The regulatory nature of the e-invoicing process varies across countries around the world. The legislation governing e-invoices can seem confusing — particularly for cross-border businesses that must deal with multiple sets of regulations. So, let’s consider e-invoicing for three separate EU nations.
The French government’s main aim is to work against VAT evasion and ensure the effectiveness of transaction processes. The country first mandated the use of e-invoices for all business-to-government (B2G) transactions from 2020 onwards, using the public platform Chorus Pro to provide e-invoice clearances.
However, new e-invoicing reforms are on the way. E-invoicing will be mandatory for select large enterprises as of July 1, 2024, then for smaller companies starting January 1, 2025, and finally on January 1, 2026, for small businesses. From these dates, e-reporting will be compulsory for all transactions — even those conducted with an individual not liable for VAT and cross-border sales with exempted entities — using Chorus Pro or other state-certified solutions.
Meanwhile, Spain has mandated the use of e-invoices for B2G transactions from 2015 onwards. But the law is changing: soon, all e-invoices and other relevant accounting records will need to be sent through Spain’s national platform, FACe. Spanish legislation also states that all invoices should be made electronically available to all the recipients for a period of at least four years. Failure to comply means the organisation will be charged with an administrative offence. There isn’t a finalised deadline for this mandate (as of November 2023), so keep an eye out for further news.
Finally, Poland has mandated e-invoicing for all transactions from January 1, 2024, onwards. To that end, the country has also launched a national e-invoicing platform called Krajowy System e-Faktur (KSeF). In addition, all Polish taxpayers are required to submit a Standard Audit File for Tax (SAF-T). All taxpayers have to submit a SAF-T every month to the Polish tax authorities.
Although more nations are starting to make e-invoicing compulsory, the legislature behind the required reporting is not standardised and can vary significantly. This can be a pain point for any businesses that want to avoid the risks and penalties of noncompliance, which include:
- Financial penalties: Monetary fines for noncompliance range from fixed amounts to a percentage of the invoice value, to be remitted to the national financial authorities.
- Legal repercussions: Lawsuits or prosecution from legal authorities also come loaded with associated penalties and court costs.
- Reputational damage: A noncompliant business is more likely to lose the trust of their suppliers, customers, or partners, who may be made anxious by the organisation’s noncompliance.
Complying with e-invoicing rules has notable benefits, such as improved relationships with tax authorities (which also reduces the risk of audits). Acting as a contributor to international tax compliance can go a long way towards ensuring your business is able to operate across borders, reducing the chances of penalties and legal complications that go hand in hand with noncompliance.
