The business landscape is undergoing a significant shift with the rise of e-invoicing and e-reporting. Governments worldwide are increasingly emphasizing the adoption of mandatory electronic invoicing, requiring businesses to exchange invoices electronically through designated platforms. This article explores the transformative potential of e-invoicing and e-reporting, highlighting their importance for companies to remain compliant and competitive. Let’s delve into the future of e-invoicing, the common CTC models, upcoming changes, challenges, and the need for a proactive approach.
Upcoming changes for e-invoicing and e-reporting
By 2028, significant changes to the mandatory e-invoicing requirements are expected, especially for B2B transactions, following the introduction of e-invoicing in more and more countries. Governments, especially in Europe, have introduced obligatory electronic invoicing for companies cooperating with government units, thus setting an example of how electronic invoicing can support activities in B2G relations. In addition, in the B2C relationship, there is also an increase in the number of invoices sent electronically due to the requirements in this area in some countries.
Several European countries are moving towards implementing the electronic invoicing process, with Poland implementing mandatory B2B e-invoicing in July 2024. Other countries such as Romania, Belgium, France, Germany and Spain are also preparing to implement B2B e-invoicing. An important element of the activities carried out in Europe is the ViDA proposal, which is still the subject of political discussion, and governments must be kept informed of its potential impact on the e-invoicing models they implement.
ViDA proposal: harmonizing VAT in the digital age
The ViDA proposal, also known as “VAT in the Digital Age,” seeks to harmonize the electronic invoicing and digital reporting frameworks across all EU Member States. The proposal was first presented in December 2022.
ViDA will revolutionize inter-community trades if approved, making e-invoicing and real-time reporting the standard practice. By leveraging technology, EU countries can enhance their current VAT system and bolster fraud prevention measures.
One of the key changes is redefining the concept of e-invoicing. Under the proposed plan (which is expected to be implemented in January 2024), electronic invoices will only be accepted in structured form, which means that a PDF will not be treated as an e-invoice. This also means that e-invoices will have to be issued enabling automatic processing on the recipient’s side.
ViDA will introduce several transformative measures, including:
- Making electronic invoicing the default method of issuing invoices
- Eliminating the requirement for recipients to accept electronic invoice
- Granting member states the ability to enforce B2B e-invoicing without seeking derogation from the EU Parliament
- Mandating e-invoicing for cross-border transactions
- Establishing a common e-invoicing standard
- Phasing out the option of issuing summary invoices
It’s important to note that ViDA is currently a proposal under active political discussion. Feedback from the latest ECOFIN meeting indicates that not all Member States align entirely with every aspect of the proposal. The short timeframe for full ViDA implementation in 2024-2028 requires a deeper assessment of the potential impact on business operations.
Understanding CTC models for effective e-invoicing compliance
Various continuous transaction control (CTC) models exist, but they are all implemented in different shapes and forms. When attempting to categorize the various requirements emerging globally, it becomes clear that each model has its unique characteristics and distinctions.
The four common models include:
- Real-time reporting model
- Clearance model
- Centralized exchange model
- Decentralized continuous transaction control and exchange model
Understanding and adapting to these models is crucial when navigating the challenges of the complicated e-invoicing and e-reporting regulatory environment.
Top four challenges for businesses navigating e-invoicing
- Complicated regulatory environment. It’s challenging for businesses to navigate the changing world of legal obligations. Not only are invoice requirements subject to continuous modifications, but technical details are also evolving. Adequate resources are necessary to assess their impact on your company to ensure ongoing e-invoicing and e-reporting compliance.
- High level of fragmentation. The EU puts a lot of effort into harmonization to combat fragmentation. Despite this, for now, each country introduces its own e-invoicing models and obligations, significantly affecting business operations. Addressing these specific requirements and obligations calls for adaptations on the system, process, and people levels.
- Outdated technology. The increasing number of changes and fragmentation in the e-invoicing world can’t always be addressed through the same trusted solutions, especially for international companies. In light of the significant upcoming requirements, businesses should adopt a more sustainable, centralized, holistic, and global approach to tackle these emerging trends effectively.
- Tackling one obligation at a time. Companies must consider the bigger picture to align their implemented e-invoicing and e-reporting processes with the wider landscape. Taking this holistic approach facilitates achieving compliance in e-invoicing particularly for internationally operating companies.
A comprehensive global e-invoicing requirement compliance strategy is crucial for businesses to adapt to the ever-changing e-invoicing landscape. By understanding current and upcoming obligations and assessing their impact, businesses can design a centralized and standardized approach to achieve compliance more efficiently.
To ensure effective compliance with the evolving e-invoicing landscape, consider factors such as your customer channels, transactions in scope, and existing overall technical framework. Assess the impact on your current environment and address these requirements at the global or regional level, avoiding a local-to-local approach. Design your target environment with a focus on implementing centralized data hub global solutions to handle diverse requirements, and standardize your approach to avoid restarting your project every time a new obligation pops up.
Comarch E-Invoicing – a strong ally in e-invoicing compliance
Leverage third-party relationships and solutions that offer the necessary global support. A great product to streamline and automate all of your AP/AR invoicing processes is Comarch e-Invoicing. It was specifically created to address the challenges of the digital revolution. The platform is compliant with the latest legal regulations and data transfer standards. Contact our specialists to learn how we can help you improve business efficiency and reduce costs.