B2B and B2G transactions and proposes the use of e-invoices must be defined as an obligation in Latvian regulations, setting a mandatory requirement for the use of e-invoices to start no later than 2025.
The Latvian government approved the report, and the necessary regulatory acts, hence implementation of technological solutions are expected to take shape in due course.
What’s next?
It’s clear that CTC initiatives are becoming increasingly popular among governments and tax authorities in Europe, with the Northern European countries starting to follow this trend, even if they seem to be acting more cautiously. It will be very interesting to see how and when these CTC projects take shape and be affected by the upcoming results from the EU Commission on the VAT in the Digital Age project.
Take Action
Need help with e-invoicing requirements? Get in touch with our tax experts.
Update: 3 May 2024 by Dilara İnal
Israel Postpones CTC Rollout
The Israeli Tax Authority (ITA) has postponed the rollout of the continuous transactions controls (CTC) mandate.
The deduction of input tax is allowed with this second postponement, even in the absence of an allocation number, until 4 May 2024. The previous cut-off date was 31 March.
Starting 5 May 2024, businesses engaged in B2B transactions exceeding 25,000 NIS (approx. EUR 6,500) are required to obtain an allocation number assigned by the ITA.
On 23 October 2023, the Israeli Tax Authority (ITA) announced that it had extended the continuous transaction controls (CTC) implementation timeline to offer businesses more time to complete their technological development. According to the announcement, the ITA will allow the deduction of input tax from a tax invoice, even in the absence of an allocation number, until 31 March 2024.
The new Israeli invoicing framework will require businesses engaged in B2B transactions that exceed a specific threshold to obtain an allocation number. The first phase starts on 1 January 2024 for invoices exceeding 25,000 NIS. Businesses must ensure that their invoices include the allocation number to be eligible for input VAT deduction as of this date. In light of this recent announcement, buyers will receive an additional three-month period to comply.
It is important to emphasise that although the ITA has extended the time for input tax deductions, the clearance platform will be fully operational as originally planned from 1 January 2024. From this date, invoice issuers who will request allocation numbers will receive them.
Looking for more information on Israel’s invoicing developments? Find out more.
Update: 6 July 2023 by Enis Gencer
Israel Announces CTC Implementation Timeline and Guidelines
The Israel Tax Authority has released a set of guidelines encompassing technical details and other relevant information regarding the implementation of the Israeli Invoice model.
The guidelines state the new model will be a phased implementation that begins with a pilot program in 2024. A key objective of this new model is to address and mitigate the long-standing issue of fictitious invoices in Israel.
Israel invoicing model
Under the newly introduced Israeli Invoice model, taxpayers involved in B2B transactions which exceed a specific threshold will be required to obtain an invoice number. This will be done by contacting the designated tax authority service via APIs and sending the invoice information prescribed by the tax authority.
The guidelines define the set of information that must be reported to the tax authority, including:
Invoice ID
VAT number
Invoice date
Invoice amount
Accounting software number
Once acquired, the invoice number must be included on the tax invoice. Without this number, taxpayers will not be eligible to deduct input VAT. It is important to note that the tax authority reserves the right to not assign the invoice number if there is reasonable suspicion of any legal inconsistencies concerning the invoice.
Buyers can use the invoice number to access invoice details through the tax authority service. This feature is designed to optimise the process of incorporating the invoice into the taxpayer’s accounting system.
Implementation phases
The Israeli Invoice model will be a phased implementation, beginning with a pilot program in January 2024 for invoices exceeding 25,000 NIS (approximately 6,500 euros). During this phase, the tax authority can only reject the request for invoice numbers in cases of technical errors.
As implementation progresses, the threshold will be gradually reduced as follows:
2025: The threshold will be reduced to 20,000 NIS (appx. 5200 euros) pre-VAT. Note that the Finance Committee may extend the pilot program through 2025.
2026: The threshold will further decrease to 15,000 NIS (appx. 3900 euros) pre-VAT.
2027: The threshold will be 10,000 NIS (appx. 2600 euros) pre-VAT.
2028: The threshold will be set at 5,000 NIS (appx. 1300 euros) pre-VAT.
Israel is quickly taking steps towards the introducton of its invoicing system by publishing technical details and its implementation timeline soon after introducing the system formally in February 2023. Taxpayers should now prepare their systems according to the legal and technical guidelines that the tax authority has recently published.
Israel: Progress on Implementing Continuous Transaction Controls (CTCs)
Update: 26 May by Enis Gencer
More details have emerged regarding the implementation of the continuous transaction control (CTC) model in Israel, which was announced to be introduced in the country in February 2023.
As we reported earlier, Israel’s government approved the 2023-2024 budget on 24 February 2023, setting the stage for the adoption of the CTC model. Since then, the proposal has gone through the standard legislative process and it has recently received approval from the Finance Committee, with some modifications.
New scope and timeline of CTC system
According to the latest announcement, the modified plan introduces a CTC e-invoice clearance model for invoices exceeding NIS 25,000 (approximately 6,500 Euros) in business-to-business (B2B) transactions. Under this model, invoices must be issued through the tax authority’s system and obtain real-time approval. Taxpayers will not be allowed to use unvalidated invoices for deducting input tax.
The implementation of the CTC e-invoicing model is scheduled to start in January 2024, and by 2028, the threshold will be reduced to NIS 5,000, thus covering smaller amount transactions.
Despite the short implementation timeline, it is important that the authorities publish regulatory and technical specifications in time for taxpayers to prepare their invoicing systems to fully comply with the new requirements by January 2024.
This long-awaited move will have significant implications for businesses operating within the country. It is essential to know the changes that may impact your company.
Proposal for e-invoice clearance model
The new plan, prepared by the Ministry of Finance and approved by the government, envisages an e-invoice clearance model for invoices over NIS 5,000 (appx. 1300 Euros) issued between businesses. Under this model, invoices must be issued through a tax authority system and receive real-time approval.
The tax authority system will issue a unique number as proof of clearance for each invoice, which businesses can then use to deduct input VAT. The government has also proposed that the tax authority be entitled to refuse a request to assign a number and not clear the invoice if there is a reasonable doubt that the invoice is not issued legally.
While this plan is an exciting development, it is only the beginning of a long journey towards implementing a CTC model. The above proposal is currently only outlined in a budget document, which will be subject to further readings and approvals before the government can implement it.
Additionally, an amendment to VAT Law and the publication of technical details will be necessary to make it legally and technically enforceable.
Israel on the Road to Continuous Transaction Controls (CTCs)
With the long-lasting problem of fictitious invoices in Israel, a move towards some form of mandatory e-invoice clearance might be the answer. After having been withdrawn once due to failing support, the idea of a continuous transaction control (CTC) model is being revived by the Israeli tax authority. The proposed model, similar to Chile’s e-invoicing system (clearance), would include a direct connection between the tax authority and businesses in real time for each transaction. The proposal, which is currently being reviewed with interested stakeholders, will be presented to the Knesset Finance Committee, with the hope of promoting legislation for implementing the planned reform measures as soon as a new government is formed.
Subject to final adoption in law, the core points of the reform are:
B2B Invoices over NIS 5,000 must be reported in real-time to and approved by the tax authority.
The reporting will occur through an accounting software or a government web portal.
Information required to be reported includes the date of the transaction, invoice number, business numbers of the transacting parties and the amount of the invoice, excluding VAT.
An authentication by the buyer of the invoice on the government portal is envisaged.
Pre-population of the VAT return is also envisaged.
It’s an interesting observation that for years Israel appeared to be heading towards the EU approach of a post-audit system, yet recently they seem to have pivoted and be heading towards the more Latin American style of continuous transaction controls.
Either way, the Israeli tax authorities are now taking firm measures to combat VAT fraud, as to whether they go for a model similar to Chile, or something close to home in India or Turkey, we will have to wait and see.
Note: The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. Our blog, France: B2B E-Invoicing Mandate Postponed, is promptly updated whenever there are changes to the rollout of the French mandate.
France will implement a mandatory B2B e-invoicing and an e-reporting obligation. Every company operating in France is affected.
Electronic invoicing in France requires using a (partner) dematerialization platform. The already enacted legislation leaves the choice of which platform up to companies.
Should you use the public platform (‘PPF – Portail Public de Facturation’, i.e. Public Invoicing Portal) or a third-party private platform (‘PDP – Plateforme de Dématérialisation Partenaire’, i.e. Partner Dematerialization Platform)? And which organisation registered as a PDP should you opt for?
There is a lot to consider – including the type of invoices, data management, customer/supplier relations, transmission, functionalities, and more – this blog will help you make a decision.
The electronic invoicing process includes formatting, controlling, reporting, routing tracking, transactions, whether between trading parties (domestic B2B e-invoices) or with the PPF (domestic B2B e-invoices, cross-border B2B sales and purchases, B2C sales, payments received on services). In this respect, PDPs are essential.
French legislation allows companies to choose their dematerialization platform for submitting and/or receiving domestic B2B invoices and reporting transactions. A public solution exists, the PPF, alongside which other PDPs position themselves.
What parameters should you consider when choosing a dematerialization platform? What are the conditions for becoming a PDP and when will they be operational?
This blog discusses the elements that enable companies to understand the role of dematerialization platforms in managing electronic invoicing. If you wonder how to choose the right PDP for your organization, read this blog about Choosing the right PDP – 5 Questions to ask Yourself.
1. Understanding the role of dematerialization platforms
The need to use a dematerialization platform is part of the electronic invoicing requirements, which come into force for business-to-business (B2B) transactionswith go-live of the mandate.
Electronic invoicing in France: who is affected?
Mandatory electronic invoicing requirements are being implemented progressively according to company size.
They also entail the need to exchange B2B invoices via a platform. The public platform PPF and PDP will allow these exchanges.
October 2023: draft of new Finance Law for 2024 with details of changes, including any revisions to the timeline for when each category of company will be in scope
Endof 2023: new Finance Law for 2024 formally enacted by French Parliament
From April onward 2024: Initial list of officially registered PDPs published
2025: Pilot phase ongoing during most of the year
Early September 2026: first phase of mandate go-live expected
Inbound e-invoicing INBOUND for all companies. Outbound e-invoicingOUTBOUND (+ e-reporting) for Large & Mid-Size businesses Caps
September 2027:second phase of mandate
Outbound e-invoicing OUTBOUND (+e-reporting) for any other companies
2. PDPs and electronic invoice formats
An electronic invoice must be delivered in a structured format, leaving it to the trading parties and their PDPs to agree on the standard. By default, PDPs must be able to process the three core set formats, UBL, CII, or UNCEFACT, with the obligation for the platforms to produce a legible version of each invoice, or Factur-X hybrid format (XML+PDF/A-3).
PDPs may also offer to process any other structured formats (e.g. EDI formats such as EDIFACT), subject to acceptance by both the buyer and the seller. In both cases, PDPs will have to extract mandatory data from the issued e-invoice and map it into one of the core set formats – and then report them to the PPF within 24 hours of the e-invoice issuance.
The corresponding flows can be exchanged under various communication protocols (EDI, API, etc.)
3. Public platform or PDP?
Using a PDP isn’t mandatory from a legal point of view. However, using a PDP will be necessary for companies who want to exchange invoices in specific formats due to the specificities of the invoice flow (not supported by the PPF).
The role of the public platform
The PPF will be used for the obligatory transmission of invoice data to the tax authorities.
It will manage the following for companies:
Submission of invoices (in simple PDF format).
Invoice entry to the portal.
Invoice conversion into one of the three formats (CII, UBL, or Factur-X).
Invoice availability to recipients.
The PPF performs other functions including management of the Central Directory (in which any registered company subject to VAT will be identified), data collection and transmission to the tax authorities, and retention of e-invoices.
The advantages of Partner Dematerialization Platforms (PDPs)
Like the PPF, a Partner Dematerialization Platform (PDP) ensures the submission of invoices and conversion into one of the three core-set formats – CII, UBL or Factur-X.
But, contrary to the PPF, they will allow the exchange of invoices in any EDI format (other than the three core-set formats).
The PDPs will allow the following:
The creation and control of invoices (in terms of tax and accounting compliance) and their validation (technical and consistency).
Sending invoices from suppliers to buyers/recipients and thus transmitting invoices regardless of the platform chosen by the recipients.
Receiving invoices sent by other platforms and making these invoices available to users
Processing the four invoice lifecycle statuses (deposit, rejection, refusal, and cashed).
Transmitting invoice data, transactions and payments to the public platform.
In addition to these mandatory functionalities, they may also offer the following:
Archiving tools in a digital vault with various functionalities, centralization, and collection.
As well as the PPF, the PDPs must process non-mandatory lifecycle invoice statuses such as notifications of delays, reminders, split payments, and so on.
Specific business applications like presence/consistency controls of business data and approval workflow.
4. Conditions to become a PDP
A PDP is a platform registered and authorised by the French tax authorities. The official registration number will be issued based on an application file submitted by an operator. This file will have to document how the regulation requirements (decree and order published in October 2022) are met, particularly the ability to perform the functions expected of a PDP.These requirements are meant to be slightly revisited with a new decree/order to be published beginning of 2024 (more precisely, with the removal of connectivity tests with TA Platform as a PDP Registration Criteria)
In addition to the guarantee provided by this registration (mainly from the point of view of compliance with stringent security rules), what distinguishes a registered platform from a simple dematerialization operator is the possibility of transmitting invoices to other dematerialization platforms (PPF or other PDPs).
This registration is valid for three years and then must be renewed, based on audits to be regularly provided by the PDPs (first audit to be conducted no later than 12 months after the registration entering into force).
The first certified PDPs should be announced in the beginning of 2024 and will be published on the tax authority’s website.
Thailand has permitted e-invoicing since 2012. From 2017 – following regulations issued on e-tax and e-receipts – taxpayers may prepare, deliver, and keep their invoices and receipts electronically, subject to prior approval from the Thai Revenue Department.
Currently, the Revenue Department and the Electronic Transactions Development Agency (ETDA) are working together to improve the e-tax invoicing system in Thailand. As a result of this joint effort, they’re developing new regulations.
Thailand´s voluntary e-invoicing system aims to promote and support their e-payment policies and electronic transactions, reduce the cost and management of the government and private sector and increase confidence and safety according to international standards.
According to the Revenue Code documents that can be voluntarily issued electronically are tax invoices (known as e-tax invoices), credit notes, debit notes and receipts.
What is e-tax in Thailand?
E-tax invoices are electronic tax invoices, including regular invoices and debit and credit notes prepared in a specific electronic format.
Formats may include a Microsoft Word file, a Microsoft Excel file, PDF, PDF/A-3, XML or other forms established by the Revenue Department. Finally, the e-tax invoice must be signed using a digital signature or time stamp before being delivered to the buyer.
Thailand e-tax system
Thailand currently has two e-invoicing systems for taxpayers to adopt voluntarily. These are e-tax invoices and e-receipt RTIR, and e-tax invoices by email.
E-tax invoices and e-receipt
Any taxpayer can voluntarily register for this system without a turnover threshold.
Entrepreneurs can prepare electronic tax invoices and electronic receipts in an XML file or other electronic formats with a digital signature. However, to submit the data to the Revenue Department, the information should only be in an XML file format (Bor Thor. 3-2560). They must also have an electronic certificate provided by a Certification Authority.
In this system, the supplier must submit the e-invoice to the Revenue Department by the 15th day of the subsequent tax month after delivering it to the buyer.
E-tax invoice by email
This system is designed for small entities with an annual turnover of less than THB 30 million. Taxpayers can email the invoice to the buyer and include the central system of the agency that develops electronic transactions in the CC field for time stamping.
The system then sends both trading parties an e-tax invoice with a time stamp. In this system, the file format is PDF/A-3. Information is automatically sent to the Revenue Department.
It’s important to note that once approved by the Thai Revenue Department to issue electronic invoices, taxpayers must comply with all the regulations and rules for preparing and storing electronic invoices and receipts.
New regulations on e-tax invoices and e-receipts in Thailand
The Thai Revenue Department has recently published new announcements from the Director-General of the Revenue Department regarding VAT, namely: no. 48, 247, 248 and 249.
E-tax invoices and credit and debit notes should include specific statements from those announcements. As of January 2023, they must specify that electronic invoices were prepared and sent to the Revenue Department electronically.
The Thai Revenue Department also set forward new standards in the Announcement of the Director-General of the Revenue Department No.48 regarding forms, method of delivery, storage and documentary evidence or books and information security for operations relating to electronic invoicing.
These new standards entered into force on 19 August 2022.
This regulation reinforces the need for prior approval and permission from the Revenue Department to connect with the electronic systems to issue e-tax invoices. It is subject to the requirement that a data security system can ensure the fulfilment of e-tax invoices and e-receipts.
The taxpayers opting for e-invoicing must follow the rules and conditions for this process. They need to inform the Revenue Department of the e-tax invoice by submitting a receipt for the tax invoice and the certificate used for digital signature.
E-archive rules in Thailand
The Thai Revenue Department also issued new standards in Announcement No. 48 for storing and archiving e-tax invoices and e-receipts.
Taxpayers who are obligated to issue an invoice and choose to do so electronically have to keep the electronic invoice or receipt according to specific criteria:
(a) Use reliable methods to maintain message integrity from the time the message is completed and can display that message later.
(b) Keep information on tax invoices or receipts, which can be accessed and reused, and the meaning does not change.
(c) Keep the information of tax invoices or receipts in the format in which they were created, sent, or received – or in a form that can display messages correctly, and
(d) Retain information indicating the origin and destination of the tax invoice or receipt and the date and time they sent the message.
According to the Thai Revenue Code, electronic invoices must be stored electronically for no less than five years but no more than seven years. Taxpayers must keep tax audit e-invoices until the completion of the audit.
What´s next in Thailand?
These were significant steps towards the digitalisation of taxation in Thailand. Although there is no future timeline or mandate, they’ve taken more measures to solidify and mature the e-invoicing mandate.
While e-invoicing is still not mandatory in Thailand, the government intends to promote e-tax invoices to help businesses to increase efficiency and decrease costs. These measures could be applicable in a future compulsory e-invoicing mandate.
If you want to learn more about e-tax in Thailand or have any other question please feel free to get in touch with a tax expert today.
