What’s the European Electronic Invoicing and when It will come into effect

The EU is moving towards mandatory notification of cross-border B2B transactions

From 2030, it will be mandatory to notify intra-EU B2B transactions. Member states have begun the “race to compliance,” and Italian companies trading with the EU will need to pay attention to the regulatory developments in the countries where their business partners are located.

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Is the EU preparing for European electronic invoicing? The answer appears to be yes. There has been no official statement from the Commission, but in recent months, some revisions and modifications to current regulations seem to be paving the way for mandatory B2B electronic invoicing within the EU. An operation of this scale requires time and several preliminary steps, not only for defining technical specifications but also for adjusting VAT regulations.

At present, a true “European electronic invoicing” system does not exist. However, on December 8, 2022, the ViDA (VAT in the Digital Age) directive proposal was issued. This proposal is a revision of the VAT Directive (2006/112/EC) at the European level and includes significant innovations for the notification of cross-border transactions. Among these is the introduction of a mandatory notification system for member states, which will facilitate the creation of a single digital market and interoperability between states.

What is the ViDA Directive

### What is the ViDA Directive

The VAT Directive 2006/112/EC has been in place for 17 years as of 2023, and an update has long been anticipated to align it with the innovations that have occurred over the years, such as the rise of e-commerce and Brexit.

However, what has “convinced” the EU of the need to update notification procedures are the latest data on tax evasion in cross-border commercial transactions, which quantify the loss at about 61 billion euros per year, approximately 2000 euros of evasion per second (Data from the Digital B2b Observatory). To combat this phenomenon and simplify monitoring, the EU appears to have decided to standardize and digitalize transaction processes. Thanks to the reform of the VAT regulation, an estimated recovery of VAT across Europe is around 11 billion euros annually*.

As mentioned, the ViDA directive contains significant changes for cross-border operations, including:

1. Introduction of a mandatory notification system – Digital Reporting Requirements (DDR) by 2030, i.e., the obligation for member states to notify data on cross-border transactions. This mandatory transmission will only come into effect for intra-EU B2B transactions, while it will remain optional for domestic transactions.

2. Elimination of the clause requiring customer acceptance – Starting from 2025, all member states will eliminate the clause that requires customers to accept receiving an invoice in electronic rather than paper format.

3. Abolition of Article 232 of the VAT Directive – Currently, Article 232 requires member states to request a derogation to make electronic invoicing mandatory in B2B and B2C. Its elimination, scheduled for 2026, will make it easier for countries to introduce this obligation without first seeking authorization from the European Union, and electronic invoicing can be considered the “default” mode compared to paper.

When will European Electronic Invoicing take effect and the ViDA roadmap

The introduction of a mandatory community-wide electronic invoicing system requires time, as it is essential to allow all member states to adapt. However, starting from 2024, member states will be able to impose a general requirement for electronic invoicing—following EU technological standards—without needing prior authorization. Other changes to the ViDA directive will come into effect gradually. Where are we currently? In 2023, after receiving positive feedback from the European Data Protection Supervisor and the European Economic and Social Committee, the draft directive was sent to the European Parliament, which proposed 251 amendments. In 2024, the proposal will be reviewed by ECOFIN (the body comprising finance ministers from various countries), which is expected to approve it unanimously, though a final agreement is still pending. Once approved by ECOFIN, the ViDA directive will need further review by the Parliament and the Commission. The process is therefore still lengthy, and it is reasonable to expect a further delay for the introduction of the mandatory notification requirement, potentially moving from 2030 to 2035.

How to prepare for European Electronic Invoicing

For Italy and domestic invoicing, there should be no substantial impacts until 2030, as the Exchange System is already capable of processing electronic invoices that meet European standards. However, the “race to adapt” has already begun among member states that have not yet introduced mandatory B2B electronic invoicing. Italian companies trading with other EU countries will need to keep abreast of the regulatory developments in the countries where their business partners are located. Spain, Germany, and Poland are expected to gradually introduce B2B electronic invoicing requirements between 2025 and 2026, followed by France and Belgium between 2027 and 2028.

The partnership between Pagero and Intesa: we handle everything for you

To support Italian companies and clients in the coming years of regulatory adjustments and to overcome language and time zone barriers in international electronic invoicing, Intesa has formed a partnership with Pagero, a global business network.

The international e-invoicing platform allows for the management of electronic invoicing activation across various countries according to local regulatory roadmaps. It creates a smart business network that consistently ensures compliance in e-invoicing and Long Term Archiving (LTA), regardless of industry or geographic location.

* European Commission, Questions and Answers: VAT in the Digital Age