Background of the ViDA proposal
Several EU member states (MSs) have already introduced their own electronic invoicing (e-invoicing) systems and/or electronic communication of certain data according to the tax authorities’ requirements (continuous transaction controls/digital reporting requirements (DRR)).
For example, in Italy, invoices must be issued electronically via SdI (so called "Sistema di interscambio") for supplies between Italian resident subjects (business-to-business (B2B) and business-to-consumer (B2C)).
Major changes in the EU VAT were proposed at the end of last year, for more information see our article “The European Commission proposes ambitious VAT reforms”. The proposed measures include an EU real-time digital reporting requirement (DRR) based on e-invoicing to be implemented step by step, starting in 2024. Please find more information in our articles “ViDA: digital reporting based on e-invoicing” and “Major EU developments in e-invoicing and digital VAT reporting”.
Latest country e-invoicing developments
Many countries have rolled out their own e-invoicing developments.
E-invoicing will be introduced in phases from 2024
B2B e-invoicing and e-reporting will become mandatory for large taxpayers who will be required to issue e-invoices and report other transactions from 1 July 2024. It will also be mandatory for all taxpayers to receive e-invoices from this date. From 2025, e-invoicing will become mandatory for medium-sized companies. All taxpayers should issue e-invoices from 2026. The technical specifications have already been made public.
Currently, businesses that supply B2B products that are considered as high risk from a tax fraud perspective are required to use the existing e-Invoicing system (e-Factura).
Mandatory B2B e-invoicing and the e-Factura system for transactions between taxable persons in Romania will be introduced from 2024. The EU has already given green light to these plans.
According to the draft law, e-invoicing will become mandatory for B2B transactions from 1 July 2024. The EU institutions still have to give green light to these proposals.
In June 2023, the draft of the implementing regulation concerning the e-invoicing obligation was published. E-invoicing becomes obligatory if both the supplier and the recipient of the invoice are businesses established or domiciled in Spain. It is expected that the e-invoicing requirement enters into force by July 2024, although the exact timetable remains uncertain. For businesses with yearly revenues of EUR 8 million or more the e-invoicing becomes mandatory one year after the adoption of the implementing regulation, and for other businesses two years after the adoption of the regulation. The EU still needs to give its approval.
From 2026, e-invoicing becomes mandatory for domestic B2B transactions between businesses established in Germany according to the last proposal. From 1 January 2025, e-invoices for domestic B2B supplies between taxable persons established in Germany would have to be issued. However, other formats, in particular paper or PDF invoices, would still be permitted until 31 December 2025. E-invoicing would become mandatory from 1 January 2026, as only electronic invoices would be permitted to be sent from this date. The European Commission has already given green light to those plans. The European Council still needs to give its approval.
Belgium plans to introduce mandatory B2B e-invoicing and DRR as part of the ViDA proposal from July 2024. The Belgian Minister of Finance has announced the intention to introduce mandatory B2B e-invoicing from July 2024, most likely through Peppol. The introduction will be phased out in stages depending on the business’s annual turnover. Belgium will also introduce DRR with the goal of having a pre-filled VAT return. The proposal is subject to approval by the parliament.
ViDA - latest EU developments
ViDA proposal still needs approval from the European Parliament and the representatives of the MSs (the European Council).
European Parliament suggests amendments to the ViDA Proposals
On 20th June 2023, the European Parliament (EP) issued draft reports containing suggested amendments to the ViDA proposals. Most importantly, the draft reports propose postponing the entry into force of the ViDA by up to 24 months. Other suggestions include removing the deeming fiction for short-term accommodation and passenger transport services, adjusting the 45-day qualification for short-term accommodation, preserving the domestic reporting requirements introduced by MSs; extending the 2 days' deadline for the issuance of electronic invoices and DRR; making the EN Standard for electronic invoices optional for MSs.
The European Council will vote on the ViDA in October 2023
The European Council, which consists of the representatives of the EU MSs, is expected to vote on the ViDA proposal in October 2023.
Possible further developments
Several EU countries have adopted or planning to adopt the e-invoicing and DRR, France and Romania are the next countries where the requirements come into force already in 2024.
The VAT community and businesses are awaiting with interest how and when the important changes proposed by the ViDA are adopted, since these will overhaul the entire VAT compliance landscape. Businesses operating in the EU market need to start preparing for e-invoicing by (further) digitalizing their business processes and familiarizing themselves with requirements since e-invoicing may go ahead as soon as 2024.
How to be prepared for the ViDA and e-invoicing?
- Make sure you understand the new definition of e-invoicing and requirements in various countries
- Ensure that you are able to extract reliable data from your ERP/bookkeeping systems for VAT determination and reporting
- Review VAT treatment of the transactions to ensure timely issuance of correct VAT invoices and reports
- Assess whether systems are suited to the new way of exchanging data with clients/suppliers and authorities
- Ensure that your sales system can:
- Create and send structured e-invoices,
- Receive and use structured e-invoices.
- Implement changes in ERP if necessary
Do you have any questions about the ViDA or e-invoicing? Do not hesitate to contact us.