The Rise of E-Invoicing Worldwide: Find Out How You Can Stay Ahead of the Competition
In this blog, you’ll gain insight into tax-compliant invoicing, upcoming changes impacting your business and how Onyx keeps you compliant.
The global business landscape has witnessed a significant shift toward digitalization in recent years, and tax authorities are no exception. The adoption of electronic invoicing has become an effective tool in the ongoing battle against tax fraud. In this article, we’ll consider the common drivers for tax authorities to implement electronic invoicing, outline the various models used around the world and share how Onyx can help alleviate the administrative burden for hotels and agencies struggling to keep up with varying requirements where they operate.
The common drivers for tax authorities to implement electronic invoicing are:
- Fighting Value Added Tax (VAT) Fraud
E-invoicing enhances revenue collection by reducing tax evasion. Real-time monitoring allows tax authorities to detect and address non-compliance issues promptly. This proactive approach ensures businesses are held accountable for their tax obligations, ultimately leading to a more effective and equitable tax collection process. The European Union Commission reported the VAT gap in the EU was about 61 billion euros in 2021.
- Business Automation
E-invoicing significantly reduces the costs associated with traditional paper-based or PDF processes. Automation minimizes manual data entry, reduces paperwork and streamlines administrative tasks.
On one hand, automated data entry and validation processes reduce the likelihood of mistakes, ensuring the information presented is accurate and reliable. It accelerates the entire financial ecosystem, helping businesses send and receive invoices more quickly, which leads to faster payment cycles. On the other hand, tax authorities can allocate resources more efficiently, focusing on value-added activities and avoiding time-consuming tasks.
- Value of Data
Tax administrations obtain and analyze real-time data about the economy and focus on more efficient policy developments. Each tax authority decides on the Continuous Transaction Control (CTC) model to be implemented.
A CTC model is how tax administrations obtain real-time invoicing data and implement e-invoicing. There are different CTC models used across countries, and not all countries have adopted a CTC model. Therefore, e-invoicing is not mandatory in many countries…yet.
- Traditional Post Audit
Relevant countries include Austria, Australia, Belgium, Bulgaria, Croatia, Cyprus (Republic of), Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland, Singapore, Slovakia, Slovenia, Spain and Sweden.
These countries follow the traditional economic model where tax authorities receive data once they carry out an audit. It usually happens months or even years after a transaction has taken place. In this model, the invoice format is not regulated and it is common to see invoices in paper or PDF formats. Usually, large companies and multinationals adopt e-invoicing due to the long-term financial benefits.
As of 2023, most countries follow a post-audit model for their business-to-business (B2B) transactions.
- CTC Model: Clearance
Relevant countries include India, Italy and México.
In this model, the invoice becomes valid only after the tax administration’s approval. Before an invoice goes to the buyer, it must be sent to the tax administration for registration and approval. The tax authority usually adds a stamp or code to the invoice as proof of authenticity. The tax authority gets notified of all economic activity.
In Mexico and India, invoices go back to the supplier for distribution after invoice approval. In contrast, in Italy, the tax administration is responsible for delivering the invoice to the buyer.
Note: There are other CTC models, such as interoperability and real-time invoice reporting. However, these are not commonly implemented for B2B transactions.
2024 and Beyond
Many countries are in the process of moving from post-audit to clearance or other types of e-invoicing models. Poland is expected to adopt a clearance model in July 2024. After that, countries such as Latvia or Spain will likely implement e-invoicing or e-reporting in 2025. Belgium, Germany, Croatia and France, among others, are also in the process of implementing mandatory e-invoicing, expected in 2026. Some deadlines may be postponed while some others may be uncertain as of January 2024.
The European Union is already proposing guidelines for e-invoicing adoption through the VAT in the Digital Age (VIDA) initiative for all EU member states. Onyx has followed this and submitted our input to the VIDA hearings based on our experience and to voice the particular needs of our industry. As it stands now, VIDA may come into effect by 2030, however, most EU countries are likely to adopt e-invoicing on their own, earlier than this timeline.
Onyx CenterSource has developed e-invoicing capabilities in more than 30 countries so our clients can remove the burden of issuing e-invoices for their commission payment collection. As a RecoverPro or GroupPay client, you outsource your invoicing obligations to Onyx and rest assured that your invoices will comply with local regulations. Onyx will continue to invest in these capabilities to expand coverage and offerings.
Below is a chart of key invoicing questions by country*, including invoicing models, formats and other mandates. Use these materials to start talking with your leadership now about staying current with this important trend.
Click here to download a PDF of Onyx’s Invoicing Compliance Chart.
*Includes the countries where Onyx has compliant invoicing capabilities as of January 2024.
