The landscape of VAT compliance in Europe is undergoing a seismic shift. The ViDA (VAT in the Digital Age) proposal, approved on March 11, 2025, signals a new era for multinational companies. This landmark initiative aims to modernize and streamline VAT processes across the EU, primarily through the widespread adoption of e-invoicing and digital reporting. While this promises greater efficiency and transparency, it also presents significant challenges for businesses operating across multiple European nations. 

The three pillars of ViDA 

The ViDA proposal rests on three key pillars: 

1. E-Invoicing and Digital Reporting Requirements: This pillar focuses on real-time digital reporting of VAT transactions, mandating cross-border e-invoicing to ensure accuracy and reduce fraud. Restrictions on e-invoicing will be removed, paving the way for full digital adoption. 
   
2. Single VAT Registration in the EU: ViDA simplifies VAT compliance by allowing businesses to register for VAT only once across the entire EU, streamlining operations and reducing administrative burdens. 
   
3. Enhanced Rules Around Digital Platforms: The rules ensure VAT is correctly applied to transactions facilitated by online platforms, making platforms responsible for VAT collection and remittance. 

The e-invoicing revolution: Obligations and timelines 

The most immediate impact of ViDA will be on the world of e-invoicing. The proposal mandates that all cross-border transactions must be electronically invoiced and reported in near-real-time with the objective of streamlining VAT reporting and reducing fraud. 

A key change is the removal of the "buyer acceptance" principle, which previously allowed buyers to refuse electronic invoices. This restriction has hindered the widespread adoption of e-invoicing and prevented countries from mandating it nationally. With these restrictions lifted, countries are expected to implement e-invoicing mandates more rapidly. 

While the directive sets a deadline of July 1, 2030, for full integration of e-invoicing and digital reporting requirements into national legislation, many countries are expected to implement these changes much sooner. 

The challenges for multinationals 

Multinational companies face a complex challenge. With approximately ten EU member states already implementing their own e-invoicing mandates and the remaining seventeen expected to follow, businesses can anticipate dealing with an average of three to four new e-invoicing mandates per year until mid-2030. Given that implementing a single e-invoicing mandate can take enterprises up to two years, this represents a significant burden on resources. 

OpenText's commitment to ViDA compliance 

As a leading provider of global e-invoicing services, OpenText is committed to supporting businesses through these changes. The OpenText Trading Grid e-Invoicing solution is already equipped to manage e-invoicing regulations in over fifty countries. OpenText provides a managed services approach to e-invoicing, offering an end-to-end solution that includes evaluating readiness and supporting integrations with internal systems, external stakeholders, and national e-invoicing portals, as well as maintaining ongoing compliance with any changes that follow. 

The approval of the ViDA report marks a monumental step towards a more efficient and transparent VAT system in Europe. While the transition presents challenges, it also offers opportunities for businesses to streamline their operations and reduce costs. Companies that proactively prepare for these changes will be best positioned to thrive in the new digital landscape. Stay tuned for further updates as the ViDA proposal is implemented and its impact unfolds. 

Learn more about OpenText’s OpenText Trading Grid e-Invoicing.

The post Navigating the ViDA revolution: What multinationals need to know about e-invoicing in Europe  appeared first on OpenText Blogs.

February 2025

New developments in HMRC's e-Invoicing consultation

As you saw in my previous blog post back in September 2024, the UK government announced an open consultation on promoting electronic invoicing (e-invoicing) across businesses and the public sector. Now, there’s exciting progress to share!

Key Aspects of the Consultation

The consultation, which is a significant step towards standardizing e-invoicing in the UK, has now officially kicked off. Commencing on February 13, 2025, it will run until May 7, 2025. This consultation aims to gather a wide range of views on how best to implement e-invoicing. The goal is to enhance business productivity, improve cash flow, reduce administrative burdens, and minimize errors in tax returns.

One of the key aspects being explored is whether e-invoicing should be voluntary or mandatory. There’s also a lively discussion on the merits of centralized versus decentralized models and the potential for real-time reporting. The government is keen to hear from businesses of all sizes and sectors to ensure the approach developed is both practical and beneficial.

To facilitate this, HM Revenue & Customs (HMRC) and the Department for Business & Trade (DBT) are organizing various events to engage with businesses and gather their input. This is a fantastic opportunity for businesses to have their say and help shape the future of invoicing in the UK.

Benefits of e-invoicing

From our perspective, the benefits of a mandatory e-invoicing regime to both businesses and tax agencies are clear. For businesses, automating all inbound and outbound invoice transactions substantially reduces the overhead of labor-intensive manual processes, virtually eliminates errors, and significantly reduces late payments. This will have real cash flow benefits for businesses at a time when the economy is struggling.

For tax agencies, a mandatory e-invoicing regime delivers greater visibility into the economy and significantly reduces the time and cost associated with tax audits. Many tax agencies have seen a significant reduction in their VAT gap as a result of such mandatory e-invoicing reforms, potentially representing billions of pounds in additional revenue for the UK.

Models and approaches

However, it is vital that any mandate must put the needs of businesses first. Many of our customers here in the UK have been invoicing electronically for decades, leveraging the existing provisions in UK tax law for voluntary e-invoicing. Forcing them to change a process that has worked reliably for years is unnecessary.

While we have seen many different models implemented globally, the best model for e-invoicing that serves the needs of both the tax agency and businesses has proven to be a decentralized one. Unlike the centralized or clearance models used in Italy and proposed in Poland, a decentralized model does not force taxpayers to use a central government portal to deliver their invoices. A decentralized model allows suppliers to send e-invoices directly to their buyers. In parallel, real-time or near-real-time reports of invoice transactions can be transmitted to a government portal to provide visibility to HMRC, as has been proposed in countries such as France, Greece, Croatia, Latvia, and others. This approach minimizes disruption to businesses that have already implemented e-invoicing while giving those who have not yet done so maximum flexibility in how to send or receive e-invoices.

Participating in the consultation

For more information about the consultation process and details of how to submit your responses to HMRC, see the official documentation here.

If you'd like to discuss the different approaches laid out in the consultation in order to better respond to the consultation, please feel free to reach out to your OpenText account representatives who can arrange a discussion with our subject matter experts, or contact us here.

Stay tuned for more updates as the consultation progresses.

September 2024

Embracing the future: HMRC announce consultation on mandatory e-Invoicing

The UK government has recently announced an exciting development that could revolutionize the way businesses handle invoicing. As part of a broader package of reforms, His Majesty’s Revenue and Customs (HMRC) will soon launch a consultation on the implementation of mandatory electronic invoicing (e-Invoicing) across UK businesses and government departments.

A step towards digital transformation

This consultation marks a significant step towards a digital-first approach, aiming to streamline administrative tasks, improve cash flow, boost productivity, and reduce errors in tax returns while enhancing overall business efficiency.

From the government's perspective, this is seen as a key initiative in improving the UK's tax system and helping to fix the foundations of the UK economy, and close the VAT gap, which at last count (2022-2023 tax year) was estimated to be approximately £8.1bn.

What does this announcement mean?

This is exciting news for all UK businesses. While e-Invoicing has been an option for businesses for many years, its adoption has been hampered by limitations derived from the European Union VAT Directive (Council Directive 2006/112/EC). This directive included provisions that allowed buyers to refuse electronic invoices, insisting on paper instead.

HMRC VAT Notice 700/63 outlines the conditions for e-Invoicing, transposing many key conditions from the EU VAT directive, including the obligation for buyer acceptance. This has been a major barrier to widespread adoption.

However, recent e-Invoicing mandates in Europe have reversed this restriction, preventing buyers from vetoing electronic invoices and mandating that all invoices be exchanged electronically.

The benefits of mandatory e-Invoicing

The implementation of a mandate will have many benefits, not just for the UK government, but for businesses.

• Efficiency: Automating invoicing processes reduces manual errors and saves time.
• Cost Savings: Lower administrative costs and faster payment cycles.
• Environmental Impact: Reducing paper usage contributes to sustainability efforts.
• Tax compliance: Ensures adherence to the latest tax regulations and reduces the risk of compliance errors and fraud

Looking ahead

As HMRC prepares to gather input from businesses on how to best implement e-Invoicing, we encourage our customers to participate in the consultation process. Your feedback is invaluable in shaping a system that works for everyone.

As a global provider of e-Invoicing services, OpenText we have long supported the existing optional regime for B2B e-Invoicing in the UK and have been a key player in providing PEPPOL-based e-Invoicing solutions for the NHS. Our commitment to innovation and excellence means we are well-prepared to support any new mandatory regime that the UK government might propose.

We are committed to supporting our customers and prospects through this transition and beyond. Stay tuned for more updates as we navigate this exciting journey towards a more efficient and digital future.

For more details of HMRC's announcement, see the official press release on the UK government's website here. Learn more about OpenText e-Invoicing solutions.

Disclaimer: This blog is intended to reflect the direction the industry is moving and does not a reflect a commitment for the OpenText Trading Grid e-Invoicing (formerly Active Invoices with Compliance) product development roadmap to meet any particular stated regulations.
LEGAL Disclaimer: The information contained in this newsletter is for general guidance on matters of interest only. The authors are not herein rendering legal, accounting, tax or other professional advice and the content should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. While we make every attempt to ensure the accuracy of the information contained within is from reliable sources, OpenText is not responsible for any errors or omissions, or for any result

The post e-Invoicing mandates and updates: United Kingdom appeared first on OpenText Blogs.

February 2025

Latest updates on French e-Invoicing reform

There have been a few updates over the last few months regarding the ongoing e-invoicing reform in France. Here are some key developments you need to know about:

Updated Information Sheets from DGFiP

On November 18, 2024, the French tax agency (DGFiP) released various new "information sheets" to businesses in navigating the new e-Invoicing requirements. In addition, to help businesses understand the requirements for Partner Dematerialization Platforms (PDPs), the tax administration has provided a detailed FAQ, a visual diagram illustrating the invoice and data transmission process, and an information sheet tailored for SMEs and micro-enterprises.

You can find all the important links below:

Comprehensive FAQ - The DGFiP has released a detailed FAQ to address common questions about Partner Dematerialization Platforms (PDPs). This resource is essential for understanding the new requirements and ensuring compliance.

Illustrated Diagram - An illustrated diagram explaining the transmission circuit for invoices and data has been provided. This visual aid helps clarify the process and ensures businesses know how to handle their e-invoicing.

Specific information for SMEs and Micro-Enterprises - information sheets tailored for SMEs and micro-enterprises have been updated. These documents provide crucial guidance on how smaller businesses can comply with the new e-invoicing rules.
For the full text of the official announcement (in French), check out this link.

DGFiP as the French Peppol Authority

In addition, the French tax agency (DGFiP) has confirmed that it will assume the role of Peppol Authority for France. This move is a significant step towards enhancing interoperability and efficiency in e-invoicing.

For the past two years, OpenPeppol, supported by FNFE and GENA (Global Exchange Networks Association), has been working on a Proof of Concept (PoC) to implement the French e-invoicing and e-reporting requirements using the Peppol Network. With the successful completion of this PoC, the results will now be put into production, starting January 2025.

OpenPeppol will act as an interim Peppol Authority until DGFiP fully transitions into the role, ensuring a smooth migration for the French business community.

OpenText, are a founding member of GENA with active representation on the Executive Committee.

Release of PPF External Specification Version 3.0

The French tax authority, DGFiP, has recently released version 3.0 of the external specifications for the Public Invoicing Portal (PPF). This update, published on December 18, 2024, focuses on the directory and data concentrator aspects of the e-invoicing reform.

Key highlights of the new specifications include:

• Refined Focus: The updated specifications emphasize the collection and processing of invoicing, transaction, and payment data by the administration.
• Implementation Timeline: The specifications formalize the requirements for the reform’s initial phase starting on September 1, 2026, with further updates expected for the broader rollout on September 1, 2027.
• Future Updates: Additional documents from the AFNOR Commission will be released in 2025 to address specific use cases and data exchange formats between PDPs.

For more details, you can access the full specifications here.

These updates are essential for staying compliant and informed about the ongoing changes in the French e-invoicing landscape. As always, I’ll keep you updated with any new developments.

October 2024

Radical change to the French e-Invoicing reform

The French government has announced a radical change in the technical approach to e-invoicing, which will significantly impact businesses operating in France.

As per the announcement, dated 15th October 2024, businesses will no longer be permitted to directly connect to the Public Invoicing Portal (PPF) or use a “non-certified” operator (OD or Opérateur de Dématérialisation). Instead, all businesses must use a certified operator (PDP or Plateformes de Dématérialisation Partenaires) for sending and receiving electronic invoices and for pushing e-reporting data to the PPF.

The PPF will now focus solely on establishing a recipient directory and a data hub for transmitting information to the tax authorities. Only the “Flow 1” (e-reporting of invoicing data) will be transmitted to the PPF, similar to the models being developed in Belgium and other countries.

With only around 89 service providers, including OpenText, currently registered and seeking PDP status, the 4 million businesses in France will face intense competition to secure a PDP for themselves. This could lead to significant challenges in finding a suitable provider and potentially higher costs. Companies that had previously favored a direct connection to the PPF or OD will need to reassess their strategies. They must now navigate the new requirements and ensure compliance with the updated regulations.

The government will continue to engage with key stakeholders, including dematerialization platforms, professional federations, and software publishers, to address concerns and provide guidance. OpenText, as a registered PDP, continues to be an active participant in these discussions.

This reform is a significant step towards modernizing the invoicing process in France, and it’s essential for businesses to stay informed and prepared. As always, I’ll keep you updated with any new developments.

August 2024

OpenText Achieves Registered PDP Status for French
e-Invoicing Mandate

We are proud to announce that OpenText has achieved the prestigious status of a registered Partner Dematerialisation Platform (PDP) under the upcoming French e-Invoicing mandate. This milestone is a testament to our commitment to providing top-tier e-Invoicing solutions and ensuring compliance with the latest regulatory standards. Our registration was issued by the French tax administration (DGFiP) on August 5th 2024.

OpenText are the only PDP offering a fully managed global e-Invoicing service compliant in more than 50 countries. What does a managed service mean for our customers? We become an extension of your finance and IT teams, monitoring and managing your transactions on a daily basis to ensure smooth operations and reduce the many administrative burdens associated the with day to running of an e-Invoicing solution, as well as ensuring your ongoing compliance with any amendments to the regulations that might follow.

OpenText are able to ensure the compliance of your e-Invoicing processes across all of your financial applications since we are agnostic to the systems generating and receiving e-Invoices. We are able to cover all of your inbound accounts payable scenarios as well as outbound accounts receivable invoices, regardless of whether for indirect or direct materials.

What is a PDP in French e-Invoicing?

In the context of French e-Invoicing, a Partner Dematerialisation Platform (PDP) is a government-certified service provider authorized to handle electronic invoices. PDPs play a crucial role in the e-Invoicing ecosystem by ensuring the secure exchange of invoices between businesses and the French tax authorities. They are responsible for:

• Reporting e-invoices and their lifecycle statuses to the Public Invoicing Portal (PPF).
• Sending e-invoices to the buyer’s PDP and reporting required data to the PPF if the buyer is also using a PDP.
• Converting e-invoices into standard formats such as Factur-X, UN/CEFACT CII, and UBL 2.1 to comply with European Union norms.

Achieving PDP Status: What It Takes

Becoming a registered PDP is no small feat. Service providers must demonstrate several key capabilities, including:

• Data Integrity and Security: Ensuring the authenticity, integrity, and exhaustiveness of invoice data.
• Interoperability: Ability to convert and transmit invoices in various standard formats.
• Compliance: Adhering to strict regulatory requirements and undergoing rigorous audits to validate compliance with the French e-Invoicing mandate.

The Value of a PDP to Multinationals

For multinational companies, partnering with a registered PDP like OpenText offers numerous advantages:

• Regulatory Compliance: Ensures adherence to local e-Invoicing regulations, reducing the risk of non-compliance penalties.
• Operational Efficiency: Streamlines the invoicing process, reducing manual intervention and errors.
• Data Security: Provides robust security measures to protect sensitive financial data.
• Interoperability: Facilitates seamless integration with various business systems and international standards, ensuring smooth cross-border transactions.

For more details about PDPs, and whether your company needs a PDP to support their French e-Invoicing needs, see the below update dated February 2024 – “To PDP or not to PDP, that is the question“.

At OpenText, we are proud to support our clients in navigating the complexities of e-Invoicing and achieving compliance with the latest mandates. This achievement underscores our dedication to innovation and excellence in providing secure, efficient, and compliant e-Invoicing solutions.

February 2024

To PDP, or not to PDP, that is the question

“Whether ’tis nobler in the mind to suffer the slings and arrows of outrageous fortune, or to take arms against a sea of troubles, and by opposing end them?” The famous soliloquy from Hamlet is the crux of the hero’s dilemma. And it echoes the dilemma faced by companies operating in France today. The question at hand: to use a Partner Dematerialization Platform (PDP) or not for the upcoming French e-Invoicing reform.

Act I: The Mandate

“All the world’s a stage, and all the men and women merely players.” In our play, the stage is set by the French government, which has mandated B2B e-invoicing and e-reporting starting from September 2026. The players of course are all of the companies who are operating in France and must adapt to this new reality.

Act II: The Choice

“To be, or not to be, that is the question.” To be a user of a PDP, or not to be? That is the question companies must ask themselves. The PDP, registered and authorized by the French tax authorities, offers more functionalities and flexibility than the public platform (PPF) or a regular, uncertified Dematerialization Operator (OD). It can process any EDI format, provide archiving tools, and offer specific business applications.

• Partner Dematerialisation Platforms (PDPs) are government-certified e-invoicing service providers. They can issue and receive e-invoices directly with the service provider of the buyer without going through the Public Invoicing Portal (PPF). PDPs can convert e-invoices into standard formats such as Factur-X, UN/CEFACT CII, and UBL 2.1 to comply with European Union (EU) norm.
• Dematerialisation Operators (ODs) provide similar functions to PDPs but are not certified by the government. They cannot directly issue or receive e-invoices. Instead, they must use the PPF as an intermediary to perform e-invoicing activities.

Act III: The Considerations

“There is nothing either good or bad, but thinking makes it so.” When choosing whether to use a PDP or not, companies must consider various parameters: the type of invoices they will process, data management concerns, customer/supplier relations, transmission methods, and specific features and functions that they may require. Cost will also be a key criteria, since service providers who certify as a PDP will have significant additional operational costs to achieve and maintain their PDP status.

It’s not a question of good or bad, but of what suits the company’s needs best.

Act IV: The Solution

“Some are born great, some achieve greatness, and some have greatness thrust upon them.” OpenText are a leading provider of e-invoicing solutions and have applied for the role of PDP in France. The list of operators who have submitted their applications can be found on the French tax authority website here.

Of course, applying for PDP status is no guarantee of achieving it and the timelines for certification to complete are still a bit vague. PDP status will only be awarded after the interoperability tests with the public PPF platform are completed. However, as a global and profitable company hosting their own data centers and support infrastructure with the European Union, OpenText remains confident of achieving PDP status.

OpenText intends to operate both as an OD (Dematerialization Operator) and a PDP (Partner Dematerialization Platform) in France, recognizing that not all companies will need all of the features of a PDP.

We are also offering the OpenText e-Invoicing mandate readiness check service to assist customers in assessing the output from their ERP/finance/accounting systems to ensure it meets the requirements of the French legislation.

By partnering with OpenText we can help you achieve greatness in your e-Invoicing journey, and successfully navigate the “undiscovered country, from whose bourn no traveler returns” of e-invoicing with confidence.

Act V: The Conclusion

“All’s well that ends well.” With the right choice of partner, companies can ensure a smooth transition to the new e-invoicing system. The question of “To PDP, or not to PDP” will be answered, and all’s well that ends with successful compliance.

For more details reach out to your OpenText account representative or contact us here.

September 2023

New timeline proposed for B2B e-Invoicing reform

The postponement of the long-anticipated French e-Invoicing mandate we announced in July has caused much turmoil in France. This turmoil has extended to the e-Invoicing industry which was already ramping up for the 2024 roll-out.

Two French agencies share responsibility for the new e-Invoicing platform: Direction Générale des Finances Publiques or directorate of public finances (DGFIP) and Agence pour l’informatique financière de l’Etat (AIFE) or agency for state financial information). On September 14, 2023, they offered the first real clarification of the causes of the delay as well as a modified timeline.

The delay is primarily due to issues in developing the government’s centralized e-Invoicing platform – the Portail Public de Facturation (PPF). While the PPF is based on the existing Chorus Pro platform used for B2G, it appears the development work to expand its usage has been significantly underestimated.

The proposed new timeline below from the DGFIP and AIFE should still be considered preliminary at this stage. It will not be confirmed until October 2023 at the earliest, when the government will announce the 2024 Finance Act.

• March 2024 – registration for PDPs (service providers) will open
• July 2024 was the intended “go-live” date and this is now proposed as a period for ongoing development of the new PPF e-Invoicing platform.
• 2025 – commencement of pilot program which was due to begin January 2024
• 2026-2027 – roll-out reform in two or three phases based on size of taxpayer as previously indicated.

Additionally, the tax administration confirmed that there will be a fresh call for applications for the pilot phase.

OpenText is closely monitoring these developments and will keep you posted.

July 2023

France postpones their e-Invoicing and e-reporting mandate - date to be confirmed!

A major announcement from the French government has deferred the roll out of their e-Invoicing reform which was scheduled to commence in phases starting on 1 July 2024. However, the latest news reveals a subsequent extension to a future date, which is yet to be confirmed.

The timeline and details of the deferral will be deliberated as part of the discussions centered around the finance law for 2024.

For more information the official press release is available in French here.

Upgraded technical specifications (v2.3) unveiled

The newest iteration of updated Technical Specifications (v2.3) were recently released.

Though the commencement of the impending mandate might have been pushed back, the wheels are undeniably still turning as we can see from the continued refinement of the technical prerequisites and advancing the changes to the new Chorus platform.

For those keen to delve into the specifics, the latest technical specifications are readily accessible on the official French government website here.

May 2023

English version of B2B external specification v2.2 now accessible

The latest technical guidelines, version 2.2, for mandatory electronic invoicing and reporting requirements have been unleashed in English. This follows the earlier release of the French version on January 31, 2023.

Compared to the June 30, 2022 iteration, version 2.2 brings some notable enhancements. It offers further clarity on various use cases and addresses miscellaneous points.

You can access the English version of the B2B External Specification v2.2 by visiting the official website here.

New dematerialization platform registration service established for PDPs

An important milestone was passed in France's plans to leverage certified service providers to support their new e-Invoicing reform. The French Tax Administration has officially released an Order outlining the establishment of the Partner Dematerialization Platform (PDP) registration service.

The responsibility for evaluating registration applications, issuing and renewing dematerialization platform operator registrations, as stipulated in Article 290 B of the general tax code, lies with the regional public finance department of Hauts-de-France and the Nord department. This department is also tasked with ensuring the adherence to obligations for partner dematerialization platforms and their users, in accordance with Articles 289 bis, 290, and 290 A of the same code. To facilitate these processes, a dedicated service named the "Service of Registration of Dematerialization Partner Platforms" has been created within the regional directorate of public finances for Hauts-de-France and the North department.

Effective from May 1, 2023, this decree's details can be accessed on the official website of the French government here.

Pilot phase of French mandate announced for January 2024

As we have discussed at length in these pages, the French e-Invoicing reform introduces a new CTC (Continuous Transactions Control) model which will be implemented in stages starting from July 2024 and establishes new requirements for all businesses operating in the country.

Under the new mandate, taxpayers will be obligated to issue their B2B domestic invoices electronically replacing traditional paper-based invoices. Additionally, the mandate introduces electronic reporting obligations for transaction data and payments, facilitating a more streamlined and efficient invoicing process.  In order for the French tax authorities to access the data, taxpayers, or their authorised providers (PDP) will have to integrate with the Public Billing Portal (PPF).

In a significant next step towards the implementation of their e-Invoicing mandate, the French Ministry of Economy has announced the launch of a pilot phase for electronic invoicing.

The proposed pilot, which will run between January and June 2024, aims to test the viability and effectiveness of the new electronic invoicing model in real-world conditions. The pilot phase will involve all stakeholders, including the Public Billing Portal (PPF), partner platforms (PDPs), and taxpayers.

Enterprises interested in participating in the pilot phase are required to submit their applications by the deadline of 26 June 2023. Following the evaluation process participants will be notified of the results. This will provide businesses with an opportunity to assess their eligibility and prepare for compliance with the upcoming e-invoicing regulations.

OpenText invites customers and prospects to partner with us if they wish to participate in this pilot program, or to check their readiness for the e-Invoicing mandate using our e-Invoicing mandate readiness check service. Reach out to your OpenText account representative, or contact us here.

February 2023

Updated technical guidelines for e-Invoicing mandate reform

On 31st January 2023, the French tax authorities (Direction Générale des Finances Publiques – DGFiP) published a further revision to the B2B external specifications as part of their e-Invoicing mandate reform.

The revision includes changes to specific invoicing use cases such as those around factoring, debit notes, down payments, discounts, and margin schemes. Further admissions cover changes to the process for adding attachments to an invoice, as well as clarifications around transmission procedures and the role of PDPs.

The full specifications (in French) can be found on the French government website.

e-Invoicing mandate Readiness Check service for France: OpenText Professional Services

As we begin to approach the 2024 deadline for the French reform, companies must prepare their internal systems for the necessary changes that will be required. Many organizations lack the internal resources or knowledge and expertise required to evaluate their ability to meet the requirements.

The OpenText Professional Services team, in conjunction with tax experts, has prepared a robust methodology for analyzing organizations’ output data against the published requirements for e-Invoicing and e-Reporting reform.

Whether companies are still using paper and PDF invoices or have already switched to fully automated electronic invoicing, they will invariably find gaps between the output they produce today, and the additional mandatory and conditional fields required by the new French legislation.

With further updates recently published by the French authorities it’s increasingly important that companies validate their readiness.

OpenText professional services will perform a systematic analysis of the data produced by a companies’ ERP or other line-of-business application, evaluating the data for conformity to the format and content of the required output.

After this review, OpenText will host a workshop to walk through the findings and consultation on any identified gaps, providing organizations with the tools to properly assess the risk and potential impacts, as well as guidance on how to resolve any potential issues.

See our service overview for more information and reach out to your OpenText sales representative to follow up.

October 2022

Updates to legal framework, FAQs and list of data fields for French e-Invoicing mandates

As we move ever closer to the 2024 French mandate, further legal and technical updates have been forthcoming.

Decree No. 2022-1299 and the October 7 2022 Order relating to the generalization of electronic invoicing were published, confirming the timeline of the roll-out and adding further detail around the obligations for PDPs (accredited service providers), the outline for the centralized directory, and more information about the e-Reporting framework.

The technical specifications have also been updated to clarify some new data fields which are required to be included on electronic invoices. The list can be found on page 16 of the current technical specifications (in French) which are available on the tax authority website.

In addition, there have been amendments within the e-Invoicing / e-Reporting FAQs which may better help businesses understand the requirements. The latest FAQ for French electronic invoicing can be found here (also in French).

For more information about these changes and any clarification you might require about the obligations in France for 2024, please reach out to your OpenText sales team and arrange a consultation with our French tax and e-Invoicing SMEs.

July 2022

The latest specifications for the French e-invoicing mandate

The French e-invoicing mandate is expected in 2024 so companies still have some time to prepare. Here are three important aspects of these new mandates.

Timeline and mode of inception 

There is a clear distinction between the timeline for outgoing and incoming invoices. When it comes to issuing invoices to your clients, the new obligations will take effect for you according to the size of your company. Large companies will have to issue all invoices electronically from July 2024, mid-size companies in January 2025, and SMEs and micro-enterprises in January 2026.

Method of sending and receiving e-invoices 

Companies have two options for issuing and receiving e-invoices in France, either they may use an accredited private service provider (Plateforme de Dématérialisation Partenaire: PDP) or they can choose to directly use the E-invoicing Public Portal (Portail Public de facturation – PPF). 

While use of the PPF is free, which of course may seem appealing, companies should note that according to the French tax administration themselves, this will only provide a minimal service.  It is clearly targeted for microenterprises with limited technical infrastructure to ensure that there remains an affordable basic option. For SMEs and enterprises, the use of a service provider such as OpenText is recommended.

While on the face of it, the long preparation period granted to companies may appear to provide plenty of breathing space, as we write this in July 2022 the French tax authority has still failed to finalize key technical details, has not published all the relevant regulatory texts, nor have they issued all of the necessary decrees required to give the regulations weight in law. So there is a lack of certainty which leads to concerns about the feasibility of the schedule.

And while the gradual phasing in of these requirements on the surface seems to provide even more time at least for the majority of companies, the fact remains that all companies established in France must be ready to receive e-invoices sent by their suppliers from July 2024.

Of course, this makes perfect sense since the large enterprises mandated to send e-Invoices in phase 1 can in principle be issuing invoices to any size of business, but it does mean that first deadline of July 1st, 2024, effectively applies to all businesses.

Within larger enterprises, issuance and reception of e-Invoices is often performed by different applications owned by different departments – AP vs AR, purchasing/procurement versus sales, even potentially different applications for indirect materials procurement and direct materials and so ensuring that all applications and processes comply by the correct date is imperative.

Format of e-invoices

The French regulations allow for a number of different formats for the issuance of invoices, with multiple structured formats (UBL, CII, etc), unstructured formats (native PDF), or hybrid formats (Factur-X – the Franco-German collaboration based on the German ZUGFeRD format). This is also one of those areas where the direct usage of the public invoicing portal as discussed above will limit the options.

For those choosing to issue their invoices directly via the PPF portal, only UBL, CII and Factur-x can be used, whereas the use of a service provider will allow companies to use other structured formats such as the widely used EDIAFCT standard for example.

The diversity of formats available for those using service providers will be a great benefit for companies already invoicing electronically since, potentially, it allows them the freedom to continue to use existing formats with very little change. But for those companies relatively new to e-Invoicing it presents greater complexity both for generating invoices and also for receiving and integrating various formats into their ERP and Accounts Payable applications.

The selection of one format rather than another for issuing or receiving invoices must be considered carefully in order to arrive at the best format to meets not only tax requirements but also the business and IT requirements/ constraints.

Businesses must remember that while there are many options, this does not suggest a laissez faire attitude to the content and structure of the invoice, which must still meet the mandatory guidelines.

Disclaimer: This newsletter is intended to reflect the direction the industry is moving and does not a reflect a commitment for the OpenText Active Invoices with Compliance (AIC) product development roadmap to meet any particular stated regulations.
LEGAL Disclaimer: The information contained in this newsletter is for general guidance on matters of interest only. The authors are not herein rendering legal, accounting, tax or other professional advice and the content should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. While we make every attempt to ensure the accuracy of the information contained within is from reliable sources, OpenText is not responsible for any errors or omissions, or for any result

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November 2024

ViDA proposal approved - a new era for VAT compliance

We are thrilled to announce that the ViDA (VAT in the Digital Age) proposal, has finally achieved assent this week. This package of reforms to Value Added Tax in the European Union has been a long time coming, having been revised and reviewed multiple times since it was originally put forward in December 2022.

This landmark development marks a significant step forward in the digital transformation of VAT compliance.

However, this has profound implications for multinational companies, who will be forced to comply with e-Invoicing mandates that follow in all 27 EU member states over the next five years.

The three pillars of ViDA

The ViDA proposal introduced three pivotal pillars aimed at modernizing VAT compliance:

1. E-Invoicing and digital reporting requirements:
   • Focuses on real-time digital reporting of VAT transactions.
   • Ensures greater accuracy and reduces the risk of fraud.
   • Mandates cross-border e-Invoicing to support the digital reporting requirements (DRR).
   • Removes restrictions on e-Invoicing.
2. Single VAT Registration in the EU:
   • Simplifies VAT compliance by allowing businesses to register for VAT only once across the entire EU.
   • Streamlines operations and reducing administrative burdens.
3. Enhanced rules around digital platforms:
   • Ensures VAT is correctly applied to transactions facilitated by online platforms.
   • Makes platforms responsible for VAT collection and remittance.

E-Invoicing Obligations

The new obligations are set to revolutionize e-Invoicing. One of the main focuses of the proposal was to change the way businesses handle cross-border transactions. By requiring all cross-border transactions to be electronically invoiced and reported in near-real-time, this mandate aims to streamline VAT reporting and reduce fraud, benefiting both businesses and tax authorities.

Another key change introduced by ViDA is the removal the "buyer acceptance" principle. Currently, buyers can refuse to receive electronic invoices, hindering widespread adoption of e-Invoicing, and also has inhibited countries from mandating e-Invoicing nationally. Countries like Italy, Germany, France, Poland and others have all had to pause to apply to the EU for a "special derogation" from the VAT directive in order to pursue a national mandate

These restrictions will be lifted permanently by ViDA.

Timeline

There are still some steps to go through before ViDA is fully adopted, which is likely to take place in the first half of 2025.

The proposal includes both a directive and a regulation.

• Regulation: A binding rule that applies directly and uniformly across all member states without needing to be adapted into national law.
• Directive: Sets out goals that all members must achieve but allows each country to decide how to meet those goals.

The directive will cover the details around the three pillars, with a deadline of 30 June 2030 to fully integrate the e-Invoicing and DRR obligations into national legislation. However, countries are expected to implement these changes well before the deadline, given the clear benefits.

The result: national e-Invoicing mandates ahead

For multinationals operating in the European Union, this represents a significant shift. 

Currently, around ten member states are already in the process of implementing their own e-Invoicing mandates, with the remaining 17 to follow at their own pace. Businesses can therefore expect to deal with on average 3-4 new e-Invoicing mandates per year until mid-2030.

Our experience dealing with these mandates is that it can take enterprises up to two years to prepare and implement e-Invoicing to meet a single mandate, so the planning of such a huge number of mandates will represent an incredible burden on already strapped resources across tax, finance and IT.

OpenText’s commitment to ViDA

As a leading provider of global e-Invoicing services, OpenText is committed to supporting our customers through these changes. Our OpenText Trading Grid e-Invoicing solution is already equipped to handle e-Invoicing regulations in over 50 countries, and we are dedicated to ensuring that our solution remains compliant with any new mandates introduced as a result of the ViDA legislation.

The OpenText approach differs from many of our competitors, providing a white glove "managed service" approach to e-Invoicing, with an end-to-end solution that helps you to prepare for each mandate by first evaluating your readiness, and then supporting you through the necessary integrations both to your internal systems, external stakeholders, and national e-Invoicing portals.

Conclusion

The approval of the ViDA report is a monumental step towards a more efficient and transparent VAT system. At OpenText, we are excited about the opportunities this presents and are fully prepared to support our customers in navigating these changes. Stay tuned for more updates as we continue to enhance our solutions to meet the evolving needs of the digital age.

June 2024

ViDA proposal rejected once again

Despite renewed efforts during the Belgian presidency, the recent ECOFIN meeting (21.6.2024) did not result in a political agreement on ViDA. The vote went against continuing with ViDA in its current form. However, discussions are ongoing, and stakeholders remain committed to finding a viable solution.

Recap - what is ViDA?

ViDA stands for “VAT in the Digital Age.” It encompasses a set of proposals and regulations designed to harmonize and modernize the Value Added Tax (VAT) system within the European Union (EU). The goal is to create a level playing field for both traditional and digital businesses while ensuring efficient tax collection.

The European Commission (EC) proposed the ViDA package in December 2022, aiming to modernize EU VAT rules. The package covered three key areas or pillars:

• Expanding VAT digital platform rules to include platforms facilitating passenger transport and short-term accommodation
• Enhancing the single VAT registration and compliance mechanism under the One Stop Shop (OSS)
• Introducing a real-time digital reporting system based on electronic invoicing (e-invoicing) for cross-border businesses within the EU

Since the initial proposal, member states engaged in discussions, considering various concerns. These discussions led to an updated draft that reflects compromises and amendments based on different positions.

The Economic and Financial Affairs Council (ECOFIN) discussed the updated proposal in May 2024, but was unable to achieve political agreement. One member state, Estonia, disagreed specifically on expanding the VAT digital platform rules. They argue that the proposal introduces an unfair disparity between traditional businesses offering services and individuals who offer similar services through digital platforms (for example, AirBnB).

Why was it rejected?

The proposal is presented as a single legislative item and requires unanimous assent. There is clear agreement with regard to the e-Invoicing proposal and the single VAT registration. However, Estonia continues to disagree with the proposal around the updated VAT digital platform rules which they feel disadvantages SMEs operating in their nation. As a result, they have once again voted against the proposal.

The result is disappointing for those of us focused on the e-Invoicing elements. But there remains a firm agreement to work through the remaining disagreements, find an acceptable compromise, and overcome Estonia's veto.

The Presidency now passes from Belgium to Hungary and let's hope they have an appetite to shepherd these discussions through and gain consensus.

February 2023

VAT in the Digital Age (ViDA) now available in different languages

The European Union finally provided translations of the VAT in the Digital Age proposal for all EU languages, a key milestone in commencing the formal feedback process, which will run until 4 April 2023.

The local language versions of the proposal can all be found here.

The EU Commission (‘EC’) has been looking at ways to modernize and simplify VAT legislation, leveraging digital technology, including e-Invoicing mandates, to improve VAT collection and reduce tax fraud while at the same time seeking to minimize the burden on businesses in terms of maintaining compliance.

The specific objectives of the ViDA initiative include improving tax reporting and unlocking the opportunities provided by digitalization. Some of these changes focus on simplifying VAT registrations for businesses trading in multiple EU jurisdictions, and others will update rules for the platform economy. Most importantly, there are some significant changes proposed with respect to both e-invoicing and e-reporting requirements which we will focus on in this newsletter.

January 2023

e-Invoicing amendments proposed by ViDA

Firstly, as from 2024, mandatory e-invoicing will become possible without the need for prior EU approval. At present, countries who have chosen to push for e-Invoicing mandates – such as Italy, France, Poland and so on – have had to first obtain a special derogation from the EU VAT Directive.

Member States would be able to switch to e-Invoicing without consulting the EU as long as their invoices comply with the European Norm – the standard for electronic invoices which was developed initially for use in B2G e-invoicing. A further condition is that the issuance and transmission of e-invoices cannot be subject to a prior mandatory authorization or verification by the tax authorities. So what does that mean in practice?

This proposed change would effectively signal the end of the “clearance model” in the EU such as has been implemented in Italy and is widely used in Latin America. Member States, such as Italy, that already have this type of system in place would need to align with the new rules by 1 January 2028 and adapt the existing SdI model to remove the obligation for authorization of invoices by the platform prior to issuance/transmission. This will have significant benefits for businesses who may already be exchanging invoices electronically with key trading partners since it means they should not have to completely change their existing process and will be able to simply setup new flows to meet the government e-Reporting requirements (see below).

Secondly, e-invoicing will ultimately become the de facto standard for almost all invoices rather than an exception. The proposal would see issuance and reception of structured electronic invoices become the default from 1 January 2028.

Member States would need to “opt in”, i.e., seek special derogation from the EU, if they wish to allow paper invoices for certain transactions. Cross-border invoices (B2B intra-EU supplies of goods and services) would always require an e-invoice.

Third, the proposal would redefine e-invoices such that only invoices transmitted and received in a structured electronic format suitable for automated electronic processing will be considered to be electronic invoices. This is proposed to take effect as early as 1 January 2024 and could effectively eliminate the use of hybrid PDF formats such as ZUGFeRD/Factur-X (see our April newsletter for more details about this format).

e-Reporting amendments proposed by ViDA

A major focus of the proposal is around electronic reporting of intra-EU transactions. The e-invoicing obligation described above will facilitate such digital reporting requirements (DRR) and this will replace the current EC sales listings for cross-border transactions within the EU as from 1 January 2028.

The prescribed data for this reporting will need to be transmitted electronically, on a transaction-by-transaction basis, within two working days from the issuance date of the invoice. Member states can either use the existing format referred to as the EN (European Norm or European Standard), although Member States will have the freedom to allow the use of a different format as long as they also allow the use of the EN.

Member States will in turn report the data collected using an enhanced version of the VIES return (the system by which companies today report zero rated intra-EU cross border transactions using the free online VAT Information Exchange System). This centrally reported data will be available for analysis for five years.

While cross-border transactions must be reported, the proposal includes the option for Member States to to introduce digital reporting requirements for other transactions (e.g. domestic supplies of goods and services). To ensure harmonization, any such reporting system will need to be similar to the one described above for Intra-EU transactions.

Member States which have already implemented an e-Reporting system for these transactions will have to adapt them to ensure harmonization with the centralized reporting system by 2028 at the latest.

ViDA – Key takeaways

At this point there is no action, this is in proposal stage and needs to be formally adopted by the European Union as an amendment to the existing EU VAT directive which will take some time.

Assuming the proposal is passed into law, it will begin to introduce some much-needed harmonization around both e-Invoicing and e-Reporting which can only be good news.

October 2023

OECD: Report published on e-Invoicing / e-Reporting and continuous controls

The OECD have been examining the increasing use of continuous transaction control based systems for VAT reporting in order to see how these fitted with the concepts they had outlined in their previously published “TAX Administration 3.0: The Digital Transformation of Tax Administration“.

A new report has been published which is a summary of discussions between officials from China, Canada, Chile, Hungary and Spain and based on responses from 71 tax administrations about their own current situation and plans.

The report, entitled “Tax Administration 3.0 and Electronic Invoicing – Initial Findings” can be found at the link provided.

EU VAT in the digital age– Detailed reports now available

In our newsletter of February this year we discussed an European Union initiative referred to as “Vat in the digital age”. The main documentation is available here.

The European Commission has now published more detailed related reports:

• Final report. Volume 1, Digital reporting requirements
• Final report. Volume 2, The VAT treatment of the platform economy
• Final report. Volume 3, Single place of VAT registration and import one stop shop
• Final report. Volume 4, Consultation activities

These reports can be downloaded from the links provided above.

April 2022

Recommendations to the European Commission on e-Invoicing harmonization

On 10 March 2022, the European Parliament (EP) voted in plenary on a Resolution to the Commission’s Action Plan on fair and simple taxation supporting the recovery strategy (2020/2254(INL), and provided several recommendations intended to assist in reducing the costs associated with compliance for taxpayers while increasing transparency and certainty when introducing endeavours to reduce the tax gap.

A clear focus was the potential costs for smaller businesses faced with compliance with requirements in up to 27 different tax systems.

The resolution highlighted the “unprecedented impact and magnitude of the Covid-19 crisis on the economy” and the resultant decrease in tax revenues and increase in government debt.

The recommendations related to the reduction of the tax gap and compliance costs focuses on e-invoicing and e-reporting and includes:

• Promptly establishing a harmonized common standard for e-invoicing across the EU – ideally within fiscal year 2022 – to reduce the cost of the creation of fragmented, disparate and divided systems across the Member States.
• Exploring the possibility of a gradual introduction of obligatory e-invoicing across the Union by 2023, focusing on a significant reduction of costs of compliance, especially for SMEs.  Invoice issuance should be administered only via state-operated/certified “system(s)” with full data protection ensured.
• Examining the possibility that such a system would provide tax compliance data/documents for eligible taxpayers, meeting the responsibility for the compliance of these returns, especially – once again – from the point of view of reducing compliance costs and risk for SMEs.

The full text of the resolution can be found here.

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July 2024

Malaysia relaxes mandate penalties at the 11th hour

The e-Invoicing for Tax Reporting & Compliance mandate in Malaysia is set to take effect on 1st August 2024. Technical specifications have been updated as recently as June 2024, raising concerns among service providers and taxpayers about the readiness of the new system.

In a recent announcement, Saiful Izwan Mohd Shazali, the Director of National e-Invoicing & Standardisation at MDEC (Malaysia Digital Economy Corporation), provided an update which is good news for all concerned.

Flexibility for Taxpayers

To ensure a smooth transition to e-Invoicing, the Inland Revenue Board of Malaysia (IRBM) has announced that the Government will provide flexibility to taxpayers. This flexibility will be in effect for 6 months from the commencement date of mandatory e-Invoicing.

During this period, taxpayers are allowed to issue a consolidated e-Invoice for all transactions. This includes all activities and industries, even those issuing self-billing e-Invoices. Furthermore, any transaction description can be entered in the “Product or Service Description” field. If there is an e-Invoice application from the buyer, the seller is also allowed to only issue a consolidated e-Invoice without issuing an e-Invoice for each transaction.

No Prosecution for Non-Compliance

LHDN also stated that, within the said 6 months, there will be no prosecution action under section 120 of the Income Tax Act 1967 against non-compliance with the e-Invoicing rules. This is provided that the taxpayer complies with the consolidated e-Invoicing requirements as stated above.

Grace Period

The grace period given is expected to give sufficient time to taxpayers to ensure the full implementation of e-Invoicing. This is seen as a more effective solution covering all aspects such as system availability, smooth business operations, and change management in business.

Incentives for Early Adopters

To recognize taxpayers who successfully implement e-Invoicing according to the set timeline (without using the above relaxation), a reduction in the capital allowance claim period from three (3) years to two (2) years will be granted. This is for the purchase of ICT equipment and computer software packages effective from Assessment Year (TT) 2024 to TT 2025.

Conclusion

This announcement marks a significant step in Malaysia’s journey towards digitization and standardization of tax reporting and compliance. The flexibility and incentives offered are expected to encourage businesses to adopt e-Invoicing, leading to smoother business operations and more efficient tax compliance.

Stay tuned for more updates on this topic as we continue to monitor the situation and provide timely updates to help businesses navigate these changes.

How OpenText can help

For customers who have not yet deployed a solution, OpenText is ready to assist in achieving compliance. The OpenText e-Invoicing solution caters to all your business-to-business (B2B) and business-to-government (B2G) invoicing needs. Delivered as a fully managed service, it eases the burden of daily invoice operations and ensures ongoing compliance in over 50 countries..

As an accredited PEPPOL Service Provider for Malaysia, we provide our clients with a seamless e-Invoicing solution that meets this mandate streamlining your accounting processes and delivering efficient tax compliance.

In addition, our e-Invoicing mandate readiness check service is available to aid customers in assessing the output from their ERP, finance and accounting systems to ensure it meets the new legislation.

Reach out to your OpenText account representative or contact us here.

February 2024

Malaysia's clearance e-Invoicing mandate - what we know so far

Malaysia has joined the increasing number of countries to announce a new mandatory e-Invoicing regime. As well as targeting tax compliance and reducing "tax leakages", the system will make tax reporting more efficient. In addition, the stated goals of the mandate include improvement in business efficiency and supporting the digital economy.

While e-Invoicing has been possible since 2015, it has been optional and not widely adopted. The new plans announced by the Inland Revenue Board of Malaysia (IRBM) for a Continuous Transactional Controls (CTC) mandate will be phased in over a period of years based on company revenue.

Malaysia MyInvois portal - high level details

The Malaysian approach includes a central government platform, called "MyInvois" which will validate invoices; hence it is classed as a clearance model. The MyInvois platform will approve invoices prior to issuance and add a unique digital Certification Serial Number to the invoice. Once verified, the supplier must share the validated e-Invoice with the buyer or customer.

Companies can connect directly to the MyInvois portal, or use their own application, as long as it is able to integrate via the published Application Programming Interface (API).

For those with low volumes of invoices, connecting to MyInvois directly is possible. Here, invoices can be entered manually through a web form, or uploaded individually or as a batch using a spreadsheet. The portal supports all essential e-Invoice actions, including invoice generation, submission, viewing, cancellation and rejection.

Cancellation or rejection needs to occur within 72 hours from the time of validation.

The API option can be enabled through an existing business application such as your ERP if it supports the API, or through a service provider. Invoices can be submitted in XML or JSON format.

There are 55 mandatory fields required under the new system as well as additional annexes for certain circumstances.

Invoices that fail to include the mandatory content or are not in the correct format will be rejected automatically.

More details of the functional and technical requirements can be found at the IRBM portal here.

Scope

The scope of the mandate will cover both domestic and cross-border transactions. Both imports and exports will need to be reported to the IRBM MyInvois portal.

Invoices, credit notes, debit notes and refund notes are all in scope of the mandate. Self-billed invoices are also in scope. There are some exemptions, which are detailed in the technical specifications available on the IRBM Portal.

Timeline

The initial implementation date of the mandate has been deferred from June 2024 to August 2024 and slightly simplified from four phases to three. The timeline is now as follows:

• For taxpayers with an annual turnover exceeding RM 100 million, the applicable date is now August 1, 2024.
• For taxpayers with an annual turnover between RM 25 million and RM 100 million, the applicable date remains January 1, 2025. This simplifies the timeline by removing an additional phase which had originally been slated for January 1, 2026, for businesses with an annual turnover between RM 25 million and RM 50 million. These are now all included in the earlier date.
• Finally, for all remaining taxpayers, the mandatory e-invoicing implementation starts on January 1, 2027.

How we can help

As the clock ticks down to August 2024, businesses operating within Malaysia need to gear up for the new mandate.

OpenText are prepared to assist customers meet the deadlines above. In addition, our e-Invoicing mandate readiness check service is available to aid customers in assessing the output from their ERP, finance and accounting systems to ensure it meets the new legislation. Reach out to your OpenText account representative or contact us here.

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March 2024

German Federal Council officially approves law driving the e-Invoicing mandate

On 22nd March 2024 The German Bundesrat - the Federal Council - officially approved the Federal Government's Growth Opportunities Act, which is the legal instrument that includes the provisions for the planned e-Invoicing mandate. The law had undergone criticism and review but was finally passed with a clear majority.

The law aims to strengthen Germany's competitiveness by providing tax incentives and relief worth 3.2billion Euros and includes provisions around climate protection as well as economic stimulus.

Manuela Schwesig (SPD), who co-chaired the mediation committee, said: "The economy urgently needs these impulses." (Google translated from source article, in local language, here).

The mandate is closer than you think!

The official timeline remains as follows:

• All German companies must be prepared to receive electronic invoices based on EN 16931 standard as of Jan 1^st 2025. Sending will remain optional until the timelines provided below:
• From Jan 1^st 2027 sending is mandatory (for companies > 800k annual turnover)
• From Jan 1^st 2028 sending is mandatory for all companies

As discussed in our October 2023 blog below, while this seems to provide plenty of breathing space for German companies, the requirement for all businesses to receive e-Invoices by 1st January 2025 is still a significant and urgent deadline, since it means all businesses must implement e-Invoicing capabilities by the end of 2024.

How we can help

As the clock ticks down to January 1st 2025, businesses operating within Germany need to prepare the new mandate.

OpenText are prepared to assist customers meet the deadlines above. In addition, our e-Invoicing mandate readiness check service is available to aid customers in assessing the output from their ERP, finance and accounting systems to ensure it meets the new legislation. Reach out to your OpenText account representative or contact us here.

October 2023

Further updates and clarifications on German e-Invoicing regime - the mandate is coming sooner than you think!

The latest update from the German Federal Ministry of finance has provided clarification around some key points relating to their roll out. This update specifically relates to EDI procedures and the ZUGFeRD hybrid invoice format and clarifies the timelines for optional and mandatory e-Invoicing in Germany.

The "soft mandate" from January 2025 is not as soft as it looks!

There had been some confusion about the proposed timeline for the German e-Invoicing mandate. Some parties reported an "optional" use of e-Invoicing as of 1st January 2025 which would become mandatory the following year. This would 1st January 2026 for large enterprises (those with revenues above €800,000), and then for small businesses beginning 1st January 2027.

What Germany is actually doing is implementing what I refer to as a "soft mandate" for e-Invoicing. This is an approach we saw taken by many governments implementing business to government (B2G) e-Invoicing in response to the Public Procurement Directive (2014/24/EU).

In these cases, government agencies were mandated to accept electronic invoices if they were issued by suppliers. However, suppliers were not mandated to issue invoices electronically - hence it was only a "soft mandate". As a result, we often saw very low volumes of B2G electronic invoices in these countries. A few governments went further. They either directly or indirectly implemented a "hard mandate" requiring suppliers to issue their invoices electronically. Not unexpectedly, these countries saw a complete switch from paper invoices to electronic overnight.

In a B2B scenario this approach is unusual although not unprecedented - Turkey is one such example. It has important implications.

In Germany, from 1st January 2025 ALL taxpayers must ensure they deploy an e-Invoicing solution to receive invoices issued electronically by their suppliers.

Now, you may be thinking "my suppliers don't issue electronic invoices, so I don't need to rush". And you may also be thinking "look what happened in those B2G cases".

I urge you to think again.

The buyer acceptance clause has slowed adoption, but the Germans may remove it

Everyone in the e-Invoicing industry agrees that one of the primary reasons that e-Invoicing adoption has been so painfully slow in the European Union, despite it being formally allowed since 2001 (Directive 2001/115/EC aka the "EU115 Directive") - is one specific and troublesome clause in the directive. We call this the "buyer acceptance" clause.

The buyer acceptance clause is Article 232 of the VAT directive. It simply states, "the use of an electronic invoice shall be subject to acceptance by the recipient."

How can one simple sentence be responsible for hampering e-Invoicing initiatives so badly? Very simply put - in a buyer/supplier relationship, as we say here in the UK, "the customer is king" or "the customer comes first". Suppliers do not dictate to their customers how they buy, so if the customer says "no" to electronic invoices then the supplier is forced to carry on sending paper.

In other words, attempts by suppliers to implement e-Invoicing have been severely hampered by the willingness or technical readiness of their buyer community to accept an electronic invoice.

With the German proposal to remove this requirement for buyer acceptance, it will be open season for suppliers to invoice ALL of their customers electronically. Many of them have been ready and waiting for this day. Even for those who have not yet implemented e-Invoicing you can be sure a majority will be ready by January 1st 2025.

Savvy supplies will be thinking "how can I make the most of the investment in e-Invoicing technology that I have been forced to make?" And one great way to do this is to digitize their outbound invoice process and send all their domestic invoices electronically.

An electronic invoice removes the ability for customers to say "I still haven't received that invoice" - the old "it's probably lost in the post" excuse. Electronic delivery mechanisms come with assured delivery which is a huge benefit to the supplier in trying to get paid more rapidly.

So the message is clear - it may not be a full e-Invoicing mandate - and you are certainly not obliged to implement e-Invoicing for your own outbound flows. However, you absolutely should expect to see a huge volume of your inbound domestic German invoices switch to electronic formats from January 1st 2025.

Of course - it certainly makes a lot of sense for you to also consider your own outbound invoice flows if you are a supplier as well as a buyer. Switching to fully digitized electronic invoices will save you significant additional costs which will help to pay for the implementation of your electronic invoice reception solution.

Of course, not all e-Invoicing solutions are created equally so ensure that when you deploy an e-invoicing solution it provides all the capabilities and coverage you require.

Likely changes to EDI procedures - to be confirmed

The Ministry of Finance also note that further clarification will be forthcoming regarding EDI procedures - noting the importance of this technology for key areas of the economy. They stated that, "a solution is currently being worked on to ensure the continued use of EDI procedures as far as possible under the future legal framework." However, they also noted the, "possibility that technical adjustments will have to be made to certain EDI procedures with the introduction of the transaction-based reporting system". They added that "the aim will be to limit this conversion effort to what is necessary in the interest of the economy.

Clarification around the hybrid invoice format - ZUGFeRD

There has been some question raised around whether the ZUGFeRD hybrid invoice format widely used in Germany would be acceptable under the European Union ViDA (VAT in the Digital Age) proposal, which seeks to redefine an invoice as structured electronic data. Since a PDF is generally considered to be unstructured data this raised some concerns.

According to the latest update (translated from German): "In order to provide legal and planning certainty to practitioners as early as possible, the Federal Ministry of Finance (BMF) and the highest tax authorities of the federal states have discussed this issue. They have come to the conclusion that, from the point of view of the tax authorities... an invoice in accordance with the ZUGFeRD format as of version 2.0.1 basically represents an invoice in a structured electronic format that complies with the European standard for electronic invoicing..."

They also clarified that, given that there are two distinct components to a hybrid invoice, the invoice image - a human readable representation of the invoice data, and the underlying data itself in an XML format - for the avoidance of doubt the structured data will be considered to be the legal original for tax purposes. "the structured part will be the leading one in the case of a hybrid format.... In the event of a discrepancy, the data from the structured part will then take precedence over that from the image file."

For more background regarding ZUGFeRD see our April 2022 newsletter.

May 2023

Germany propose B2B e-Invoicing mandate for January 2025

Germany has now announced it's proposed timeline for implementation of a B2B e-Invoicing mandate covering all domestic transactions. The German Federal Ministry of Finance (Bundesministerium der Finanzen or BMF) issued a discussion document on April 17, 2023 with details of the proposed changes to the current legislation. This timeline would see implementation of the proposed mandatory e-Invoicing regime commencing on 1st January 2025.

The proposal takes into account the framework proposed by the VAT in the Digital Age (ViDA) proposal put forth by the European Commission in December 2022.

There are indications as to what key changes would be made to the existing German tax legislation.

Firstly, Germany will update the legal definition of invoices to include electronically issued invoices. The definition of an e-Invoice would be based on the ViDA proposal and the European Norm (EN16931) standard introduced by the EU Public Procurement Directive (2014/24/EU).

E-Invoices would then become the default and mandatory system of invoicing for all B2B transactions, replacing paper.

Any other types of invoices, such as paper, and electronic formats including PDF and EDI would be grouped together as "Other invoices", and are out of scope of the mandate. There remains some confusion as to what place there might be for such invoices, if any.

The proposal also includes amendments to the existing German laws which cover the requirements for authenticity, integrity, and legibility of the invoices.

The Ministry of Finance is seeking input from businesses, software/solution providers and other stakeholders prior to issuing a draft law. This consultation process is due to run from April through to 8th May 2023.

The BMF is seeking comments around whether the government should seek a phased deployment as per France or should take more of the "big bang" approach of Poland. They are also seeking input regarding whether a phased approach should be based on size of company, invoice amounts or other alternatives.

Also open for comment is whether exceptions to the mandate should be made for certain invoice types such as micro invoices, tickets etc.

The proposal also presents two different implementation models.

One of the proposed approaches would be to leverage the PEPPOL network in a "5-corner model" leveraging the established PEPPOL network. PEPPOL Access Points would send a copy of the invoices to the proposed government e-Invoice portal for validation prior to issuance between PEPPOL end points.

The second approach would be to follow a model more like that proposed in France using certified private platforms to validate invoices prior to submission to the central government platform.

This is an important next step in Germany's journey to mandatory e-Invoicing and it's gratifying to see the German tax ministry seek input from key stakeholders. Once the German government collates these comments, we expect to see a more concrete formulation of legislation, although at this point no clear time line has been established for next steps.

The post e-Invoicing mandates and updates: Germany appeared first on OpenText Blogs.

July 2024

Poland’s e-Invoicing Mandate proceeding in 2026. We hope.

The much-anticipated Polish e-Invoicing System (KSeF) is back on track. Poland was originally set to embark on their e-Invoicing journey at the beginning of this month, 1st July 2024. As you read in our last update, the implementation date was pushed back due to what we’ll diplomatically call ‘technical hiccups’.

In the aftermath of the announcement, there had been hopes that Poland would resolve the issues rapidly and reschedule the roll-out of e-Invoiding for 2025. It appears that was rather optimistic. Today, we have more clarity on the Ministry of Finance’s plans, or should we say, their latest round of sanguine predictions.

In a recent press briefing, the Minister of Finance, Andrzej Domański, and the Head of the National Revenue Administration, Marcin Łoboda, announced the phased introduction of the mandatory KSeF:

• Starting from 1st February 2026, for taxpayers whose sales value in the previous year exceeded PLN 200 million. (Yes, you read that right, 2026!)
• From 1st April 2026, for all other taxpayers. (No, this is not an April Fool’s joke, they are genuinely talking about rolling out the second wave on 1st April!)

This announcement provides businesses with a clear timeline to work towards, enabling better planning for the impending changes. Or at least, that’s the theory.

The KSeF Audit: A Comedy of Errors?

The decision to redesign KSeF was a response to the shortcomings identified in the audit. Minister Domański believes that the audit was crucial in averting potential disruptions to the Polish economy. The technical analysis revealed that the project’s lack of proper supervision and the system’s inadequately designed architecture resulted in low efficiency and a high failure rate.

We might therefore conclude that delaying until 2026 was to ensure there are no further embarrassments for the Ministry.

The draft law to postpone the KSeF implementation date is currently awaiting the President’s signature.

Now is the time to prepare. Probably.

The announcement of the KSeF implementation date is pivotal for all entities operating in the Polish market. While many taxpayers had already begun adapting their processes and IT systems to be KSeF-compatible and training their teams accordingly, with the announcement of the delay in January 2024 we saw many large companies drop their internal projects in dismay.

With a new implementation date for the system, it's time to dust off those change management project plans and start again. It's imperative that organizations start early to ensure that any changes required to their internal systems and processes can be managed effectively, minimizing the risk of errors and non-compliance with the new regulations.

If you anticipate significant IT or operational difficulties due to KSeF (especially for foreign entities registered for VAT in Poland), now is the perfect time to start discussions with external advisors and your internal project team on how to structure the implementation process (especially regarding future purchase and sales invoices workflow).

OpenText is ready to assist customers meet the deadlines above. Our e-Invoicing readiness check service is available to aid customers in assessing whether the output from their ERP, finance and accounting systems meets the requirements of the new legislation.

The good news is that our global e-Invoicing compliance platform is available and already successfully connected to the KSeF platform, so we are ready to deploy whenever you are and can support you through this transition.

Reach out to your OpenText account representative or contact us here.

February 2024

Poland’s e-Invoicing Mandate Postponed Indefinitely Due to System Errors

On 19 January 2024, Polish Finance Minister Andrzej Domański unexpectedly announced that the implementation of their proposed national e-Invoicing mandate had been postponed indefinitely.

This marks the second time Poland has postponed the mandate, having previously pushed it back six months from an original timeline of January 2024 to July 2024.

The KSeF system has been operational in a “voluntary phase” since January 2022, and businesses had been reassured by the Ministry of Finance that the KSeF system was ready for full implementation. This makes the recent discovery of critical errors and concerns about the platform’s ability to scale to the expected volumes of invoices all the more surprising. While the Ministry had previously claimed the system was capable of handling 100 million invoices per day, it appears that this figure may fall short of the actual demand due to peaks in processing on the first and last day(s) of each month.

Given the risk that businesses would be unable to issue invoices in the event of a system failure, the ministry has prudently decided to pause the mandate. A comprehensive external audit of the system is now planned to evaluate the issues and formulate a plan to resolve them. Only after the audit is complete and a remediation plan is in place will a new timeline be announced. The Ministry made clear that this will not be in 2024.

KSeF remains available on a voluntary basis

It remains unclear whether the Ministry will take this opportunity to address the already well-understood deficits in the KSeF system, such as the inability to include attachments with invoices issued through the platform. This common business practice is currently unsupported by the KSeF system, leaving businesses with the unenviable task of sending attachments separately via e-mail or other means, and buyers having to reconcile these attachments with the invoice received via KSeF.

Simultaneously, doubts have been raised about the compatibility of KSeF with the European Commission’s planned ViDA (VAT in the Digital Age) reforms. While ViDA has not yet been approved, it seems likely to proceed eventually, leaving Poland with a pressing need to adapt KSeF yet again to meet the demands of the reforms.

Although the Minister’s decision may be pragmatically welcomed as a step towards ensuring business continuity, it also comes as a blow to the many enterprises who have already invested in technology to connect to KSeF.

However, OpenText obtained confirmation directly from the Polish Ministry of Finance that: "KSeF still works in an optional version, and you can use it. Taxpayers can still integrate their financial and accounting programs with the National e-Invoice System.” In other words, KSeF is still available to be used on a voluntary basis as it has been since January 2022, and Polish companies can continue to roll out their e-Invoicing solution leveraging KSeF.

A unique opportunity to explore the benefits of e-Invoicing

As we all know, there are significant benefits in switching to electronic invoicing, in terms of reducing the costs and effort associated with manual invoice handling. This leads to faster payments, improved cash flow, and better customer and supplier relationships.

For suppliers sending invoices to their customers, there remains an obligation to obtain consent from your buyer to switch to electronic invoicing. However, the buyer does not need to establish a direct API connection to KSeF in order to receive their invoices electronically. They can register to manually download invoices from the KSeF portal in either PDF, XML, or HTML format. Multiple invoices can be downloaded together in ZIP format.

Buyers receiving invoices from their vendors can proactively provide consent in order to begin receiving their invoices. It seems likely that larger suppliers will be keen to proceed with automated e-Invoicing due to all of the business benefits.

OpenText Professional Services Community Survey can assist clients by finding out which of their buyers are ready to receive e-Invoices via KSeF, and which of their larger suppliers are willing and able to send e-Invoices.

Businesses should therefore see this as an opportunity, rather than a setback. As governments recognize the complexity of national e-Invoicing regimes, businesses too must understand that this is going to be more complicated than they expect. This is especially true for multinational companies with entities operating in multiple regimes affected by the impending mandates not just in Poland but also Romania & Malaysia (2024 mandates), Germany, Greece, Spain, and Slovakia (2025 mandates), and France, Belgium, Croatia, and Latvia (2026 mandates).

This wave of impending mandates will drive incredible demands on businesses to modernize and digitize their entire order-to-cash and procure-to-pay processes in a very short space of time, and in a manner that facilitates far greater agility. An agile and robust global platform for electronic invoicing will be an absolute necessity in order to meet the requirements of multiple national mandates in a very short space of time.

Poland’s “voluntary option”, therefore, represents a perfect low-risk approach to trying and testing your e-Invoicing strategy and platform in advance of the next major mandate.

August 2023

Polish President signs legal act mandating the KSeF e-Invoicing system

On August 4, 2023, the President of the Republic of Poland endorsed an Act that introduces the obligation to issue invoices through the National e-Invoice System (KSeF). With the Act's approval awaiting publication in the Journal of Laws, the final stage of the legislative process is underway. Once published, the Act will transition into a legally binding mandate, and the majority of its provisions will spring into action on 1 July 2024.

Learn everything you need to know about the National e-Invoicing System (KSeF)

Presently, e-invoicing through KSeF is optional, coexisting alongside various traditional invoicing methods. However, the clock is ticking, and in less than a year (starting July 1, 2024), active VAT taxpayers based in Poland will be mandated to exclusively use KSeF for issuing invoices. This mandate will also extend to foreign entities possessing a fixed establishment within Poland's territory, as defined by VAT regulations.

Prepare for the transition to the Polish e-Invoicing mandate

To ensure a smooth transition, the Ministry of Finance is preparing an information brochure detailing the final version of the FA(2) XML schema for e-invoices. In tandem, comprehensive technical documentation is in the works, encompassing critical aspects such as generating and managing collective identifiers for payments and QR verification codes.

We anticipate the release of the final versions of regulations outlined in the Act, notably concerning KSeF utilization and exemptions from the e-invoicing obligation. This transition will also prompt changes in other regulations, including those governing invoice issuance, as well as the precise scope of data to be incorporated in VAT-related tax returns and records. These regulatory adjustments aim to align existing frameworks with the requisites of e-invoicing. An initial step in this direction was taken on 7 August, with the publication of a draft amendment to the regulation governing KSeF usage.

As the clock ticks down to July 2024, businesses both within Poland and those with a fixed establishment on its soil need to gear up for the e-invoicing revolution.

OpenText Active Invoices with Compliance is already online and connected to the KSeF portal for customers wishing to prepare for the transition. In addition, our e-Invoicing mandate readiness check service is available to assist customers in assessing the output from their ERP/finance/accounting systems to ensure it meets the new legislation. Reach out to your OpenText account representative or contact us here.

July 2023

Polish legal wrangling around new e-Invoicing system

After the postponement of the mandate for e-Invoicing, the Lower House of Parliament in Poland (Sejm) passed an amendment to the VAT Act to support the plans for KSeF (the Polish e-Invoicing platform). However, the Senate voted to reject the amendment. This appears to be due to political conflict between the higher (senate) and the lower (Sejm) chamber of the Polish parliament.

Since the ruling party holds the majority of votes in the Sejm chamber they were able to overrule the senates rejection, effectively approving the KSeF legislation. The bill is now ready to be sent for final signature by the President in August 2023 with the intent to push forwards with the mandatory e-invoicing regime as from 1 July 2024.

February 2023

National e-Invoicing mandate postponed to July 2024

The Polish Ministry of Finance have completed a public consultation on new draft legislation surrounding mandatory e-Invoicing via the KSeF platform. The result of the consultation has been to postpone the implementation date of the mandate from 1st January 2024 until 1st July 2024, giving taxpayers a further six months to prepare. Penalties for non-compliance will come into effect as of 1st January 2025.

The draft legislation states that consumer invoices (B2C) will now be fully excluded from the scope of the mandate.

Further, a provision has been made for taxpayers to issue invoices outside of the KSeF platform in the case of technical failure on the taxpayer’s side as long as they are subsequently transmitted to the KSeF system the following day.

The complete statement in Polish can be found on the Ministry of Finance website and the referenced draft act is also available.

Finally, there is a public consultation on a new proposed schema defining the logical structure of e-Invoices. The specifications can be found on the website of the Ministry of Finance.

July 2022

New specifications for e-invoicing mandate released

The Polish e-invoicing is expected in 2024 so companies still have some time to prepare. Here are three important aspects of these new mandates.

Timeline and mode of inception

The Polish mandate imposes a “big bang” approach for both issuance and reception of e-Invoices. After an initial voluntary period, which already came into effect on 1 January 2022, the mandate comes into full force for all companies, regardless of size, beginning in the second quarter of 2023.

The exact inception date of the reform is not yet finalized, which, given the short lead time, is of course going to cause concern for companies operating in Poland. This lack of communication of an official date could lead us to suspect that the Polish system is still not fully ready – but only time will tell.

The post e-Invoicing mandates and updates: Poland appeared first on OpenText Blogs.

February 2024

E-Invoicing mandate back on the agenda and planned for January 1 2026

Despite concerns that e-Invoicing would be off the table until late 2024, the Belgian finance minister has relaunched a legislative proposal to introduce mandatory e-invoicing for domestic business-to-business (B2B) transactions. The draft legislative proposal, adopted by the Council of Ministers on September 29, 2023, aims to implement the e-invoicing obligation on January 1, 2026.

The bill was approved by the Chamber of Deputies on 1 February 2024 and now awaits the royal seal and the publication in the official gazette. While Belgium still needs to receive a derogation from the European Commission in order to proceed, their application was submitted in October 2023 and there is no good reason to expect such a derogation would be refused. Still it remains an important milestone on the road to any e-Invoicing mandate.

What’s in scope?

The proposed B2B e-invoicing mandate includes all taxable persons established in Belgium and Belgian branches of foreign entities (foreign businesses with mere VAT registration in Belgium are not included).

Companies would be obliged to issue invoices in an electronic structured data format for domestic transactions in Belgium. The format proposed is PEPPOL-BIS UBL – which complies with the EU standard format EN-16931.

These invoices will need to be exchanged using the PEPPOL network or another compliant system agreed by both parties. PEPPOL was originally established for the purpose of business to government (B2G) e-Invoicing and although it has gradually been expanded for business to business (B2B) use cases it has yet to form the basis of a national B2B e-Invoicing mandate such as that proposed here so there is still certainly room for issues to arise during implementation of the mandate.

The PEPPOL network operates through certified Access Points which ensure data security, the integrity of transaction data, and the authenticity of the parties involved in any exchange. While companies are quite within their rights to purchase or build their own PEPPOL Access Point the model is mostly used through service providers like OpenText in what is effectively a “four-corner model” or interoperable model.

When the mandate goes live, sending of manual paper invoices, along with PDF invoices via email as well as other electronic invoicing approaches such as traditional EDI will no longer be allowed in a domestic B2B context.

This will result in significant disruption for businesses who have already invested in OCR technology or electronic invoicing solutions that rely solely on PDF or EDI.

What’s different from the previous attempt?

As we reported in our August 2023 update, political disagreements derailed the process previously – so what is different this time?

This time around, a single “big-bang” approach is being proposed with no phased implementation; the mandate would apply to all Belgian VAT-registered entities from January 1, 2026.

An associated e-reporting obligation is expected to be defined and introduced later, although most likely will simply be a straightforward 5-corner model as already used in countries like Hungary and South Korea, where service providers will report a subset of the invoice data to a government portal.

This is a very pragmatic approach, since, once the initial phase is over and all tax payers are successfully sending/receiving invoices and have reaped the benefits associated with eliminating manual invoices, it will be relatively straightforward to add the additional reporting step. If only all tax authorities took such a pragmatic approach that focuses first on the business benefits for taxpayers, before adding any additional burdens around tax reporting.

Be prepared

While we have seen high profile cases of countries delaying their e-Invoicing mandate the Belgian approach has been deliberately simplistic, leveraging the existing proven PEPPOL network in order to avoid potential complications around technical architecture and scalability.

Despite the seemingly distant implementation deadline, and the apparent simplicity of the model, businesses still start to prepare for the potential new mandate as soon as practical. If you are already using PEPPOL in Belgium, for example for B2G e-Invoicing, you may find there is less to do. But for those new to PEPPOL there is still some work to be done.

And of course Belgium is just one of many countries now who’s mandate will be coming soon. While Poland have postponed and no date has been set it will almost certainly be a 2025 deliverable, with Germany, Spain and Slovakia also due to begin their mandates in 2025. And 2026 will not only see Belgium introduce a mandate but also of course France, Croatia and Latvia.

For organizations with operations across these countries having to deal with not just one but two, three, four or even more mandates in quick succession will very likely leave you struggling for resources.

Beginning to address your global e-Invoicing strategy now makes a lot of sense.

August 2023

E-Invoicing launch delayed in Belgium due to political disagreements

Belgium's plans to launch a PEPPOL based e-Invoicing model in July 2024 have collapsed. Parliamentary opposition parties rejected the proposal, citing a lack of confidence in the government's revenue estimates from the proposal. The proposed e-Invoicing reforms aimed to increase tax revenue by reducing the VAT gap.

The withdrawal of the proposal means a substantial delay. Any fresh attempt to gather political agreement and revisit the reforms are impossible until after the summer elections in 2024.

Given the delay, it's unlikely any e-Invoicing reform will come to Belgium before January 2026 at the earliest.

March 2023

Long-awaited tax reform proposal in Belgium finally announced

On 2nd March 2023, Belgian Finance Minister Vincent Van Peteghem took a significant step toward reform by launching a proposed first phase of the Belgian tax overhaul. After months of anticipation, his government formally presented the proposal it is now entering the legislative process. The goal? To solidify a reform plan by early April, followed by an official vote during the summer.

The proposed changes hold Companies face substantial implications for e-Invoicing and e-Reporting with these proposed changes. These should be phased in beginning 1st July 2024.

In response to a Parliamentary question, Van Peteghem confirmed that he intends to make the electronic issuing and receipt of invoices mandatory for a large majority of taxpayers.

The stated aim of the reform is to have a positive effect on the VAT gap, which accounted for 4.8BEuro or 14% of the expected Belgian VAT revenues as of 2020. The new obligations will decrease errors and restrict potential fraud, reducing the gap over time. The Belgian government is also preparting other measures to address this gap.

Van Peteghem recognized that the reforms proposed require an application for derogation from Articles 218 and 232 of the EU VAT Directive. He also confirmed that the Cabinet of the Ministry of Finance and the European Commission discussed this.

Technically the reform will require VAT registered Belgian taxpayers to send and receive structured electronic invoices for specific B2B transactions. The format will likely conform to the definition provided by the EU's Vat In The Digital Age (ViDA) proposal, with PEPPOL expected to become the standard for exchanging e-Invoices.

Belgium has included e-Reporting obligations in the plans at the request of the European Commission. These will follow in a later phase. The current details are limited but the new obligations will likely fall in line with ViDA.

You can find details about the proposed Belgian tax reform, which also encompasses adjustments to VAT rates and more here.

April 2022

Mandatory B2G e-Invoicing moves forwards

Belgium's plan to implement B2G e-Invoicing has proceeded with a Royal Decree that lays out the obligations for entrepreneurs. It also includes a timeline of implementation that will apply to all public contracts by 1st October 2023.

The official Royal Decree in Dutch is here.

March 2022

Benelux conference on VAT Gap

During a Brussles Benelux conference, Belgium, the Netherlands and Luxembourg called for co-operation to reduce the existing VAT gap in the EU. The VAT gap refers to the difference between expected VAT receipts and what the tax authorities had actually collected. Sharing good practices and knowledge should lead to more decisive and targeted action to detect fraud and ensure VAT is paid. In a region like Benelux, that is highly intertwined across borders and economically, this is especially true.

The loss of VAT revenue heavily affects public expenditure on goods and services such as schools, hospitals, transport and infrastructure. The missing funds could also address the many economic and health challenges surrounding the recovery from the COVID-19 pandemic.

Although the overall VAT gap in the EU Member States has narrowed since 2015, the EU countries all together still lost EUR 134 billion in VAT revenue in 2019. In addition to national action, the positive trend is also due to the EU making efforts to improve the situation. For example, there was a strong push towards the so-called transaction network analysis. Originally developed by the Benelux countries, 27 Member States are now able to identify cross-border fraud networks faster than before and target their investigations accordingly. According to Yuriko Backes, Luxembourg's finance minister, the results of the automated data analysis tool (TNA) show an effectiveness in the fight against VAT fraud.

Benelux countries are convinced that with increased cooperation and knowledge sharing, they can take more targeted measures to put an end to VAT fraud.

February 2022

Update on Belgian B2B e-Invoicing mandate

Last month we mentioned the confirmation of Belgium’s plan to switch to mandatory e-Invoicing for B2B invoices.

On 10th February 2022, Mr Vincent Van Peteghem, Deputy Prime Minister and Minister of Finance in Belgium stressed the benefits of electronic invoicing for businesses as well as the state. It allows businesses to gain in productivity, he stated, by simplifying invoice processing and validation while combating tax fraud. The government is aware of the difficulties that could be faced by small businesses, which represent a large part of Belgium's economic base. Van Peteghem indicated that Belgium is planning intensive exchanges with businesses and stakeholders to deploy the B2B electronic invoicing mandate project.

The proposed timing – mid-2023 – has raised objections from various stakeholders. The full scope of the proposed mandate remains undefined with no legislation in place, and no technical specifications published.

However, the Belgian government has confirmed that their model will be based on PEPPOL, which has an established network. This is quite a different approach to other member states, such as Italy and France, which developed their own platform/gateway. It will certainly accelerate the process. 

We will share more information as it is made available.

January 2022

Belgium announces a gradual move towards mandatory e-Invoicing

The Belgian finance minister Vincent Van Peteghem has confirmed their intent to follow current trends and implement a mandatory e-Invoicing system.

The government will announce details of timeline and technical requirements in a legislative proposal in 2022.

The post e-Invoicing mandates and updates: Belgium appeared first on OpenText Blogs.

Welcome to the October 2023 edition of our e-Invoicing & VAT compliance newsletter. This newsletter contains the most recent collection of updates to our real-time country updates blogs.

Over the past few months, we’ve been making some changes to our blogs in response to popular requests from subscribers. We have been introducing country-specific update pages so we can capture what is happening more rapidly. It also enables you to quickly review the status of a particular country at-a-glance, without having to cross-reference multiple newsletters.

The newsletter will remain. However, each iteration will now be a collection of the country-specific updates that have been published since the previous newsletter.

If you wish to keep abreast of the latest news from the OpenText Blogs page, navigate to “News & Events” and select e-Invoicing.

In “Compliance news and updates” read the latest world news on mandates as Germany, Romania and Poland progress with their intent to introduce mandatory e-Invoicing. Meanwhile, France has issued a delay to their planned 2024 reform, and we provide the latest news on that too.

E-Invoicing & VAT Compliance news and updates

October 2023 - Germany - Further updates and clarifications on proposed e-Invoicing regime

The latest update from the German Federal Ministry of Finance provided clarification around some key points relating to their roll out. This update specifically relates to EDI procedures and the ZUGFeRD hybrid invoice format. It also clarifies the timelines for optional and mandatory e-Invoicing in Germany.

The "soft mandate" from January 2025 is not as soft as it looks!

There had been some confusion about the proposed timeline for the German e-Invoicing mandate. Some parties reported an "optional" use of e-Invoicing as of 1st January 2025, which would become mandatory the following year. This would mean 1st January 2026 for large enterprises (those with revenues above €800,000). Small businesses beginning 1st January 2027.

What Germany is actually doing is implementing what I refer to as a "soft mandate" for e-Invoicing. This is an approach many governments took. These governments implemented business to government (B2G) e-Invoicing in response to the Public Procurement Directive (2014/24/EU).

In these cases, government agencies had to accept electronic invoices issued by suppliers. However, suppliers were not mandated to issue invoices electronically. Hence it was only a "soft mandate". As a result, we often saw very low volumes of B2G electronic invoices in these countries. A few governments went further. They either directly or indirectly implemented a "hard mandate" requiring suppliers to issue their invoices electronically. Not unexpectedly, these countries saw a complete switch from paper invoices to electronic, almost overnight.

In a B2B scenario this approach is unusual, although not unprecedented. Turkey is one such example. It has important implications.

In Germany, from 1st January 2025 ALL taxpayers must ensure they deploy an e-Invoicing solution to receive invoices issued electronically by their suppliers.

Now, you may be thinking "my suppliers don't issue electronic invoices, so I don't need to rush". And you may also be thinking "look what happened in those B2G cases".

I urge you to think again.

The buyer acceptance clause slowed adoption. What happens when it's gone?

Everyone in the e-Invoicing industry agrees that there is one of the primary reasons that e-Invoicing adoption has been so painfully slow in the European Union. Despite it being formally allowed since 2001 (Directive 2001/115/EC aka the "EU115 Directive") it contains one specific and troublesome clause in the directive. We call this the "buyer acceptance" clause.

The buyer acceptance clause is Article 232 of the VAT directive. It simply states, "the use of an electronic invoice shall be subject to acceptance by the recipient."

How can one simple sentence be responsible for hampering e-Invoicing initiatives so badly? Very simply put - in a buyer/supplier relationship, as we say here in the UK, "the customer is king" or "the customer comes first". Suppliers do not dictate to their customers how they buy. So, if the customer says "no" to electronic invoices, the supplier must send paper versions.

In other words, attempts by suppliers to implement e-Invoicing have been severely hampered by the willingness or technical readiness of their buyer community to accept an electronic invoice.

German may remove the requirement for buyer acceptance

With the German proposal to remove this requirement for buyer acceptance, it will be open season for suppliers to invoice ALL of their customers electronically. Many of them have been ready and waiting for this day. Even for those who have not yet implemented e-Invoicing, a majority will be ready by January 1st, 2025.

Savvy supplies may wonder how to make the most of the investment in e-Invoicing technology they have been forced to make. One great way to do this is to digitize outbound invoice process and send all their domestic invoices electronically.

With an electronic invoice customers can no longer claim to have not received an invoice. Businesses no longer have to deal with the, "it's probably lost in the post" excuse. Electronic delivery mechanisms come with assured delivery, which is a huge benefit to the supplier in ensuring timely payment.

Expect to see increased volumes of e-Invoices as of January 1, 2025

So, the message is clear. This may not be a full e-Invoicing mandate. And you are certainly not obliged to implement e-Invoicing for your own outbound flows. However, you absolutely should expect to see a huge volume of your inbound domestic German invoices switch to electronic formats as of January 1st, 2025.

Of course, it certainly makes a lot of sense to also consider your own outbound invoice flows if you are a supplier as well as a buyer. Switching to fully digitized electronic invoices will save you significant additional costs. This will help to pay for the implementation of your electronic invoice reception solution.

Of course, e-Invoicing solutions are not created equal. Ensure that when you deploy an e-invoicing solution, it provides all the capabilities and coverage you require.

Likely changes to EDI procedures - to be confirmed

The Ministry of Finance also note that further clarification will be forthcoming regarding EDI procedures. It notes the importance of this technology for key areas of the economy. "A solution is currently being worked on to ensure the continued use of EDI procedures as far as possible under the future legal framework." However, they also add the, "possibility that technical adjustments will have to be made to certain EDI procedures with the introduction of the transaction-based reporting system". Finally, they clarified that "the aim will be to limit this conversion effort to what is necessary in the interest of the economy.

Clarification around the hybrid invoice format - ZUGFeRD

There is some question whether the ZUGFeRD hybrid invoice format widely used in Germany would be acceptable under the European Union ViDA (VAT in the Digital Age) proposal. The ViDA proposal seeks to redefine an invoice as structured electronic data. Since a PDF is generally considered to be unstructured data this raised some concerns.

According to the latest update (translated from German): "In order to provide legal and planning certainty to practitioners as early as possible, the Federal Ministry of Finance (BMF) and the highest tax authorities of the federal states have discussed this issue. They have come to the conclusion that, from the point of view of the tax authorities... an invoice in accordance with the ZUGFeRD format as of version 2.0.1 basically represents an invoice in a structured electronic format that complies with the European standard for electronic invoicing..."

They also clarified that, given that there are two distinct components to a hybrid invoice. These are the invoice image, a human readable representation of the invoice data, and the underlying data itself in an XML format. The BMF will consider structured data to be the legal original for tax purposes. "The structured part will be the leading one in the case of a hybrid format. In the event of a discrepancy, the data from the structured part will then take precedence over that from the image file."

For more background regarding ZUGFeRD see our April 2022 newsletter.

September 2023 - Romania - further steps along the road to mandatory e-Invoicing

In recent years, Romania has been making significant strides in refining its electronic invoicing regulations. These changes promise benefits for both businesses and the government, ranging from increased efficiency in transactions to enhanced transparency.

The journey so far - from B2G to B2B

Mandatory e-invoicing in Romania began with the introduction of B2G (Business-to-Government) e-invoicing through the RO e-Factura system in September 2021. This system, managed by the National Agency for Fiscal Administration (ANAF), provided a platform for reporting, storing, and downloading invoices.

The pilot program for B2G e-invoicing commenced on October 1, 2021, under Ordinance no. 120/2021. It marks the initial step toward e-invoicing integration in the country.

Romanian technical specificaitons announced

By December 2021, Romania had approved technical specifications and basic elements for e-invoicing, known as RO_CIUS. For B2B (Business-to-Business) transactions, it remains optional, contingent on both the sender and recipient being registered in the e-Factura registry.

January 2022 marked a significant shift in Romania's e-invoicing landscape. B2B taxpayers dealing in high tax risk products must use electronic invoices via the RO e-Factura system starting from July 1, 2022. These high-risk products include items such as fruit and vegetables, alcohol, construction materials, mineral products, clothing, and footwear.

As we reported in July 2023, Romania applied to the EU Commission for a derogation to the EU VAT directives. The EU approved this derogation, paving the way for their mandate.

The road ahead - the updated e-Invoicing timeline in Romania

As of the latest update, Romania's e-invoicing timeline is as follows:

• January 2024: Established taxable persons and VAT-registered entities must submit invoices in the RO e-Factura system. This must be done within five days of issuance for reporting purposes (e-Reporting).
• April 2024: Fines will be applicable to non-compliant taxpayers.
• July 2024: The system shifts to a full invoice clearance system. This also transmits invoices to Romanian-registered trading parties - similar to the Italian model.

Preparing for the Romanian changes

As businesses in Romania prepare for these forthcoming e-invoicing changes, it's crucial to take proactive steps:

1. Review Your Resources: Conduct an internal audit to assess your current resources, technical capabilities, and awareness of regulatory changes. Optionally, consider partnering with an expert provider like OpenText who can help you assess your readiness for the impending changes.
2. Avoid Short-Term Thinking: Choose a flexible e-invoicing solution that can adapt to evolving requirements. E-Invoicing regulations are expected to become even more complex, and it is very much an integration problem. It is a core part of the overall order-to-cash and procure-to-pay process. Ensure you consider a partner who can help you digitize the entire buying and selling process, not just the invoice.
3. Don't Procrastinate: Avoid postponing the implementation of a new e-invoicing solution. Last-minute decisions can lead to poor choices.

Romania's e-invoicing journey landscape is gaining pace. Mandatory e-invoicing for B2B transactions approaching in less than a year from today. Businesses need to be proactive to ensure they not only comply with the new requirements. However, they must also enhance their operational efficiency and competitive advantage in the digital age.

The full draft legislation (in Romanian) is on the Ministry of Finance website here.

September 2023 - France - New timeline proposed for B2B e-Invoicing reform

The postponement of the long-anticipated French e-Invoicing mandate we announced in July has caused much turmoil in France. This turmoil has extended to the e-Invoicing industry, which was already ramping up for the 2024 roll-out.

Two French agencies share responsibility for the new e-Invoicing platform. These are the Direction Générale des Finances Publiques or directorate of public finances (DGFIP) and Agence pour l'informatique financière de l'Etat (AIFE) or agency for state financial information). On September 14, 2023, they offered the first real clarification of the causes of the delay, as well as a modified timeline.

The delay is primarily due to issues in developing the government's centralized e-Invoicing platform - the Portail Public de Facturation (PPF). The PPF is based on the existing Chorus Pro platform used for B2G. However, it appears the development work to expand its usage has been significantly underestimated.

Possible new timeline for the French mandate

Businesses should consider the proposed new timeline below from the DGFIP and AIFE as preliminary at this stage. It will not be confirmed until October 2023 at the earliest, when the government will announce the 2024 Finance Act.

• March 2024 - registration for PDPs (service providers) will open
• July 2024 was the intended "go-live" date. The government is now proposing this date as a period for ongoing development of the new PPF e-Invoicing platform.
• 2025 - commencement of pilot program which was due to begin January 2024
• 2026-2027 - roll-out reform in two or three phases based on size of taxpayer as previously indicated.

Additionally, the tax administration confirmed that there will be a fresh call for applications for the pilot phase.

OpenText is closely monitoring these developments and will keep you posted.

August 2023 - Belgium - E-Invoicing launch delayed due to political disagreements

Belgium's plans to launch a PEPPOL based e-Invoicing model in July 2024 have collapsed. Parliamentary opposition parties rejected the proposal, citing a lack of confidence in the government's revenue estimates from the proposal. The proposed e-Invoicing reforms aimed to increase tax revenue by reducing the VAT gap.

The withdrawal of the proposal means a substantial delay. Any fresh attempt to gather political agreement and revisit the reforms are impossible until after the summer elections in 2024.

Given the delay, it's unlikely any e-Invoicing reform will come to Belgium before January 2026 at the earliest.

August 2023 - Polish President signs legal act mandating the KSeF e-Invoicing system

On August 4, 2023, the President of the Republic of Poland endorsed an Act that introduces the obligation to issue invoices through the National e-Invoice System (KSeF). With the Act's approval awaiting publication in the Journal of Laws, the final stage of the legislative process is underway. Once published, the Act will transition into a legally binding mandate, and the majority of its provisions will spring into action on 1 July 2024.

Learn everything you need to know about the National e-Invoicing System (KSeF)

Presently, e-invoicing through KSeF is optional, coexisting alongside various traditional invoicing methods. However, the clock is ticking. In less than a year (starting July 1, 2024), the government will mandate active VAT taxpayers based in Poland to exclusively use KSeF for issuing invoices. This mandate will also extend to foreign entities possessing a fixed establishment within Poland's territory, as defined by VAT regulations.

Prepare for the transition to the Polish e-Invoicing mandate

To ensure a smooth transition, the Ministry of Finance is preparing an information brochure detailing the final version of the FA(2) XML schema for e-invoices. In tandem, comprehensive technical documentation is in the works, encompassing critical aspects such as generating and managing collective identifiers for payments and QR verification codes.

We anticipate the release of the final versions of regulations outlined in the Act, notably concerning KSeF utilization and exemptions from the e-invoicing obligation. This transition will also prompt changes in other regulations. These will include those governing invoice issuance, as well as the precise scope of data to be incorporated in VAT-related tax returns and records. These regulatory adjustments aim to align existing frameworks with the requisites of e-invoicing. The government took an initial step in this direction on 7 August, with the publication of a draft amendment to the regulation governing KSeF usage.

As the clock ticks down to July 2024, businesses both within Poland and those with a fixed establishment on its soil need to gear up for the e-invoicing revolution.

Ensure your e-Invoicing solution can access KSeF

OpenText Active Invoices with Compliance is already online and connected to the KSeF portal for customers wishing to prepare for the transition. In addition, our e-Invoicing mandate readiness check service is available to assist customers in assessing the output from their ERP/finance/accounting systems to ensure it meets the new legislation. Reach out to your OpenText account representative or contact us here.

Disclaimer: This newsletter is intended to reflect the direction the industry is moving and does not a reflect a commitment for the OpenText Active Invoices with Compliance (AIC) product development roadmap to meet any particular stated regulations.

LEGAL Disclaimer: The information contained in this newsletter is for general guidance on matters of interest only.  The authors are not herein rendering legal, accounting, tax or other professional advice and the content should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers.  While we make every attempt to ensure the accuracy of the information contained within is from reliable sources, OpenText is not responsible for any errors or omissions, or for any result

The post October 2023: E-Invoicing & VAT compliance update appeared first on OpenText Blogs.

September 2023

Romania - further steps along the road to mandatory e-Invoicing

In recent years, Romania has been making significant strides in refining its electronic invoicing regulations. These changes promise benefits for both businesses and the government, ranging from increased efficiency in transactions to enhanced transparency.

The journey so far - from B2G to B2B

The journey toward mandatory e-invoicing in Romania began with the introduction of B2G (Business-to-Government) e-invoicing through the RO e-Factura system in September 2021. This system, managed by the National Agency for Fiscal Administration (ANAF), provided a platform for reporting, storing, and downloading invoices.

The pilot program for B2G e-invoicing commenced on October 1, 2021, under Ordinance no. 120/2021. It marks the initial step toward e-invoicing integration in the country.

By December 2021, Romania had approved technical specifications and basic elements for e-invoicing, known as RO_CIUS. It remains optional for B2B (Business-to-Business) transactions, contingent on both the sender and recipient being registered in the e-Factura registry.

January 2022 marked a significant shift in Romania's e-invoicing landscape. B2B taxpayers dealing in high tax risk products must use electronic invoices via the RO e-Factura system starting from July 1, 2022. These high-risk products included items such as fruit and vegetables, alcohol, construction materials, mineral products, clothing, and footwear.

As we reported in July 2023, Romania applied to the EU Commission for a derogation to the EU VAT directives. The EU approved this derogation, paving the way for their mandate.

The road ahead - the updated e-Invoicing timeline in Romania

As of the latest update, Romania's e-invoicing timeline is as follows:

• January 2024: Established taxable persons and VAT-registered entities must submit invoices in the RO e-Factura system within five days of issuance for reporting purposes (e-Reporting).
• April 2024: Fines will be applicable to non-compliant taxpayers.
• July 2024: The system shifts to a full invoice clearance system that also transmits invoices to Romanian-registered trading parties - similar to the Italian model.

Preparing for the changes

As businesses in Romania prepare for these forthcoming e-invoicing changes, it's crucial to take proactive steps:

1. Review Your Resources: Conduct an internal audit to assess your current resources, technical capabilities, and awareness of regulatory changes. Optionally, consider partnering with an expert provider like OpenText who can help you assess your readiness for the impending changes.
2. Avoid Short-Term Thinking: Choose a flexible e-invoicing provider that can adapt to evolving requirements, as e-invoicing regulations are expected to become more complex. E-Invoicing is very much an integration problem, and one that is a core part of the overall order-to-cash and procure-to-pay process. Ensure you consider a partner who can help you digitize the entire buying and selling process, not just the invoice.
3. Don't Procrastinate: Avoid postponing the implementation of a new e-invoicing solution. Last-minute decisions can lead to poor choices.

Romania's e-invoicing journey landscape is gaining pace, with mandatory e-invoicing for B2B transactions approaching in less than a year from today. Businesses need to be proactive to ensure they not only comply with the new requirements but also enhance their operational efficiency and competitive advantage in the digital age.

The full draft legislation (in Romanian) can be found on the Ministry of Finance website here.

July 2023

EU proposes approval of Romania's request to proceed with e-Invoicing mandate

Romania has moved a step forward in its plan to mandate e-Invoicing, with a proposal from the European Commission to grant derogation from the EU VAT Directive.

The Romanian Senate first made the application on 14 January 2022, but subsequently modified it on 30 September 2022. This has pushed back the date of the derogation to 1st January 2024, and it would apply until 31st December 2026.

The main objectives discussed in Romania's request are to combat tax fraud and increase the efficiency of tax collection, while also reducing administrative costs both for the tax administration and taxpayers. Romania historically has maintained one of the highest VAT Gaps within the EU, 35.7% in 2020, which they admit is a fundamental problem and requires urgent and sustained action, of which e-Invoicing will likely be just one component.

The requirement for this derogation process remains in place since the current VAT directive effectively prohibits member states from imposing a mandate due to the following two elements. First, article 232 of the VAT Directive states that the use of an electronic invoice remains subject to acceptance by the buyer - effectively allowing the buyer to refuse an electronic invoice if they do not have the technical means to accept it. Second, article 218 states either paper or electronic invoices must be accepted as long as they meet the other conditions of the directive.

While the ViDA proposal discussed here would remove the need for governments to request such derogation, this proposal remains to be ratified. Once ratified, the derogation Romania has been granted would become redundant, but it is required for them to proceed in the meantime.

The existing "RO eInvoicing" system, which came into effect in November 2021, targeted business-to-government (B2G) e-Invoicing and is expected to become the basis for the new mandatory e-Invoicing system. The existing platform is already designed to support B2B transactions and will remain available for use on an optional basis for non-established economic operators.

The proposed system already uses an invoice format compatible with the European Norm e-Invoicing standard (EN16931), which is in line with the ViDA proposal. However, the way the system currently performs semantic checks as well as structural and syntax checks on invoices before certifying the invoice with a Ministry of Finance electronic seal, does not align with one of the key intentions of ViDA. Romania has stated its intent to adapt the system as of 1 January 2026 in order to comply.

While the derogation is not simply a formality, given that all EU members thus far have succeeded in their application, and given the tone of the proposal, it seems highly likely they will be allowed to proceed.

For the original text of the European Commission decision, see here.

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