E-invoice - a trending topic that has been the cause of a lot of controversy among taxpayers and consulting companies in recent months. Serving as the key to global digitization of tax settlements, it will soon replace traditional VAT invoices - both paper ones and those sent electronically between taxpayers, either in PDF format or as a scan.
E-invoicing - regulations
E-invoicing is nothing else than the electronic exchange of invoices in a structured format between two entrepreneurs. Poland is not the only country introducing regulations in this regard. E-invoicing continues to grow worldwide and applies not only to the Member States of the European Union, which are bound by the provisions of Directive 2014/55/EU, but also to countries such as Brazil or South Korea.
Two models of e-invoicing
There are two possible models for e-invoicing. The first one is "post-audit", in which entrepreneurs issue, send and store electronic invoices using various electronic systems. This model is carried out without the intermediation of tax authorities, although they are still able to verify these documents at any time but often only in a limited scope.
More far-reaching in terms of fiscal authority supervision is the so-called "clearance model" in which three entities are involved - the seller, the tax administration and the buyer. Within this model, businesses use strictly defined government systems.
A structured invoice
An e-invoice must have a structured format, and very often, before sending it to the customer, the authorities must “clear” (validate) it. Subsequently, the invoice is assigned a unique number in the system. In some countries, the invoice has to be issued by the tax authority itself on behalf of the seller, after the seller has provided all necessary data. Thanks to these tools, the tax administration gains “real-time” control over the e-invoicing processes of each mandated taxpayer. This model is currently growing in popularity amongst European countries, such as Italy, France or Poland.
The implementation of the clearance model is associated with full transparency of taxpayers’ settlements – thus for national tax authorities the benefits are clear: new compliance tools to detect and reduce tax fraud. As a result, the tax offices will have access to very extensive information on both sales and purchase invoices of each taxpayer. For companies using e-invoicing platforms, this does not immediately have to be associated with solely negative consequences.
KSeF within anorganization
E-invoicing introduced within an organization means reduced costs of exchanging and storing paper invoices (which should be considered a more eco-friendly solution too), eliminating human errors, as well as streamlining and standardizing the process of delivering invoices to contractors. In the long run, the clearance model will also allow for the elimination of VAT returns. However, this will only be possible upon the introduction of e-invoices as a mandatory requirement for all taxpayers.
Legislators across the world are working hard on the new regulations, setting the timeframes and the scope of entities subject to the e-invoicing mandate, which is considered at various levels, from B2B, to B2G and B2C transactions. Poland will join the group of countries with mandatory e-invoicing between entrepreneurs (B2B) starting from July 1st, 2024.