Estonia takes e-invoicing to the next level

Simplifying B2B transactions

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The new Accounting Act simplifies the process for B2B transactions and explicitly states that if a receiver requests e-invoices, the supplier should be ready to send them. However, initially, there will be no penalties imposed if the supplier can’t or won’t meet the customer’s request, although this may result in strained business relationships. The second change in the new Accounting Act concerns the e-invoice format. Starting from 1 July 2025, only EN 16931 (the European norm) will be supported. The local Estonian e-invoice standard EVS 923 will still be allowed and used in legacy platforms, but for future developments and public tenders, EN 16931 will be the primary format.

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The Estonian e-invoicing system is designed to be simple and user-friendly. Businesses can send and receive e-invoices using a variety of methods, including the local e-invoice roaming network which is a frequent preference for many businesses, but also Peppol delivery or delivery via web applications like Unifiedpost’s Banqup.

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Anticipated future mandate and VAT reporting changes

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Additionally, the Estonian government has revealed plans to publish a mandate for B2B e-invoicing starting from 2027. At the same time, the government intends to change the VAT law so that all VAT-related transactions must be declared to the Tax Authority. Today, suppliers are only obliged to report detailed invoice data where the total amount invoiced in a month to any given customer is over €1.000. For total customer billings under this amount, only totals need to be reported. The proposed change would eliminate this €1.000 threshold. Implementing these changes would be a strong step towards ViDA’s digital reporting requirement in the domestic market. The new proposal is under public discussion and the next decisions will be taken at the end of Q1 2025.

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The Estonian government is confident that the new e-invoicing system will help boost the country's economy, further reduce the VAT gap and make the country more competitive in the global marketplace.

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Other countries embracing receiver-driven e-invoicing

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Globally, the adoption of e-invoicing has been accelerating, with several other countries considering or having already implemented similar approaches that grant buyers the right to request electronic invoices from their suppliers:

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Finland:

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Since 1 April  2020, Finland mandates that e-invoices comply with the European standard on e-invoicing (EN 16931) if the invoice receiver (whether a public administration or a private company) requests it. This means that suppliers must issue e-invoices in a structured format that meets the standard, ensuring interoperability and compliance. 

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Australia:

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Australia is working on the Business e-Invoicing Right (BER), which would allow businesses to require their suppliers and customers to use e-invoicing via the Peppol network. While large businesses were initially expected to comply by July 2023, medium businesses by 2024, and small businesses by 2025, the initiative is still awaiting formal approval. Once implemented, the BER will mandate all businesses to be Peppol-enabled. While the framework remains under review, the initiative aims to boost e-invoicing adoption, enhance business processes, and align with sustainability goals.

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Global trends:

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A growing number of countries are adopting e-invoicing mandates to improve tax compliance and reduce fraud. As of 2024, 55 countries worldwide have adopted or are considering adopting e-invoice mandates, including specific standards and real-time reporting to tax authorities. 

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It's important to note that while many countries are moving towards mandatory e-invoicing, the specific rights of buyers to demand e-invoices from suppliers vary. In some jurisdictions, such rights are explicitly granted, while in others, the adoption of e-invoicing is more supplier-driven.

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When seen alongside these other initiatives, the Estonian government's approach signals a potential shift towards empowering businesses to demand e-invoices, which could become a more prevalent model in the future.

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