The current COVID-19 pandemic has accelerated the digital transformation of economies, exemplified by the increase in compliance policies announced by most European countries. It is a trend that will continue into 2021.
Among the most important legislative developments is the emphasis on electronic invoicing and real-time tax declaration by companies to governments.
In the European sector, the most noteworthy announcement has been the rollout of NextGenerationEU, the largest aid package in the history of the EU at 1.8 trillion Euros. The central mechanism of the plan is the Recovery and Resilience Facility, whose objective is “to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.”
To access the NextGenerationEU aid funds, each Member State must develop its own recovery and resilience project in line with EU recommendations. Among the battery of measures included in the plan is the digitalization of public administrations.
The modernization of the B2G sector has been a priority of the European Union for years. Having completed the implementation of electronic invoicing in 2020, the region enters a new phase involving the incorporation of other electronic messages to be exchanged between suppliers and public institutions.
This is the case in Denmark, where in addition to e-invoices, its public administrations will need to manage electronic orders beginning in January 2022.
Germany also continues to make progress in consolidating its B2G invoicing system. This year, the challenge for issuing companies will be "to compile their customers’ reception methods and Leitweg-IDs to uniquely identify them when routing e-invoices to the final recipient, and entering this information in their invoicing system," warns Emilio Del Pino, Global Account Manager & Head D-A-CH Markets at EDICOM. The German government is also planning to extend the electronic invoicing obligation to public suppliers in the federal states of Baden-Württemberg (Bundesland Baden-Württemberg) and Saarland (Bundesland Saarland) in 2022, and beginning in 2024, to the federal states of Rhineland-Palatinate (Bundesland Rheinland-Pfalz) and Hesse (Bundesland Hessen).
Without a doubt, the private sector will experience the greatest changes. The positive results from B2G e-invoicing have motivated many governments to incorporate it into the B2B sphere, following in Italy's footsteps. This is the case of France, which is awaiting approval from Brussels before embarking on its B2B e-invoicing project. It is expected to begin at the earliest on January 1, 2023, or at the latest on January 1, 2025. "Beginning in 2023, any company should be able to receive electronic invoices. Moreover, depending on their size, companies should progressively be able to issue electronic invoices through a Certified Private Platform or through Chorus Pro. In this respect, the DGFIP is moving towards a mixed model, combining electronic invoicing (e-invoicing) and the transmission of invoice data (e-reporting) for a comprehensive view of commercial operations, thus fighting tax fraud," says Albin Castel, Commercial Director EDICOM France.
Another country that intends to mandate B2B e-invoicing is Poland, whose pilot phase will start in October of this year. Greece is also expected to launch its MyDATA platform for tax reporting and its e-invoicing system this year.
In Italy, changes are being made to the existing e-invoicing system. The Stereometro will be eliminated, so that Italian companies will have to declare cross-border invoices through the SDI. "Italy is taking another step forward in digitization and tax simplification by allowing cross-border transaction data to be declared in the electronic invoice format and sent to the SDI platform, with which national invoices are already exchanged," confirms Luis Molina,, Sales Manager Italy at EDICOM.
Another focus of tax digitalization this year will be the adoption of real-time reporting mechanisms, and their improvement in countries that already have systems in place. In Portugal, ATCUD and QR codes will be added to invoices and relevant tax documents by 2022. Likewise, Hungary will update to version 3.0 of invoices declared to the RTIR (Real Time Invoice Reporting) system for VAT reporting as of April. Hungary is also evaluating the possibility of adopting the SAF-T system for electronic auditing of companies.
Other countries in the region experiencing changes are Albania and Serbia. Both countries are EU candidates and have decided to implement mandatory B2B2G e-invoicing later this year as part of their membership bids.
Outside the EU27, companies doing business with the UK will be required to submit all tax returns electronically through the Making Tax Digital (MTD) platform beginning on April 1, 2021.