Anoek van der Riet
Following in the footsteps of Italy, France and Poland, among others, Belgium and Germany now want to make want to make e-invoicing for B2B transactions. The Belgian Ministry of Finance wants to roll out mandatory e-invoicing in phases starting in July 2024. The German Ministry of Finance has issued a proposal to make e-invoicing for companies be made mandatory.
More and more countries are making e-invoicing mandatory for business-to-business transactions. In Europe, for example, this is already the case in Italy, France and Poland. Belgium and Germany thus plan to add to this list soon. Spain, Latvia, Slovakia, Slovenia and Romania also have advanced plans to make e-invoicing mandatory soon.
Why is e-invoicing becoming mandatory?
Why is e-invoicing becoming mandatory in more and more countries? It has mainly to do with controlling VAT payments. This is because governments are missing out on a huge amount of VAT revenue every year. To illustrate: in 2020 the VAT gap, i.e. the difference between what they should collect in VAT and what they actually collect, was 93 billion euros in Europe. And that's still modest compared to the year before. In 2019, European countries collectively missed out on as much as 124 billion euros.
One of the ways governments hope to reduce the VAT gap is through the entry of continuous transaction controls (CTC). A well-known form of this is the clearance model. With continuous transaction controls, the government checks every invoice for VAT data, rather than all at once in retrospect during the VAT return that businesses must file each quarter. To enable that real-time control, e-invoicing must be in place.
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Benefits of e-invoicing
E-invoicing does not just benefit governments that want to control VAT payments. In fact, e-invoicing also offers advantages for the companies themselves. For example, companies can send and receive invoices faster and more efficiently if this is done electronically. This saves time and money per invoice. For example, research shows that processing a paper invoice costs about 30 euros compared to less than 5 euros to process an e-invoice.
Another advantage of e-invoicing is that there is less chance of (human) error. Errors in invoices mean that your employees have to make manual corrections, which is unnecessarily time-consuming. It is also frustrating for the supplier, as they are kept in the dark about the status of the invoice and have to wait longer than necessary for payment. An e-invoice can be instantly and automatically validated for errors, duplicates or missing data. This prevents invoices from falling out unnecessarily due to inaccuracies.
Then, provided the rest of the purchase-to-pay process is also automated, e-invoices can be easily matched to purchase order and goods receipt data to identify any mismatch or payment tolerance issues.
Will e-invoicing also become mandatory in the Netherlands?
In the Netherlands, e-invoicing is currently mandatory only for Business to Government (B2G) transactions. The central government only accepts e-invoices from suppliers. Pdfs, paper bills or other forms are no longer accepted. For Business to Business transactions, e-invoicing is currently not yet mandatory in the Netherlands, but the possibilities are currently being explored.
Making e-invoicing mandatory could accelerate its adoption. This would allow more businesses to experience the benefits of e-invoicing. In fact, e-invoicing is not yet commonplace in the Dutch business community, revealed a research by DirectResearch.
Just over one-third of Dutch corporates have currently embraced e-invoicing, it became clear by enquiring among more than 200 finance and procurement professionals. These companies regularly receive e-invoices, either directly in the invoice processing program or as XML documents in the mail. Still, 15 percent of large companies say they never receive e-invoices.
In medium-sized businesses, e-invoicing adoption seems to be accelerating. In fact, more than half of SMEs say they often or always receive e-invoices directly in their invoice processing system, and a third regularly receive XML documents in the mail.
What are the rules for e-invoicing?
Rules for e-invoicing vary by country and industry. In general, an e-invoice must comply with specific formats and legal requirements, such as electronic signatures and authentication methods. It is important to consult the applicable laws and regulations in the relevant country to meet the requirements and ensure a correct e-invoicing procedure. In addition, there is still a jumble of formats and standards for e-invoices. Unfortunately, there is no one standard way that applies globally or Europe-wide.
International companies must decide for themselves how to address this patchwork of rules and obligations. Ensuring compliance can therefore be quite challenging for internationally operating companies. Especially with the prospect that more and more countries are moving, or at least considering moving, to continuous transaction controls and mandatory e-invoicing.
Getting started with e-invoicing?
A reliable e-invoicing partner like ICreative can help you deal with all the different rules, formats, standards and networks. We can completely unburden you in the field of e-invoicing.
Wondering what e-invoicing can do for your organization? How you can stay compliant with increasingly stringent international laws and regulations? And what is going on in the Netherlands in the field of e-invoicing? Get in touch with us.
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Anoek
van der Riet
Contents Specialist
Anoek writes daily about purchase to pay, order to cash and Robotic Process Automation. She enjoys diving into topics such as e-invoicing, working capital and hyperautomation.