European nations are preparing for e-invoicing

The Digital Transformation of Governments

Digital transformation has been the most discussed topic in recent years. It enables companies to create or use new disruptive innovations to take their business to the next level and guarantee their advantage over competitors. However, there is another digital transformation!

Governments worldwide have launched digital transformation initiatives to simplify their tax systems. This increases process efficiency, lowers costs and makes it easier for companies to keep their businesses in compliance with legal requirements. Losses due to sales tax losses and corruption are also stopped. The model is Latin America, especially Brazil, whose legal authorities electronically validate all documents during the entire sales process, such as delivery notes, invoices, credit notes, direct debits, etc., and prescribe daily, monthly and annual tax reports.

Obliged e-invoicing not only for B2G (Business 2 Government)

With the EU directive on electronic invoicing adopted in 2014, European countries are digitizing their tax systems - not just for B2G. B2B and B2C follow gradually. For example, Italy has been using e-invoicing for B2G for several years, and since January 1, 2019, B2B companies have also had to submit tax-relevant documents electronically.

Italy was the first country in Europe to introduce mandatory electronic billing for B2B due to the EU directive, and many countries are now following:

 

  • The UK launched its Making Tax Digital initiative on April 1, 2019, which affects all VAT-registered companies.
  • Greece announced e-invoicing for B2B and B2C from January 1, 2020
  • Spain is currently expanding its B2G e-invoicing platform FACe to B2B
  • France, Germany and Portugal are currently validating an e-invoicing solution based on the Latin American model
  • Electronic invoicing has been mandatory in Hungary since August 1, 2018, and the nation is currently updating the file formats of its "NAV" portal.

In addition to Europe, Turkey has announced that it will introduce e.Invoicing by July 1, 2019, which will require electronic delivery notes to be sent to the government, which will then authorize transportation.

Multinational companies face a challenge

The digital transformation of governments poses major challenges for all multinational companies. Which country is next? What are the legal requirements? How can I meet these requirements and keep my company in compliance?

 

"Building up the technical know-how and in relation to all legal requirements and connecting it with the possibilities of my SAP ERP system can be quite a challenge," explains Felipe Carvalho, e-invoicing specialist at Phoron. “Financial, sales and distribution data from your ERP system must be transferred in the format specified by the government. A small mistake can lead to costly penalties. In addition to building up know-how, data preparation and processing is the critical point. Operating integrated systems such as SAP's ERP platforms reduces the risk of incomplete or incorrect data and simplifies the connection to other SAP solutions, e.g. the holistic solution for e-invoicing, which covers the legal requirements of all mandatory countries worldwide.

 

“Multinational companies benefit from the holistic approach because they don't have to implement and manage third-party solutions for each country. If your company has locations in 5, 10, 20 countries, you would have to implement, operate and support 5, 10, 20 different solutions. A nightmare for all IT departments, ”concludes Felipe Carvalho.