Navigate safely through local compliance

Current status of e-invoicing in the EU

The “VAT in the Digital Age” (ViDA) initiative was launched by the European Commission to introduce mandatory e-invoicing. This is designed to digitalise the European VAT system on the one hand, and strengthen the digital cooperation between the tax authorities on the other. Although the ECOFIN meeting on June 21st, 2024 did not result in a unanimous decision on the proposed changes under the ViDA initiative, EU member states are slowly starting to prepare for the regulatory change by introducing national laws to make e-invoicing mandatory. 

Italy had taken the lead, having made e-invoicing mandatory for all transactions between businesses (B2B) in 2019, with continuous development to the process since then. Germany is going to follow this example and lay down electronic invoicing for domestic B2B transactions starting from January 1st, 2025. Read our article on this, too. There were earlier dates for introduction in Poland and France, but they had to be postponed owing to the need to make adjustments and to uncertainties in implementation and execution. E-Invoicing is now to be introduced gradually in these countries depending on the size of the enterprise, with the implementation planned for Poland starting in February 2026 and France in July 2026. 

Objectives of the ViDA initiative

The ViDA initiative primarily aims to introduce compulsory e-invoicing across the EU for all B2B transactions by 2030. The initiative also includes the introduction of real-time digital reporting obligations, which obligate businesses to submit VAT data on individual transactions to the tax authorities electronically. Although VAT is the most important source of tax income to all EU Member States, it is currently also the most liable to inefficiency and tax fraud. According to the European Commission’s VAT Gap Report 2023, approx. 61 billion euros in tax revenues were lost to the tax authorities in 2021, an estimated quarter of this owing to fraud. These measures are designed to improve the monitoring and examination of tax transactions considerably and reduce the annual losses. 

The switch to e-invoices can also bring businesses benefits, such as a lower administrative burden and more efficient distribution of resources, thus promoting economic growth. The minimised use of paper not only reduces costs but also contributes to ecological sustainability and helps businesses improve their ecological footprint. 

Technical implementation and challenges

Businesses must be prepared to receive invoices in a compliant structured format (such as XML or ZUGFerd) which ensures that the invoices can be read and processed automatically. The successful technical implementation of electronic invoicing will require close collaboration between the tax department and IT Team to establish the necessary processes and assign responsibilities to prepare the company’s bookkeeping and ERP software. Implementing the necessary technical infrastructure on time as well as training staff in how to deal with the new systems and understand the legal requirements also have to be taken into account. 

Overall, it is a particular challenge for our globally operating clients regarding how to prepare for a digital VAT system across the entire EU. Since the ViDA initiative is still in the initial stages, the legal situation continues to change, and the gradual implementation, too, makes it difficult to penetrate and comply with the various national and EU-wide regulations. To ensure local compliance across the EU, it is necessary to keep an eye on current developments of national requirements.

Complexity and centralised management by Grant Thornton

Having an overview of the global rules and centralised management can help international companies navigate this complex regulatory terrain more safely and remain competitive in the digital world. Since local entities are often responsible for their own compliance, centralised coordination for businesses often becomes a particular challenge. 

Our service line Global Compliance and Reporting Services makes use of the extensive global Grant Thornton network to offer you centralised coordination as well as access to local experts who are familiar with the regulatory requirements and particularities of the different jurisdictions. Grant Thornton is also developing technical and process solutions for the various local markets that make moving from paper invoices to electronic invoices easier for you. Our goal at Grant Thornton is to find the best solution for your company and your ambitions. 

If you have any questions, please feel free to contact us.