E-invoicing in the EU
How the EU is adapting VAT rules to the needs of taxpayers in the digital age and what it means for businesses and for the fight against tax fraud. The case of Poland and its transition to compulsory electronic invoicing.
The VAT system must meet the demands of taxpayers in the age of digital transformation by adapting regulatory changes to new digital business models.
The EU VAT rules adopted 30 years ago for cross-border trade are not adapted to business in the digital age. The revision of the VAT rules aims to use technology to reduce the administrative burden and associated costs for businesses and to combat tax fraud.
The Council of the European Union, in view of the need to adapt the rules to taxpayers, presented a draft directive amending Directive 2006/112/EC as regards the rules on VAT in the digital age.
The main objective of the draft directive, which amends the VAT reporting obligations, is the principle of a universal electronic invoicing system, in line with the concept of real-time information.
To speed up the implementation of compulsory e-invoicing by the Member States, it amends:
- The obligation for the recipient to accept receipt of an e-invoice will be removed. Some Member States, including Poland, have been granted a special measure to allow the use of mandatory e-invoicing where such invoicing systems have been implemented. To ensure convergence with the EU digital reporting system, these Member States may use their national systems until 1 January 2028.
- The definition of an e-invoice is amended, aligning it with the concept of e-invoicing in public procurement. Consequently, a structured e-invoice format will be introduced.
- The deadline for issuing invoices for the supply of goods and services is two days from the occurrence of the taxable event.
- Information will be provided on the invoice about the identifier of the bank account into which the invoice payment will be booked, the agreed dates and amounts of each payment for a specific transaction, and, in the case of an invoice correcting an original invoice, the identifier of that original invoice.
Poland is one of the first EU countries, after Italy, to join the EU’s plans for a VAT system in the digital age, making electronic invoicing mandatory as of 1 July 2024. For the time being, the National Electronic Invoicing System includes the obligation to electronically invoice domestic transactions of taxpayers with a registered office or permanent establishment in Poland. As of 1 January 2028, the planned VAT Directive will extend this obligation to intra-EU transactions.
These changes aim to switch to real-time digital reporting for intra-Community transactions and the introduction of the European electronic invoice. As a result, we will have a new IT system for exchanging data between the tax administrations of the Member States.