What is electronic invoicing (e-invoicing)?
E-invoicing, or electronic invoicing, is the digital exchange of transaction data in a structured format that enables automated processing.
E-invoicing replaces traditional paper-based invoicing methods, enabling organizations to streamline financial workflows and ensure compliance with evolving regulatory standards.
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.
No time to read? Consider speaking with our experts, no question is too difficult when it comes to e-invoicing compliance.
What this guide to e-invoicing contains
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.
What is an electronic invoice?
An electronic invoice (e-invoice) is a structured electronic document that details a business transaction in a machine-readable format. Unlike traditional paper invoices or unstructured digital formats, e-invoices leverage common formats such as XML, Universal Business Language (UBL), or Electronic Data Interchange (EDI) to enable automated processing by financial systems thro.
An e-invoice differs from other types of e-documents such as e-receipts or e-payroll documents, which serve their own purposes and are often subject to distinct compliance regulations. The key distinction is that an e-invoice is specifically designed for business transactions and must comply with local or international regulations to be considered valid in tax reporting and financial systems.
How does an e-invoicing system work?
E-invoicing isn’t just about eliminating paper—it’s about automating the entire invoice lifecycle to create faster, more efficient, and compliant financial transactions. From the moment an invoice is generated to the final payment, modern electronic systems automate every step, reducing errors, eliminating manual processes, and ensuring businesses meet global tax regulations, including frameworks like Continuous Transaction Controls (CTCs).
The E-Invoice Process
Let’s explore the detailed steps that take e-invoicing from creation to reconciliation, reshaping how businesses handle their financial operations.
- Step 1:
The process begins with the generation of an electronic invoice, which includes essential details like line items, payment terms, and tax information. - Step 2: Transmit
Once the invoice is created, it is transmitted electronically through a secure network or platform. This could occur through a direct connection between the buyer and seller’s systems or through a network such as PEPPOL. - Step 3: Receipt
The buyer or receiver’s system automatically receives the e-invoices and imports the data into its financial software. Thanks to the structured format, the invoice details are accurately captured, allowing for instant processing without manual input. This ensures efficient handling of the invoice and prepares it for the next validation step. - Step 4: Validate
What is E-Invoicing Clearance?
E-invoicing clearance is a system where a tax authority must approve an electronic invoice before it can be sent to the recipient. Once the invoice is cleared, it becomes the only valid document for the transaction. This process ensures compliance with tax regulations and provides real-time monitoring of transactions by the governement.
The system then validates the invoice against supporting documents, such as purchase orders or delivery receipts, to ensure accuracy. This automated validation process checks for discrepancies in pricing, quantities, or terms. In regions following CTCs, tax authorities may also validate the invoice during this step. This is known as e-invoicing clearance, which adds an additional layer of compliance before the invoice is approved for payment.
- Step 5: Approve
Once validated, the invoice moves through the buyer’s approval workflow. The workflow, often automated, ensures that the invoice meets internal and external compliance standards, such as tax regulations enforced under CTCs. Approval may involve confirming payment terms and ensuring the invoice meets budget requirements before proceeding to payment. - Step 6: Process Payment
After approval, the payment is scheduled according to the agreed-upon terms (e.g., Net 30 or Net 60). The automated process ensures timely payments, improving cash flow and enhancing supplier relationships. The buyer’s system communicates with banks or payment platforms to execute the payment electronically. - Step 7: Reconcile and e-Archive
Once payment is processed, the system automatically reconciles the payment with the original invoice, ensuring that both parties’ financial systems are updated accurately. The final step is e-archiving, where the invoice and any related documents are securely stored in a digital format. This process supports compliance with tax regulations and ensures that businesses maintain a reliable digital audit trail, which is particularly important in countries with CTC mandates.
What is E-Archiving?
E-archiving refers to the secure, long-term digital storage of electronic invoices and associated documents. E-archiving ensures that financial records are preserved in a manner that complies with local tax authority regulations, allowing for easy retrieval for audits, legal, or compliance purposes.
Defining B2G, B2B, and B2C E-Invoicing
B2G e-invoicing involves the electronic submission of invoices by businesses to government agencies. This is part of a larger effort to digitize public procurement and improve transparency in financial transactions with government entities.
B2B e-invoicing refers to the electronic exchange of invoices between two companies. This process significantly streamlines the invoicing workflow by automating tasks like invoice creation, transmission, and approval.
B2C e-invoicing focuses on generating electronic invoices or bills for individual consumers. This form of invoicing is often integrated with digital payment systems, allowing consumers to receive, review, and pay invoices online.
The Benefits of E-Invoicing in Global Tax Compliance
E-invoicing is rapidly becoming a global standard for ensuring the accuracy of transactional data, driven by governments’ desire for transparency. Fueled by a lack of trust in the data that businesses use for compliance and decision-making, it removes subjectivity from financial data—offering businesses a clearer view of their operations and helping governments save billions.
Key Benefits Include:
- Reduces Tax Fraud
By requiring the real or near-real-time transmission of transaction data directly to tax authorities, CTC systems eliminate opportunities for underreporting or manipulating invoices. Governments can access transaction data as it occurs, enabling them to verify that taxes are properly calculated and reported. This enhanced visibility and control significantly reduce instances of tax evasion and fraud. - Simplifies Cross-Border Transactions
Operating across multiple countries involves navigating a web of complex tax regulations, varying invoice formats, and country-specific compliance requirements. E-invoicing simplifies this process by aligning invoice data with global standards, such as PEPPOL and EDI. These standardized formats allow businesses to manage cross-border tax reporting more effectively, reducing the errors and delays that can occur with manual invoicing. - Increases Tax Revenue
For governments, it provides the potential to increase tax revenue by reducing tax evasion and closing the VAT gap—the difference between the amount of VAT owed and the amount collected. Real-time monitoring of transactions allows tax authorities to detect and address discrepancies more quickly, ensuring that taxes are accurately calculated and collected. This increased transparency helps governments maintain more reliable revenue streams.
Learn more about how e-invoicing is rapidly becoming a key driver in the digital transformation of both government and business sectors.
Where is e-invoicing mandatory?
In the European Union, e-invoicing is mandatory for B2G transactions under the EU Standard for Electronic Invoicing (EN16931). These requirements have started to gradually expand to include B2B transactions, especially following the VAT in the Digital Age (VIDA) initiative. VIDA is a proposal from the European Commission aimed at modernizing and digitizing the value-added tax (VAT) system.
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.
Mandatory B2G e-invoicing for suppliers in the EU
Croatia (HR)
Denmark (DK)
Estonia (EE)
Finland (FI)
France (FR)
Italy (IT)
Lithuania (LT)
Netherlands (NL)
Spain (ES)
Sweden (SE)
Luxembourg (LU)
Romania (RO)
Slovenia (SI)
Austria (AT)
Belgium (BE)
Germany (DE)
Portugal (PT)
Bulgaria (BG)
Republic of Cyprus (CY)
Ireland (IE)
Greece (EL)
Latvia (LV)
Malta (MT)
Poland (PL)
Slovakia (SK)
Czech Republic (CZ)
Hungary (HU)
Mandatory B2B e-invoicing in EU
In most European Union countries, B2B trading parties are free to exchange e-invoices in any form and format agreed upon. 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), Slovakia (SK), Slovenia (SI), and Spain (ES)
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). Open PEPPOL 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.
E-Invoicing Mandates Around the World
Argentina was an early adopter, initially implementing the e-invoicing system in 2002 and mandating its use for all VAT-registered taxpayers by 2015. Businesses are required to issue electronic invoices, validated with an Electronic Authorization Code (CAE) from the tax authority, AFIP. E-invoicing in Argentina is mandatory for both B2B and B2G transactions, as well as for small businesses and freelancers. The system includes various invoice types like Type A, B, C, and E, covering domestic and export transactions.
Belgium will implement mandatory B2B e-invoicing starting January 1, 2026. The guidelines issued by the Belgian Federal Public Service Finance outline the requirements for structured invoices, technical specifications, and the scope of transactions affected. The guidelines also detail cross-border invoicing using the PEPPOL network and the coexistence of electronic and paper invoices. Businesses are encouraged to begin preparing for the transition to ensure compliance.
Canada currently permits but does not mandate B2B e-invoicing. In 2018, federal suppliers were required to use e-invoices for public procurement via the PEPPOL network. The Canadian Revenue Agency (CRA) launched a task force in 2021 to explore the feasibility of a B2B e-invoicing mandate, aiming to improve efficiency, sales tax compliance, and combat the underground economy. The ongoing study is evaluating international standards and models for potential future implementation.
E-invoicing in the Dominican Republic is mandatory as of January 2024, with large taxpayers being the first to comply. The e-invoicing system uses electronic tax receipts (e-CF), requiring taxpayers to submit invoices in XML format through the tax authority’s web services. Compliance is enforced with digital certificates, and invoices must be archived for 10 years. The rollout will extend to smaller businesses by 2026 as part of the country’s effort to streamline tax reporting.
Italy was the first EU country to mandate B2B e-invoicing through a clearance process with its Sistema di Interscambio (SdI) platform. By 2019, the requirement expanded to include domestic B2B and B2C transactions, making Italy the first EU country to implement mandatory B2B e-invoicing through a clearance system.
The French CTC mandate is set to take effect in September 2026. At that point, all businesses will be required to receive electronic invoices, while large and medium-sized companies must also issue electronic invoices and report their transaction and payment data. This move aims to enhance transparency and streamline tax compliance processes across businesses in France.
Germany is moving towards mandatory e-invoicing, with B2G e-invoicing already required at both the federal and state levels. From January 2025, all taxpayers must be able to receive electronic invoices, and by January 2027, large businesses with a turnover exceeding EUR 800,000 will be required to issue e-invoices. By January 2028, the mandate will apply to all businesses. The system is designed to improve tax compliance and transparency.
Greece mandates B2G e-invoicing, with suppliers required to issue invoices electronically to public sector entities through accredited service providers using the PEPPOL network. While e-invoicing for B2B and B2C transactions is currently optional, it may become mandatory in the future as part of broader tax reforms. The government has also implemented the myDATA system for real-time reporting of accounting data, further integrating digital compliance across businesses.
Malaysia rolled out mandatory e-invoicing in August 2024 for businesses with an annual turnover of more than RM100 million. The e-invoicing system in Malaysia follows a CTC model, where invoices must be validated by the tax authority through the MyInvois platform. By 2025, the requirement will extend to all taxpayers. This initiative aims to improve tax compliance and streamline reporting for specific sectors, with plans to gradually cover more businesses.
New Zealand is actively discussing mandatory e-invoicing within its e-Invoicing Adoption Leaders Group, which includes government and business representatives. While e-invoicing is not yet mandatory, the country has signed a Memorandum of Agreement with Singapore to promote e-invoicing adoption. These developments suggest that New Zealand may eventually introduce mandatory e-invoicing, although no specific timeline has been confirmed.
The Sultanate of Oman has postponed the rollout of its mandatory B2B e-invoicing system, originally planned for voluntary implementation in April 2024 and mandatory for large entities by October 2024. The new timeline has been pushed to sometime in 2025 due to the lack of detailed design and system features. Oman is expected to adopt a CTC e-invoicing model to enhance tax compliance.
Peru implemented mandatory e-invoicing for all taxpayers as part of its Electronic Issuance System (SEE), regulated by the National Superintendency of Customs and Tax Administration (SUNAT). Since 2014, businesses have been required to issue and receive electronic invoices for B2B and B2G transactions. The system includes various electronic documents, such as credit notes and sales receipts, and offers multiple issuance systems. Non-compliance with e-invoicing regulations can result in penalties, including fines and establishment closures.
Poland’s e-invoicing system will become mandatory for large businesses by February 2026 and for all other taxpayers by April 2026, using the Krajowy System e-Faktur (KSeF) platform. Initially, e-invoicing has been voluntary since January 2022, with B2G transactions already requiring electronic invoices. The system supports real-time reporting and invoice validation, aiming to streamline tax compliance and reduce fraud. Penalties for non-compliance will apply once mandatory adoption begins.
Portugal’s B2G e-invoicing system mandates suppliers to issue electronic invoices for public sector contracts. Introduced under Law Decree 111-B/2017, the requirement began in 2019 and initially applied to large companies, with deadlines for smaller businesses postponed to 2025. Invoices must follow the CIUS-PT format, and non-compliance can result in non-payment, legal action, or contract breaches. The system aims to streamline transactions, improve compliance, and align with EU standards.
Romania introduced mandatory e-invoicing in stages, starting with B2G and high-risk B2B transactions. As of July 2024, all VAT-registered businesses must submit e-invoices for all transactions through the RO e-Factura platform. The system aims to streamline tax compliance and improve transparency, with penalties for non-compliance.
Saudi Arabia’s Zakat, Tax, and Customs Authority (ZATCA) has announced the 15th wave of Phase 2 for its e-invoicing mandate. This wave targets taxpayers with annual revenues of at least SAR 4 million (around USD 1.06 million) who were subject to VAT in 2022 or 2023. These taxpayers must integrate their e-invoicing solutions with ZATCA’s FATOORA platform by March 1, 2025. Phase 2 introduces additional integration requirements to streamline compliance and reporting.
Singapore’s e-invoicing system, based on the PEPPOL network, is set to become mandatory for B2B transactions starting in November 2025 for newly GST-registered companies. The InvoiceNow framework, launched in 2018, allows businesses to exchange e-invoices more efficiently. While B2B e-invoicing will soon be required, B2G e-invoicing is expected to become mandatory in the future. The initiative aims to streamline invoicing processes and improve compliance in Singapore’s business landscape.
Slovenia has proposed mandatory CTC e-reporting, set to begin in June 2026. The plan requires businesses to issue and exchange e-invoices while reporting B2B and B2C transactional data to the tax authority in near real-time. This system aligns Slovenia with global trends in tax compliance and digital reporting, aiming to enhance transparency and efficiency in tax administration.
Spain’s e-invoicing mandates have been in place for B2G transactions since 2015, requiring suppliers to use the FacturaE format. Starting in 2025, the country will introduce mandatory B2B e-invoicing in a phased approach, starting with large taxpayers. Spain’s system operates on a post-audit model with near real-time data reporting, making it essential for businesses to comply with new standards and timelines.
Taiwan has updated its e-invoicing regulations, requiring taxpayers to submit electronic Government Uniform Invoices (e-GUIs) and related information to the Ministry of Finance’s platform within 7 days for B2B transactions and 2 days for B2C. New penalties have been introduced for non-compliance, with fines ranging from TWD 1,500 to TWD 15,000. The country has also released the updated Message Implementation Guideline (MIG v. 4.0), with the previous version valid until December 2025, allowing for a transition period.
Turkey introduced mandatory e-invoicing in 2014 as part of its e-Transformation initiative. Companies with an annual turnover exceeding TRY 3 million, as well as specific sectors like energy and online trade, must comply. E-invoices in Turkey use the UBL-TR 1.2 format and require either a fiscal stamp or a qualified electronic signature. The system reduces costs, increases security, and improves compliance with VAT regulations. E-invoices must be archived for 10 years.
Currently, there are no uniform e-invoicing regulations enforced within the United States. resulting in varied practices and slow adoption across states. According to the DBNAlliance, the lack of a federal VAT or GST system in the U.S. has created over 10,000 taxing jurisdictions, complicating e-invoicing adoption.
The Zambian Revenue Authority (ZRA) granted a three-month grace period for taxpayers to comply with mandatory e-invoicing via the Smart Invoice System (SIS), extending the deadline to September 30, 2024. The SIS is designed to reduce VAT fraud by monitoring real-time transactions. Penalties for non-compliance will be enforced starting October 1, 2024, allowing taxpayers additional time to register and integrate the system.
Frequently Asked Questions
The requirement for e-invoicing depends on the country and the regulatory framework in place. Over the past decade, many governments worldwide have introduced e-invoicing mandates as the foundation for broader Continuous Transaction Control (CTC) frameworks.
While there are a variety of options available today, the best invoicing platform is the one that meets your specific business needs while ensuring compliance with global and local regulations. Electronic invoicing systems should be scalable, reliable, and capable of growing with your business to meet the complexities of invoicing compliance worldwide. Trusted by multinational enterprises and SMBs alike, Sovos offers an end-to-end invoicing solution for compliance across more than 60 countries.
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SAP supports e-invoicing, but it’s important to note that it must be configured according to each country’s specific regulations and invoice requirements. SAP customers are basically confronted with two options: build your own tools on SAP architecture or select an end-to-end provider. These are two distinct approaches with very different paths towards your end goal.
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Very few countries have restrictions or limitations that make adopting e-invoicing challenging. For example, in Morocco, issuing e-invoices without prior consultation with the tax authority is not recommended. In Venezuela, e-invoicing is permitted only for specific industries and requires approval from the tax authority before invoices can be issued.
