Introduction
Recently the European Parliament called on the Commission “to stand for the expansion of e-invoicing and calls for the introduction of an EU e-invoicing standard [sic] harmonising”.[1] This idea seems to be supported by many EU Member States and also private organisations. But what does this need for harmonisation mean exactly? Isn’t there already the pan-European e-invoicing standard EN 16931? In the following we will try to answer these questions. Furthermore, we will dive deeper into the harmonisation of reporting standards which can be offered by summitto’s TX++.
A brief history of e-invoicing in the EU
Before looking into specific standards, it is good to have a clear definition of e-invoicing itself:
‘Electronic invoice means an invoice that has been issued, transmitted and received in a structured electronic format which allows for its automatic and electronic processing’.[2]
The current discussion regarding e-invoicing is not new, it has actually already been around for quite some years. In Europe the Nordic countries were the first to widely adopt e-invoicing. Already in 2005 Denmark made it mandatory for transactions between the public and private sector (B2G).[3] Finland, Norway and Sweden followed shortly. In 2014 the European Commission adopted Directive 2014/55/EU[4], in order to promote e-invoicing in a coordinated way among its Member States. The Directive states that public administrations of EU Member States need to be able to receive and process electronic invoices from 2019 onwards.[5] This led to the implementation of mandatory B2G e-invoicing all over the EU.[6]
The idea was that after B2G, B2B would follow due to a trickle down effect. This has only partly been the case as in many Member States the number of e-invoices, compared to the total number of invoices, has been stagnating for a long time. However, it seems that recently a turning point has been reached with an increasing number of Member States considering mandatory e-invoicing for B2B transactions due to the push for real-time reporting. This still requires a derogation from the VAT Directive. Italy was the first to obtain this derogation, implementing mandatory B2B e-invoicing in 2019.[7] Recently France, planning to introduce mandatory B2B e-invoicing in 2024, also obtained this derogation.[8] And most recently Poland was authorised to implement e-invoicing in a mandatory fashion.[9] Although this will boost e-invoicing, a downside is that most countries make use of different standards which makes it hard for companies to comply. Therefore, more and more actors are now calling for harmonisation of e-invoicing in the EU.
Different standards, but (almost) all based on EN 16931
ZUGFeRD, NLCIUS and Finvoice are just a couple of the different e-invoicing standards used throughout the EU. Although their names give the impression that they are completely different, all these standards are based on the EN 16931 standard (semantic data model). Following Directive 2014/55/EU, all public entities within the EU need to be able to receive invoices based on this “Core Invoice” standard with the possible syntaxes UBL and CII.[10] However, Member States are free to specify the usage by e.g. making certain optional fields mandatory. This creates a Core Invoice Usage Specification (CIUS) of which an example is NLCIUS.[11] In other words, NLCIUS is an implementation of EN 16931, specified to the Dutch context while SI-UBL 2.0 is basically the UBL implementation of the NLCIUS. Furthermore, certain sectors have additional specifications, all within one country. Italy has a different approach, with a national XML standard which is not based on the EU norm: the FatturaPA. At the same time, CIUS-IT was developed which is the EN 16931 implementation to the Italian context. The CIUS-IT is also accepted by the centralised clearance system (SdI).[12]
Other Member States make use of the Peppol BIS 3.0., which is again a CIUS of EN 16931, but can be even further specified to the national context. For example, Sweden and Denmark have different rules within Peppol BIS 3.0.[13] So although OpenPeppol developed an open standard, based on EN16931, there are still some national differences. Lastly, for the upcoming e-invoicing regime in France at least three e-invoicing standards will be accepted, although all based on the EN 16931 standard: UBL, CII and Factur-X.
In sum, the e-invoicing landscape in the EU seems to be relatively harmonised via the EN 16931 standard. However, due to country specific contexts there are still specific implementations (CIUS, e.g. the Netherlands) or entirely different standards implemented (e.g. Italy). This still makes it difficult for companies operating in multiple countries and/or engaging in intra-Community transactions to comply.
Harmonising Digital Reporting Requirements (DRR)
Seeing all these different country specifications, the question arises: is it possible to further harmonise e-invoicing standards for EU Member States? It seems that these national specifications are necessary or at least important for the national governments. Previously held policy discussions with a similar goal around the harmonisation of the VAT return, don’t give too much hope for actual harmonisation. It proved to be impossible to agree on the content of a single EU VAT return. While a VAT return is a relatively simple (electronic) form, e-invoices can be very complex and as we showed often specified to the national context.
Although it’s important to continue the dialogue regarding e-invoicing harmonisation and make sure that all countries adhere to the EN 16931 standard, it might be more fruitful to first focus on harmonising new VAT reporting standards. As we have discussed previously, next to e-invoicing standards, so-called Digital Reporting Requirements (DRR) also vary across the EU. A 2019 European Commission report even states that problems regarding cross-border compliance do not only stem from e-invoicing, but “the main barrier in this field are the additional e-reporting requirements”.[14] The upcoming proposal of the European Commission regarding DRR, which seems to take the form of an intra-Community real-time reporting system, provides excellent momentum to further streamline these standards. Although full harmonisation is difficult to achieve in almost any context, an intra-Community real-time reporting system could steer Member States that did not implement a domestic real-time reporting regime into a certain direction. Making it easier for companies to comply. Similarly, there are still multiple EU Member States that did not implement any DRR, which makes it somewhat easier to achieve harmonisation between these countries.
In order to help tax authorities to achieve this goal, summitto developed an open-source real-time reporting solution that optimally protects the data of the taxpayer. By providing the solution in an open-source manner, it will be possible for Member States of all sizes to adopt this solution.
Conclusion
E-invoicing harmonisation is a hot topic within the EU VAT world. However, it is not always clear what is exactly meant with this harmonisation. In this blog post we have tried to show that the EU e-invoicing landscape is already harmonised to a certain extent via EN 16931, but that national specifications (CIUS) differ throughout the EU. Furthermore, some countries are still using standards that are not compliant with EN 16931. It will be extremely difficult to further harmonise these standards due to national preferences. Therefore it might be more realistic to harmonise real-time reporting obligations, which are an equally important barrier for cross-border compliance. Summitto is ready to help Member States and the European Commission by offering an open-source real-time reporting solution for tax authorities.
In case you want to know more about our periodic or real-time reporting solutions have a look at our website at www.summitto.com or do not hesitate to contact us at info@summitto.com
[1] https://www.europarl.europa.eu/doceo/document/TA-9-2022-0034_EN.html
[2] https://eespa.eu/e-invoicing-basics/
[3] https://edicomgroup.com/blog/einvoicing-in-scandinavia
[4] https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0055&from=NL
[5] https://edicomgroup.com/blog/directive-201455-eu-enters-into-force-in-europe
[6] Read more about what this obligation exactly entails here: https://www.linkedin.com/pulse/b2g-e-invoicing-overview-across-eu-2020-ridvan-yigit/
[7] https://ec.europa.eu/digital-building-blocks/wikis/display/CEFDIGITAL/eInvoicing+in+Italy
[8] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021PC0735&from=EN
[9] https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=COM:2022:136:FIN
[10] https://ec.europa.eu/digital-building-blocks/wikis/display/CEFDIGITAL/EN+16931+compliance
[11]https://www.softwarepakketten.nl/wiki_uitleg/60&bronw=7/Nadere_specificaties_EN_16931_1_norm_voor_de_Europese_kernfactuur.htm
[12] https://ec.europa.eu/digital-building-blocks/wikis/display/DIGITAL/eInvoicing+in+Italy
[13] https://docs.peppol.eu/poacc/billing/3.0/bis/#national_rules