E-Invoicing Rules Around the World and What They Mean for You

Yokoy

It is safe to say that over the last few years, electronic invoicing, (e-invoicing) has become essential for companies of all sizes. The process of sending, receiving, and storing invoices in a digital format is increasingly replacing the traditional paper-based methods not just because it’s more efficient, but in many cases it’s a regulatory requirement, too.

However, as beneficial as e-invoicing is, it comes with a complex web of regulations that vary significantly from country to country. Each nation has its own set of rules and requirements for how electronic invoices should be formatted, delivered, and stored. These regulations are not static; they change frequently as governments update their policies to combat fraud, improve tax collection, and embrace new technologies. Keeping up with these changes can be daunting for businesses operating in multiple countries.

This is where a robust e-invoicing solution like Yokoy comes into play. Our service is designed to work with global e-invoicing regulations seamlessly. It significantly reduces non-compliance risk by adhering to the latest rules across different jurisdictions.

Please note: The information provided here is accurate as of May 2024. Given the dynamic nature of e-invoicing regulations, we strongly recommend that you regularly check the latest requirements in your region to stay up-to-date.

Electronic invoicing summarised

Electronic invoicing, or e-invoicing, refers to the process of creating, sending, receiving, and storing invoices in a digital format. Unlike traditional paper invoices, e-invoices are generated and processed electronically, enabling businesses to automate and streamline their invoicing workflows. This digital transformation minimises manual intervention, reduces errors, and accelerates payment cycles.

E-invoicing offers significant advantages for businesses of all sizes and across various industries. Large enterprises often deal with high volumes of invoices and complex supply chains. E-invoicing helps them manage these complexities efficiently, ensuring compliance with diverse regulatory requirements across different countries. SMEs (small and medium-sized enterprises) as well as the public sector can reduce administrative burdens and operational costs, allowing them to allocate resources more effectively and focus on growth. And also multinational corporations benefit immensely from e-invoicing solutions that minimise the risk of non-compliance with international regulations.

But implementing e-invoicing is not just about keeping up with technological advancements; it is a strategic move that can offer substantial benefits:

Cost savings: Reducing paper usage, printing, postage, and archiving costs.
Efficiency: Automating invoice processing reduces manual errors and accelerates payment cycles.
Compliance: Ensuring adherence to local and international regulatory requirements.
Environmental impact: Minimising the carbon footprint associated with paper-based invoicing.

E-invoices vs digital invoices

While the terms “e-invoices” and “digital invoices” are often used interchangeably, there are key differences between the two: E-invoices are created in a structured digital format, typically XML or EDI (electronic data interchange). They are designed to be read and processed automatically by electronic systems for optimal integration with accounting and ERP systems. They adhere to specific standards and regulatory requirements, making them suitable for automated, end-to-end electronic processing.

Digital invoices refer to invoices generated in a digital format, such as PDFs, and may be sent via email. While they eliminate the need for paper, they often require manual handling, such as data entry into accounting systems. Digital invoices are a step towards digitisation but do not offer e-invoices’ full automation and compliance benefits.

HMRC’s e-invoicing regulations in UK

His Majesty’s Revenue and Customs (HMRC) is the tax authority responsible for overseeing respective laws in the United Kingdom. E-invoicing regulations in the UK are primarily driven by efforts to improve efficiency, reduce tax evasion, and optimise business operations. Below, we have listed the most critical aspects for you:

1. Making Tax Digital (MTD)

The Making Tax Digital initiative is a major part of the UK government’s strategy to make it easier for businesses to get their tax right and keep on top of their affairs. MTD requires businesses to keep digital records and submit their VAT returns using compatible software. While MTD does not mandate e-invoicing, it encourages digital record-keeping and the use of electronic systems, which often include e-invoicing capabilities.

2. E-invoicing standards

While the UK does not mandate a specific format for e-invoices, businesses are encouraged to use standardised formats to ensure consistency and compatibility. The most common formats include:

UBL (Universal Business Language)
CII (Cross Industry Invoice)
PEPPOL (Pan-European Public Procurement On-Line)

Using these standardised formats helps in facilitating smooth electronic transactions between businesses and public sector organisations.

3. Public procurement regulations

For businesses dealing with public sector organisations, e-invoicing becomes more structured. The UK has adopted the European Standard on e-invoicing (EN 16931), which is required for public procurement processes. This standard ensures that e-invoices are interoperable and can be easily processed across different systems.

4. Data retention and security

HMRC’s regulations also emphasise the importance of invoice data retention and security. Businesses need to make sure that electronic invoices are securely stored and can be retrieved and presented in a readable format upon request.

5. VAT requirements

E-invoices in the UK must contain specific information to comply with VAT regulations. This includes:

A unique invoice number
Supplier’s VAT registration number
Date of issue
Description of goods or services provided
Total amount payable, including VAT breakdown

6. Cross-border e-invoicing

For businesses engaged in cross-border trade within the EU, it is essential to comply with both UK and EU e-invoicing regulations. Post-Brexit, the UK is no longer bound by EU directives, but businesses must still comply with the reporting requirements of each country they operate in.

E-invoicing rules in Europe

The European Union (EU) has been at the forefront of promoting electronic invoicing to improve business efficiency and enhance tax compliance. However, even within the EU, e-invoicing rules vary significantly from one member state to another. This diversity in regulations highlights the complexity of the topic, making it overwhelming for businesses operating across multiple countries. Understanding and complying with these differing rules is crucial for seamless operations and avoiding penalties. Here is a brief overview of the e-invoicing regulations in several key European countries.

Electronic invoicing in Germany

In Germany, e-invoicing is increasingly mandated for B2G (business-to-government) transactions. From November 2020, federal public authorities must receive and process e-invoices in the XRechnung format or the PEPPOL standard. For B2B transactions, while not mandatory, e-invoicing is widely adopted due to its efficiency and cost benefits.

E-invoicing in France

France is moving towards mandatory e-invoicing for all transactions. In the foreseeable future, companies will be required to issue e-invoices for business-to-business transactions, following the rollout that started with large companies in 2020. The French system supports the Factur-X hybrid format, which combines PDF and XML, ensuring compliance with both human and machine readability requirements.

Electronic invoicing in Italy

Italy was one of the first EU countries to mandate e-invoicing for B2B transactions. Since January 2019, all invoices must be issued and received electronically through the Sistema di Interscambio (SDI) platform in the FatturaPA format. This regulation applies to all businesses, regardless of size, ensuring high compliance and standardisation across the country.

E-invoicing regulations in Spain

Spain requires e-invoicing for B2G transactions and for large taxpayers in B2B transactions. The Facturae format is used for these invoices. Spain’s immediate supply of information (SII) system mandates that VAT-related transactions be reported electronically in near real-time, within four days of issuance.

E-invoicing system in Poland

Poland has introduced the Krajowy System e-Faktur (KSeF), an optional e-invoicing system for B2B transactions. From January 2022, businesses can voluntarily issue e-invoices through KSeF. However, this system is expected to become mandatory in the future, aiming to streamline VAT reporting and reduce tax evasion.

Electronic invoicing in Ireland

Ireland does not currently mandate e-invoicing for B2B transactions but encourages its use to support efficiency. For B2G transactions, public sector bodies must accept e-invoices that comply with the European Standard (EN 16931). This aligns with the broader EU directive on e-invoicing in public procurement.

E-invoicing rules in the US

As of now, the US does not have a single, nationwide mandate for e-invoicing. However, various federal and state initiatives are encouraging its adoption. Businesses and government agencies that embrace e-invoicing can benefit from streamlined processes, cost savings, and improved compliance.

Future developments in the US are likely to be influenced by ongoing technological advancements, increasing pressure for regulatory standardisation, and the growing recognition of the benefits of digital transformation in financial processes.

AI powered compliant invoice processing solution for around the world.

One of Yokoy’s major benefits is its adaptability to operate across complex, multi-geography setups. This includes multi-currency and multi-language support: Yokoy supports multiple currencies and languages, making it suitable for companies with global operations. This ensures that invoices are processed in the correct currency and language, adhering to local business practices.

On top of that, Yokoy integrates seamlessly with various ERP systems. This allows your business to maintain a unified system for financial management while leveraging Yokoy’s advanced invoicing capabilities. Yokoy’s platform is designed to scale with the growth of your business. Whether your company is operating in a single country or across multiple regions, Yokoy can handle increasing volumes of invoices and expanding regulatory requirements.

Additional benefits:

User-Friendly interface and advanced analytics
Powerful dashboard and reporting features
Predictive analytics
Secure data handling
Automation of invoicing processes
Support of various e-invoicing formats and standards such as PEPPOL, Factur-X, XRechnung, and others
Real-Time updates on regulations

Next steps

Do you want to see for yourself how Yokoy can improve your invoice management? Get in touch and test our platform – you will be surprised how smooth e-invoicing can be when working with a strong partner.

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