ViDA – Impact on business processes – Part 2: Recipient should be able to accept E-invoices, Member States may make it mandatory to issue E-Invoices as of Jan 1, 2024

On 8 December the European Commission (“EC”) launched its long-awaited proposals to modernize the VAT rules within the EU collectively known as “VAT in the Digital Age package” (“ViDA”). Note that is still a PROPOSAL subject to change.

ViDA has 3 pillars:

Digital Reporting Requirements (DRR)
Platform Economy
Single EU VAT Registration

As part of the pillar ”DRR”, E-invoicing will be the general rule for the issuance of invoices: Articles 217, 218 and 232.

The adaptation of the VAT Directive to the new digital reality requires a change in the treatment given to electronic invoices. Until now, the VAT Directive has put on an equal footing paper and electronic invoices. Article 232 required that the issuance of electronic invoices be subject to the acceptance of the recipient. This requirement impeded Member States from implementing mandatory electronic invoicing that could be used as a basis for an electronic reporting system. It also slowed down the development of electronic invoices, as taxable persons could not adapt their invoicing systems to implement full electronic invoicing because they had to issue paper invoices whenever the recipient did not accept electronic invoices.

The proposal changes this situation, providing in Article 218 that electronic invoicing will be the default system for the issuance of invoices. The use of paper invoices will only be possible in situations where Member States authorise them. This authorisation cannot cover those cases that are subject to the reporting obligations in Chapter 6 of Title XI, as that would prevent or create difficulties for the automatic reporting of the data. Taxable persons will always be allowed to issue electronic invoices according to the European standard. This standard is the one adopted by the Commission Implementing Decision (EU) 2017/1870 according to the request laid down in Directive 2014/55/EU. The issuance and transmission of electronic invoices cannot be conditional on a prior authorisation of validation by the tax authorities of the Member State in order to be sent to the recipient. Several Member States have been granted a special measure to apply mandatory e-invoicing, where such clearance systems have been implemented. These systems can only be applied by those Member States up to 1 January 2028, ensuring the convergence with the EU digital reporting system.

To ensure that taxable persons will not depend on the authorisation of the recipient to issue an electronic invoice, Article 232 is deleted from the VAT Directive.

Per Jan 1, 2024

Article 217 is replaced

Artcile 217 – OLD version

For the purposes of this Directive, ‘electronic invoice’ means an invoice that contains the information required in this Directive, and which has been issued and received in any electronic format.

Article 217 – NEW VERSION

For the purposes of this Directive, ‘electronic invoice’ shall mean an invoice that contains the information required by this Directive, and which has been issued, transmitted and received in a structured electronic format which allows for its automatic and electronic processing.

Article 218 is replaced (and valid between Jan 1, 2024 and Dec 31, 2027)

Article 218 – OLD VERSION

For the purposes of this Directive, Member States shall accept documents or messages on paper or in electronic form as invoices if they meet the conditions laid down in this Chapter.

Article 218 – NEW VERSION

For the purposes of this Directive, Member State shall accept documents or messages on paper or in electronic form as invoices if they meet the conditions laid down in this Chapter.
Member States may impose the obligation to issue electronic invoices. Member States imposing this obligation shall allow for the issuance of electronic invoices which comply with the European standard on electronic invoicing and the list of its syntaxes pursuant to Directive 2014/55/EU of the European Parliament and of the Council. The issuance of electronic invoices by taxable persons and their transmission shall not be subject to a prior mandatory authorisation or verification by the tax authorities, without prejudice to the special measures authorised under Article 395 and already implemented at the time this Directive enters into force.

*Directive 2014/55/EU of the European Parliament and of the Council of 16 April 2014 on electronic invoicing in public procurement (OJ L 133, 6.5.2014, p. 1).’;