EInvoicing in the EU

Member states are implementing the EU Directive on electronic invoice (eInvoice) these days. While this is an improvement and a source of savings for businesses, it is in fact becoming a nightmare for organisers when they hold an international convention abroad.

AUTHOR: OUMAR COUNTA, DIRECTOR OF TAX DEPARTMENT AT BC&A.

eInvoicing: definition, framework, and links with e-reporting

Definition and Framework

EInvoicing is the exchange of an electronic invoice document between a vendor and a purchaser. In fact, this is an invoice that has been issued, transmitted, and received in a structured data format that allows its automatic and electronic processing, as defined in Directive 2014/55/EU.

This said, eInvoices are not:

• Unstructured invoice data issued in PDF or Word formats;
• Images of invoices such as JPG or TIFF;
• Unstructured HTML invoices on a web page or in an email;
• OCR (Scanned paper invoices);
• Paper invoices sent, like images, via fax machines.

The Directive has made it mandatory for all public contracting authorities and contracting entities to receive and process eInvoices complying with the European standard.

Links with e-reporting

Now that we know what eInvoicing is, let’s consider the transmission of the information. EInvoicing is often implemented with e-reporting. This refers to the transmission of transaction data that must be carried out by companies subject to VAT, also called “Saf-T file”.

E-reporting is the cornerstone of the fight against Tax fraud and countries like Portugal or Poland have already made it compulsory, even if the eInvoicing is not yet a legal obligation.

Unfortunately, most of the Member States are progressively extending the obligation to all actors, not just public authorities. For example, the eInvoicing is already mandatory for all invoices in Italy; and it will also be mandatory in Spain, Poland, and France in 2024.

Member states and businesses shall find advantages in the eInvoicing solution

For EU member States:

European states find several advantages in implementing eInvoicing for reasons such as the reinforcement of means against VAT fraud and the easy verification of invoices in real time thanks to the transmission of VAT amounts by electronic ways.

For businesses:

EInvoicing improves company productivity thanks to automation; and also lowers expenses such as paper costs and other costs related to sending hard copies of invoices by post. Among the expected advantages of eInvoicing can be the simplification of monitoring, the standardisation, and the simplification of VAT returns, and also the reduction management of costs.

Nevertheless, this improvement comes with difficulties; In the state of regulation, the Event business is impacted by complexity due to the lake of standardisation in Europe and the consequent complexity of organising events such as International Conventions and International Congresses abroad.

• Lake of standardisation

The Directive imposed the implementation of an eInvoicing solution based on the European standard in each EU Member State and other EEA countries in public procurement. However, the Directive did not mandate any specific transmission system.

Thus, each EU country has set up its own public transmission platform and allowed local private dematerialisation platforms and operators. As a result, there are many forms of transmission services or networks in the EU, and not all are interoperable.

Currently, companies wishing to invoice abroad must comply with the requirements of the Member State where they do business.

• Complexity of implementation

The crazy thing about all this is that the EU countries that want to extend the eInvoicing to all sectors are struggling to implement it. The implementation deadline has already been postponed several times in some countries, such as France. And now Businesses – organisers – have to wait for technical documentation from the public platform to make sure the software they are using is compatible with eInvoicing and e-reporting, and, of course, that it meets all legal requirements. Often, they have to update or develop new solutions or contract dematerialisation platforms/ operators to fulfil the legal requirements.

Definitely, businesses like event organisers, which are registered for VAT in several countries due to their activity, have to comply with multiples requirements of eInvoicing and e-reporting. Currently, they are unable to use the same transmission service for each country in which they are registered.

Also, they must and will have to make sure that their invoicing software is compatible with the transmission services of the countries where they are VAT registered and where they have supplied goods and services. If this is not the case, they must use a local, validated invoicing software and hire a local accountant.

Obviously, all these obligations increase the costs and the time spent in the organisation of an event.

ABOUT THE BC&A

Founded in 2004, BC&A is a VAT consultancy firm specialised in VAT management and recovery for association events. BC&A has been involved in hundreds of events, some with as many as 25,000 participants. Its expert guidance allows for several advantages: maximum recovery for the organiser and the participant; no local VAT registration required; and expedited reimbursement in Europe.