The E-Invoicing Exchange Summit 2024, held in Prague from September 23-25, marked an important moment in time for the e-invoicing industry. Attended by nearly 300 participants from 32 countries, the summit was a bustling forum of ideas, debate, and collaboration. From governments to multinational corporations, policymakers to leading service providers, this event served as a platform for stakeholders to exchange knowledge and strategies. The organizers, Johannes von Mulert and Vereon AG, deserve praise for successfully facilitating these vital dialogues.
The RegTech underscored the summit’s importance, viewing its participation as central to our understanding of the industry’s direction. Over three days, attendees engaged in in-depth workshops, presentations, panel discussions, and roundtables, making Czechia a hot spot for the e-invoicing sector. The event provided an ideal opportunity to learn about the latest developments in global e-invoicing implementations and digital reporting requirements.
A key highlight was the discussion on ViDA, the VAT in the Digital Age initiative from the European Commission. This initiative aims to modernize VAT reporting obligations through electronic invoicing and digital reporting. The E-Invoicing Exchange Summit 2024 revealed a field of tension between tax authorities’ push to close VAT gaps and businesses’ need for automated, efficient processes. Aligning strategies to balance transparency and efficiency emerged as a demanding theme, reiterating the need for collaboration among all parties involved in international trade.
5 Key Takeaways
- ViDA Initiative and Collaboration: The VAT in the Digital Age (ViDA) initiative from the European Commission was a major focus, aiming to modernize VAT reporting through electronic invoicing and digital reporting. A central theme was the need for collaboration between tax authorities and businesses to balance transparency and efficiency.
- Market Growth and Complexity: The e-invoicing market is projected to grow rapidly, with a compound annual growth rate (CAGR) of 19.6% between 2024 and 2028. This growth introduces challenges such as harmonizing international compliance requirements and integrating AI and digital tools to streamline processes.
- Peppol’s Role in Standardization: The expansion of Peppol and its role in global e-invoicing was highlighted, with increasing adoption across countries like Japan and Singapore. Industry leaders view Peppol’s efforts to drive standardization and interoperability in e-invoicing as important for reducing costs and enhancing trust in international transactions. 5-corner model was seen as the one that will dominate in the future.
- Challenges for Businesses and Service Providers: The increasing complexity of compliance with e-invoicing regulations poses significant challenges for businesses, particularly small and medium-sized enterprises (SMEs). Service providers must adapt to new regulatory environments, consolidate operations, and maintain rtheir profitability amidst shifting market conditions.
- Global Adoption and Developing Economies: The push for e-invoicing adoption in developing countries was a key RegTech discussion point, with institutions like the IMF and World Bank seen as key to supporting digital transformation. We mphasized creating scalable, affordable solutions for developing nations, which lack the resources for more complex e-invoicing systems.
E-Invoicing Exchange Summit 2024: Market Trends
The e-invoicing market is undergoing substantial growth, with Billentis’ 2024 E-Invoicing Report projecting a compound annual growth rate of 19.6% between 2024 and 2028. The total volume of e-invoices is expected to reach 560 billion. In Europe, e-invoicing adoption varies, with some regions exceeding 55% penetration in B2B/B2G/G2B sectors. The overall share of paperless invoices in Europe is around 45%, with approximately 35% being e-invoices.
The European Commission has announced the adoption of VAT in the Digital Age, which includes mandatory intra-community electronic invoicing by 2030 and mandatory B2B intra-community digital reporting requirements. E-invoicing contributes to significant CO2 savings, with potential reductions in emissions from both production and absorption processes. Early payments facilitated by e-invoicing can lead to financial benefits, including increased tax revenue and improved internal controls.
Trends and Challenges
The market is moving towards integrated digital trade, incorporating e-invoicing with other business processes like supply chain automation, embedded finance, and e-marketplaces. AI is finding its use in automated data capture, fraud detection, predictive analytics, and future applications like smart contracts and dynamic pricing models.
Multinational businesses face hurdles in harmonizing processes and systems to meet diverse international tax and business requirements. The increasing number of mandatory countries and compliance requirements adds complexity to operations. The market is experiencing consolidation, with a expected reduction in the number of service providers due to increasing compliance requirements and price erosion. Service providers need to scale and adapt to new compliance requirements while maintaining their profitability.
Companies need to harmonize their processes and systems across different regions to support international business and tax requirements. There is a need for broad solutions that can interact with ERP, e-invoicing, e-procurement, and external systems. Integrating AI and other advanced technologies into existing systems poses a challenge, especially for small and medium-sized enterprises that may lack the resources for such investments. Tax authorities and companies face critical decisions regarding the adoption of tax reporting models and compliance strategies. Service providers must review their product portfolios and target customers to remain competitive and compliant.
Bridging Stakeholder Interests: Success in Fostering Collaboration
The European Commission’s VAT in the Digital Age (ViDA) proposal to modernize VAT reporting obligations through electronic invoicing and digital reporting was in the constant sight of all participants.
The proposal includes three main pillars: the introduction of a Digital Reporting Requirement (DRR), platforms in the transport and short-term accommodation sectors accounting for VAT instead of the underlying supplier, and a single VAT registration to reduce the need for businesses to register in multiple Member States.
Timeframe for Implementation
The state of play includes the adoption of the proposal by the Commission on December 8, 2022, with positive opinions from various committees and ongoing negotiations in the Council. Measures will come into effect from the entry into force of the Directive, with mandatory electronic invoicing for cross-border transactions by July 1, 2030. For general implementation, Member States must adopt and publish the national laws for implementing the Directive by June 30, 2030. The rules will apply from July 1, 2030.
For Member States that already have a domestic digital real-time transaction-based reporting system in place as of January 1, 2024, or have obtained a derogation or adopted legislation for such a system before that date, they can maintain these systems until January 2035 for domestic transactions. The Commission will assess the need for further measures and may propose an extension if necessary to address any shortcomings.
Main Requirements
Electronic invoices must contain information required by the VAT Directive and be issued and received in a structured electronic format that allows for automated processing. Member States can impose domestic e-invoicing systems and must protect compliance with technical standards. The date of issuance for cross-border invoices is set at 10 days following the chargeable event or receipt of payment.
The cross-border DRR covers intra-community supplies and transfers of goods, acquisitions of goods and services under the reverse charge arrangement, and other specified transactions. Data must be transmitted electronically, and Member States must provide the means for this transmission. The domestic DRR allows Member States to install reporting requirements for taxable persons established in their territory, with data transmission using the EU Standard on e-invoicing.
Obstacles ahead for Businesses and Service Providers
Challenges include the need for businesses to adapt to new compliance requirements and harmonize processes across different regions. The complexity of implementing electronic invoicing systems and assuring interoperability with existing systems poses a significant obstacle, especially for small and medium-sized enterprises. Service providers must scale and adapt to new compliance requirements while maintaining profitability, and tax authorities face decisions regarding the adoption of tax reporting models and compliance strategies.
Service providers must review their product portfolios and target customers to remain competitive and compliant. The phrase ‘live or die’ presented by the EU Commission representative on stage brought considerable reactions from the participants. It highlights the important nature of these decisions, indicating that service providers need to adapt to the new compliance requirements and market conditions to survive and thrive in the years to come.
E-Invoicing Exchange Summit 2024: The Global Push for Standardization
Peppol is expanding its reach by encouraging more countries to join OpenPeppol and increasing usage across multiple sectors. They aim to deepen their impact by boosting membership and driving higher transaction volumes. As more participants join, the network’s value increases, enhancing the efficiency of e-invoicing processes globally. Experts affirmed the value of international standards in reducing costs, safeguarding compliance, and fostering trust, particularly as nations like Japan, Korea, and Singapore join the growing list of Peppol participants.
At the E-Invoicing Exchange Summit 2024, the importance of standardization for a unified e-invoicing experience was emphasized. The Peppol Network 5-corner model was highlighted, especially in terms of facilitating smooth transactions, immediate validation, and reduced fraud. This model uses international standards and proven processes, making it cost-effective and easy to implement.
Peppol’s ViDA Pilot Announced
Peppol’s ViDA pilot aims to demonstrate that their invoice specifications can meet the ViDA digital reporting requirements. This initiative, starting in late 2024, involves European tax administrations and Peppol-certified service providers. The pilot aims to show that the Peppol Network can serve as the transmission method for tax administrations.
Global standardization is further highlighted by Peppol’s collaborations with separate countries and international organizations like the EU, Japan, Korea, Singapore, Canada, and the OECD. These partnerships are seen as means to enhance global interoperability and efficiency in e-invoicing. Peppol’s framework supports cross-border and cross-continental interoperability, meeting diverse tax administration needs.
E-Invoicing Exchange Summit 2024: The Need for a Holistic Approach
A recurring theme at the summit was the importance of viewing e-invoicing as a holistic solution that applies across B2B, B2C, B2G, and G2B sectors. This “5-corner” approach, as discussed by Peppol and individual thought leaders present at the conference, should enable all facets of invoicing to be integrated into a seamless digital ecosystem.
This holistic viewpoint is not just a technical requirement but also a strategic imperative for maintaining competitiveness in the global marketplace.
E-Invoicing Exchange Summit 2024 Case Studies: Showcase of Centralized Models
Hungarian NTCA Approach
The Hungarian National Tax and Customs Administration (NTCA) has implemented a centralized B2B e-invoicing model and government e-reporting solution to enhance tax compliance and streamline VAT reporting. The Hungarian VAT system mandates that all businesses issue invoices reported to the NTCA, including modifications such as credit and debit notes. Initially, the reporting obligation applied to B2B transactions with a VAT content of at least 100,000 HUF but has since expanded to include all B2B and B2C transactions without a VAT content limit.
Businesses report invoices created using invoicing software through machine-to-machine communication via an API provided by the NTCA, using a well-defined XML structure. Handwritten invoices are reported through a web portal within four days of issuance. The XML structure includes all mandatory VAT data, such as supplier and customer information, issue date, article description, price, and VAT percentage. Additional optional data can also be included.
The NTCA’s approach includes an anti-fraud system that detects, reports, and manages e-invoicing fraud and anomalies in real-time. This system uses AI and data analytics to enhance security and proactive risk management, addressing issues such as tax evasion, false VAT claims, and cross-border fraud.
Essential Services
The NTCA provides several services based on this reporting obligation. These services include viewing and downloading reported invoice data, querying invoice reports, and accessing online invoicing software. These services are available through both machine-to-machine communication and a web interface. The centralized e-invoicing system offers significant benefits to taxpayers, including the elimination of manual data entry, compliance checks, full invoice data access, and the ability to conduct 100% invoice audits. It also facilitates partner checks and data report analysis, enhancing overall tax compliance and reducing the administrative burden on businesses.
The NTCA collaborates closely with businesses, recognizing that although they may not always align, they share common goals. This cooperation involves various stakeholders, including accountants, auditors, IT developers, and tax advisers. The NTCA uses invoice data for various purposes, such as risk analysis, transaction network building, and audit support. The online invoice report can also serve as an e-invoice, containing all invoice data in a structured format that customers can download. This system, known as NAVXML, allows for the electronic creation, issuance, transmission, processing, and retention of invoices, making them easily processed by machines and automatically accounted for.
Total Overview of All Transactions – Serbia
Serbia has taken significant steps to enhance VAT reporting and reduce the VAT gap through a centralized core e-invoicing system known as eFaktura. The presentation highlighted that this system integrates customs and e-fiscalization, connecting various government services, including customs declarations and B2C transactions, to a unified e-reporting platform.
Such integration allows customs authorities and the tax administration to exchange data, securing that they accurately record and report all cross-border transactions. This way, Sebian model is definitely unique in the world and deserves praise for its completeness.
Expected benefits
The integration of customs into the eFaktura captures detailed information on imports and exports, helping prevent tax evasion and collecting the correct amount of VAT on goods entering and leaving the country. This real-time data collection provides the tax administration with immediate access to sales data, reducing the risk of underreporting and fraud.
The main benefits of integrating customs and e-fiscalization into a centralized core e-invoicing system include improved fiscal transparency and enhanced tax compliance. This way the system will provide a total overview of all transactions, both domestic and cross-border, helping the government monitor and control VAT collection more effectively. This transparency reduces opportunities for tax evasion and fraud, certifying that all transactions are accurately reported and recorded.
Poland – Seamless Integration with Existing EDI Services
The KSeF system (B2B e-invoicing model in Poland) mandates that all B2B invoices be issued and reported through a centralized platform managed by the tax authority. This system aims to reduce the VAT gap and combat tax fraud by enabling real-time reporting and validation of invoices.
The KSeF system operates on a centralized model where invoices are issued through an authority. This model standardizes all invoices to comply with the required XML format specified by the tax authority.
Initially scheduled to become mandatory for all businesses in Poland by January 2024, authorities have postponed the implementation of the KSeF system twice.The first postponement moved the deadline to July 2024, and the second further extended it to February 2026. These delays were primarily due to the need for additional time to address technical challenges and allow businesses and service providers to fully integrate with the new system. The postponements also provided more time for comprehensive testing and adjustments to assure the system’s robustness and reliability.
KSeF System Perks
The system supports seamless integration with existing EDI services, making it a natural extension for businesses already using electronic data interchange. One of the key benefits of the KSeF system is its ability to provide real-time data to the tax authority, enabling more effective monitoring and control of VAT transactions. This real-time reporting helps to reduce the risk of tax evasion and fraud, as all transactions are immediately visible to the tax authority. Additionally, the system simplifies the VAT reporting process for businesses, reducing administrative burdens and improving data accuracy.
The centralized e-invoicing model also facilitates better cooperation between businesses and the tax authority. By providing a single platform for all B2B transactions, the system enhances transparency and arranges that all parties have access to the same data. This transparency helps to build trust and improve compliance, as businesses can easily verify their transactions and meet their tax obligations.
Are Service Providers Always Necessary?
As e-invoicing and e-reporting systems evolve, an important question arises: Are service providers always necessary for implementing and maintaining these systems? The traditional model often relies on third-party service providers to manage the technical aspects of e-invoicing, including integration, compliance, and data processing. However, as governments adopt more centralized solutions, the role of external providers is being questioned. With ready-made platforms that offer scalability and ease of implementation, governments may no longer need to outsource significant portions of the e-reporting process.
Obviously, in regions with well-developed digital infrastructures, governments are increasingly exploring the possibility of managing these systems independently. Centralized platforms can integrate B2B, B2C, B2G, and G2B transactions without needing extensive customization from external service providers. These platforms often come with built-in compliance mechanisms, reducing the need for third-party interventions. Governments can directly oversee transaction flows, improving real-time monitoring and reducing costs associated with outsourcing.
However, in many developing countries, the complexity of e-invoicing systems and lack of technical resources still make service providers important. The infrastructure challenges in these regions mean that governments may lack the capacity to fully manage digital systems in-house. Service providers bring expertise in compliance, integration, and real-time data management that is often necessary to get e-invoicing systems off the ground. While some governments may move towards self-sufficiency, for many others, service providers will continue to play a crucial role in ensuring the successful adoption of e-invoicing and e-reporting platforms.
Developing Economies: Future Adoption and Strategic Steps Forward
As discussions turned toward the future, talk around the centre stage mainly revolved around the transatlantic context. Nevertheless, the developing countries were in the RegTech cross hairs. While many developing nations have yet to adopt widespread e-invoicing, there is growing interest in digital solutions that could enhance tax transparency and reduce fraud.
International bodies such as the World Bank, International Monetary Fund, and United Nations, as well as developed countries and leading global enterprises, must play a main role in providing the necessary financial and technical support. This includes investments in digital infrastructure, education, and regulatory reforms tailored to the needs of emerging markets.
The role of service providers is also critical in this transformation. They will need to design flexible, scalable solutions that are both affordable and adaptable to the unique demands of developing economies. Unlike their counterparts in more developed regions, businesses in Africa and Southeast Asia may not have the resources to implement complex systems, so interested parties must focus on delivering simple yet effective tools that can integrate with existing structures. These solutions must be both user-friendly and cost-effective to enable widespread adoption.
Furthermore, beyond infrastructure and tools, knowledge transfer is essential. Nations in these regions must learn from the experiences of Europe and North America, adapting best practices to their local contexts. Programs that promote cross-border collaboration and exchange of expertise are invaluable in this regard. Additionally, global e-invoicing initiatives should foster regional partnerships, where neighbouring countries with similar challenges work together to build a unified, interoperable e-invoicing network that can grow and adapt as their economies expand.
Adoption of a Centralized E-reporting System
Evidently, we see that the VAT gap in many developing countries continues to be a major issue due to widespread tax evasion, fraud, and administrative inefficiencies. Without accurate tracking mechanisms, governments struggle to collect the full amount of VAT owed. The adoption of a centralized e-reporting system changes this by allowing authorities to monitor every transaction, whether it involves businesses, consumers, or the government itself. This approach simplifies the identification of discrepancies, making it easier to catch instances of under-reporting or non-compliance.
This centralized system provides a comprehensive view of all financial activities within the economy. For example, in a B2B transaction, the system tracks the issuance of an e-invoice between two businesses and automatically cross-checks it with the VAT filings of both parties. In B2C transactions, the system captures retail sales in real time, reducing opportunities for businesses to manipulate sales figures or evade taxes. Likewise, authorities closely monitor G2B and B2G transactions, which are significant in public procurement, to guarantee that both government agencies and private contractors comply with VAT requirements.
The 5-Corner Model: Integrating Public and Private Networks
A crucial approach in tackling VAT non-compliance is the 5-corner model, which integrates a government’s e-reporting system with the private sector’s e-invoicing network. In this model, governments act as a crucial “fifth corner” mandating government’s specific rules that sellers and their service providers must follow as they apply technical specification prescribed by government institution. This integration creates a unified data flow and records every transaction—whether between businesses, consumers, or government entities—in a standardized format. The result is real-time access to transaction data, allowing for more immediate auditing and fraud detection.
Finally, for developing countries, the 5-corner model offers a significant advantage. Governments should implement the Commercial Off-The-Shelf (COTS) e-invoicing solutions, which are cost-effective, scalable, and ready to deploy without extensive customization. These systems enable quick implementation and can grow alongside the economy, providing a reliable platform for VAT monitoring as the number of transactions increases.
E-Invoicing Exchange Summit 2024: Concrete Steps Towards a Unified Future
To foster global e-invoicing adoption, particularly in developing countries, we need to take several concrete steps to achieve the ambitious goals discussed at the E-Invoicing Exchange Summit 2024. First and foremost, collaboration between governments and businesses is essential for establishing and enforcing globally recognized standards. These standards will form the foundation for e-invoicing systems, so businesses can easily exchange invoices across borders, regardless of each region’s technical capabilities. For developing nations, adhering to international standards not only simplifies cross-border trade but also enhances their competitiveness on the global stage.
Second, investments in digital infrastructure are a must. As the compliance landscape becomes more complex with the growing demands of e-invoicing, businesses will need to integrate invoicing with other key business processes like supply chain management, financial services, and ERP systems. For developing nations, this step requires significant financial and technological investments. Global institutions and multinational corporations can help facilitate this by offering affordable, scalable solutions that meet the specific needs of these markets.
Third, there is a pressing need to include small and medium-sized enterprises (SMEs) in the conversation. Too often, discussions around digital transformation focus on large enterprises that have the resources to adapt. We must empower SMEs to participate, as they represent a significant portion of the economies in developing nations. Governments and organizations can offer affordable tools, training programs, and financial incentives specifically designed for smaller businesses to insure they do not get left behind in the digital transition.
