Obligatory digital billing starting next year?

We recently reported here on developments in the digitisation of the VAT system in the European Union. The aim of the ViDA reform is to introduce mandatory uniform electronic reporting to the tax authorities in EU member states. The proposed changes will be divided into intra-community and local (i.e., at the level of individual EU member states) ones and will be launched in several phases.

At the intra-Community level, significant adjustments should take place from January 2024. All taxable persons will have to be able to issue and receive tax documents for cross-border transactions electronically. The documents must meet the requirements of the European standard EN 16931: they will need to be created in a machine-readable format, e.g.XML, UBL, PDF/A3, not just regular PDF. The requirements for the essential content of tax documents will also be extended to include e.g., the supplier's IBAN, due date and any information on the correction of the tax document. The change at the intra-Community level should also lead to the modification of summary tax documents.

If member states approve mandatory electronic invoicing at the local level, the implementation will remain within their discretion but tax documents will still be subject to the EN 16931 standard currently used for mandatory B2G (business to government) electronic invoicing.  Similar systems are currently in place in, e.g., Italy, Spain, and Hungary.

From January 2024, member states may abolish the tax administration's obligation to authorise or verify in advance the issuing of electronic invoices by taxable persons at the national level. Electronic tax documents will no longer be subject to the recipient’s consent either. Electronic invoicing will thus become a standard part of the VAT Directive. Contrariwise, the use of 'paper' tax documents will only be possible if the member state allows them at the national level.
Important deadlines

Please note that the planned date of 1 January 2024 only concerns the laying down of the legal framework for the implementation of electronic invoicing, and the directive will only become fully effective from 2028, according to current estimates. Thus, in the period from 1 January 2024 to 31 December 2027, the member states will only be given the option to introduce mandatory electronic invoicing; should they decide not to do so, for that period they may continue to use the existing systems in place.

Please note also that where EU member states have adopted different systems for reporting and control of reported data (SAF-T, VAT ledger statements, e-ledgers, etc.), nothing should change at this level in the future, and the control mechanisms put in place by national tax authorities will remain unchanged until the time ViDA Directive is implemented.

It is not yet known how the Czech Republic will approach the issue. We will continue to monitor developments in ViDA and keep you informed about the next steps in the digitisation of the VAT system in the EU.