E-invoicing, also known as electronic invoicing, is a method of creating, sending, receiving, and processing invoices electronically.

The e-invoicing process involves two parties: the supplier who issues the invoices, and the receiver – either a customer, in B2C transactions, or another company, in business-to-business transactions. The supplier creates and issues the invoice, while the client receives it.

E-invoicing rules affect several aspects of invoice processing:

• the invoice format – what an invoice must look like
• the creation of invoices – how invoices should be issued
• the sending of invoices – what channel or platform companies should use
• the receipt and processing of invoices – how invoices should be handled

Let’s break this down a little further.

Format and structure

EU e-invoicing rules specify the format that invoices must adhere to. In most cases, invoices need to be in a standardized structured data format that allows for automatic reading of the data into computer systems, to facilitate automated processing.

Common formats include XML (Universal Extensible Markup Language), EDI (Electronic Data Interchange), or other standardized formats such as UBL (Universal Business Language) or JSON (JavaScript Object Notation). These formats ensure consistency and enable systems to process invoices electronically.

However, it’s essential to review specific country regulations as there might be slight variations in the required formats.

The creation of invoices and compliance with tax regulations

Businesses need to ensure that the invoice creation process follows the prescribed format and includes all the necessary information required by the relevant authorities.

In its simplest form, an electronic invoice must contain all the required details of a paper invoice. The following information must be included:

• Unique identification number for each invoice, commonly known as the invoice number.
• Issue date of the invoice.
• Time of supply which refers to the date when the work was performed and/or payment was received.
• Supplier’s name and address.
• Customer’s name and address.
• Supplier’s VAT (Value Added Tax) number.
• Description of the goods or services provided.
• Price of the goods or services, preferably specified in countable units.
• Quantity or extent of the goods sold.
• VAT rate applicable to the goods or services.
• Amount owed or paid, excluding VAT.
• Total amount of VAT charged.
• Any discounts applied to the invoice.

In some countries, e-invoices may need to meet specific tax compliance standards, such as those outlined by the European Union’s Directive on e-invoicing.

Authentication and integrity

To ensure the authenticity and integrity of e-invoices, various mechanisms are often employed. Digital signatures or electronic certificates can be used to authenticate the sender and verify that the invoice hasn’t been tampered with during transmission.

Data exchange and interoperability

E-invoices should be easily exchanged and processed between different systems and organizations. For example, the EU regulation stipulates that e-invoices must be sent and received through a designated system, and this is a mandatory requirement.

Interoperability standards, such as PEPPOL (Pan-European Public Procurement On-Line), facilitate seamless transmission and processing of e-invoices across different entities and systems.

Storage and archiving

E-invoices are typically required to be stored and archived for a certain period of time to comply with legal and auditing requirements. The storage methods may vary, but they often involve electronic archiving systems that ensure the integrity, accessibility, and long-term preservation of the invoices.

It’s important to note that specific regulations and requirements for e-invoicing may differ from country to country. Therefore, it is advisable to consult local tax authorities or seek professional advice to ensure compliance with applicable regulations in your jurisdiction.