B2B E-Invoicing Across Europe

Business-to-business (B2B) e-invoicing initiatives are impacted by a shift towards mandatory e-invoicing in business-to-government (B2G). One of the main drivers for e-invoicing adoption has been to improve VAT collection efficiency and close tax gaps due to fraud. It also provides better control over payments and increases the potential of digitalization.

The B2B model requires sending e-invoices via the platform to the tax authorities in real time, providing insight into transaction data to the government.

B2B e-invoicing has proven to be a potent tool for some of the countries in Latin America to reduce their tax gap from tax evasion. Mexico alone has improved tax returns by 48% since implementing B2B e-invoicing.

Following the example of Latin American countries, Italy was the first European country to introduce B2B e-invoicing in 2019. Italy's Sistema di Interscambio was the first invoice clearance service in the EU, providing validation and data exchange through a central platform deployed by the tax administration. This allows the Italian Revenue Agency to automatically collect details of all e-invoices before they are even sent to customers, enabling them to calculate the tax due on each invoice accurately.

However, the EU Commission approved Italy's approach and allowed it to deviate from the EU VAT Directive. Other EU countries that want to follow a similar path must apply for a similar derogation in order to introduce mandatory B2B e-invoicing into their laws.

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So far, Spain, France, Poland, Greece, and Romania have joined Italy in this move to mandatory B2B e-invoicing.

Greece is next in line, which already determined the beginning of mandatory B2B e-invoicing on September 12, 2023.

Spain approved a draft bill for mandatory B2B e-invoicing earlier this year; it is a matter of time before they announce a new chapter.

From January 2024, France and Romania will join the group.

In Poland, as of January 1, 2022, Polish entrepreneurs could use the KSeF platform voluntarily. From July 1, 2024, it will be mandatory for VAT taxpayers to issue B2B e-invoices via the KSeF.

Germany, Portugal, Belgium, and the Netherlands are already talking about B2B e-invoicing mandates in the near future.

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We will likely see this list of countries grow significantly over the next few years since practice shows that number positively impacts tax revenue collection.

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