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From July 2025, B2B e-invoices in Estonia will be mandatory upon request, and by 2027, for all businesses. How will this affect Lithuanian companies, and what steps should they take?
Estonia is preparing for significant changes – starting from July 1, 2025, all business-to-business (B2B) invoices between Estonian companies must be electronic (EN16631 compliant) if the recipient requests it. Furthermore, the Government is working on new legislation which would mandate that starting from 2027, sending and receiving e-invoices would become mandatory for all VAT payers.
B2B e-invoices in Estonia. What will change?
Business-to-government (B2G) e-invoices have been mandatory in Estonia since 1st of July 2019. However, the new requirement from July 1, 2025, will also include B2B invoices. This means that Estonian companies will be able to demand that their partners send them only electronic invoices which are EN16931 compliant - the European norm of the electronic invoice. The Government has stated a plan that by 2027, all businesses will be required to exchange only e-invoices. The draft states a full e-invoice obligation for B2B and B2G segments of the tax payers.
These changes will bring benefits to businesses:
- Standardized document transmission will reduce administrative burdens.
- E-invoices will be processed automatically, avoiding errors from manual data entry.
- Financial control and tax administration will improve.
New e-invoice requirements in neighboring countries
Estonia is not the only country where businesses will face new e-invoice requirements. Significant changes are also happening in neighboring countries:
- Latvia. Since January this year, all transactions with Latvian public institutions must be conducted using electronic invoices (EN16931 compliant) submitted through the "e-adrese" system. By 2026, all Latvian businesses will be required to exchange e-invoices when providing goods and services to other businesses.
- Poland. Starting in 2026, Poland will gradually introduce mandatory e-invoicing for both B2G and B2B transactions, depending on the company's revenue and invoice amounts.
Additionally, the European Commission’s ViDA (VAT in the Digital Age) directive aims to transition the entire EU to digital solutions such as B2B e-invoices for more efficient VAT collection. The directive outlines a gradual implementation for businesses to exchange e-invoices in cross-border EU transactions and that would be a drive also for domestic e-invoicing.
How will this affect Lithuanian businesses?
Lithuanian companies will not be required to send B2B e-invoices to Estonian businesses. However, if a partner requests it, they will need to adapt to these expectations. This may necessitate updating accounting systems and adopting solutions that facilitate e-invoicing. Therefore, businesses trading with foreign partners are advised to prepare solutions in advance to ensure smooth e-invoice exchanges.Observing changes in neighboring countries, Lithuanian businesses may face:
- Partner requirements. Companies working with partners in Latvia or other countries may receive e-invoice requests. These markets will have already implemented more efficient processes, making PDF invoices undesirable. As a result, businesses may need to update their accounting systems to comply with client demands. Similar trends are seen in Scandinavian markets.
- Regulatory changes. The Lithuanian government may consider initiatives to encourage or mandate e-invoices, inspired by the successful experiences of neighboring countries. This would aim for greater transparency and more efficient VAT collection. Moreover, the EU ViDA directive envisions the gradual integration of e-invoices into cross-border transactions, making their use an inevitable part of business operations.
How to prepare for e-invoice changes?
To stay competitive and meet partner expectations, Lithuanian businesses should invest in digital solutions. This will ensure a smooth transition to e-invoicing requirements and reduce administrative burdens.With the right tools, businesses can ensure a seamless shift to e-invoicing:
- For small and medium-sized enterprises, the Banqup invoicing platform allows sending e-invoices via Peppol (European e-invoice network), SABIS (Lithuanian B2G e-invoicing system), "e-adrese" (Latvian B2G e-invoicing system), and Estonia’s invoice exchange network. In the future, Banqup will support Poland’s local KsEF system when Peppol is not applicable. The platform also generates European-standard e-invoices (XML/UBL), which can be easily sent via email.
- For large enterprises looking to automate invoice sending and receiving, more advanced technological solutions are available:
- Euroconnector. An API-driven data exchange tool initiated by the Lithuanian Ministry of Economy and Innovation, designed for sending invoices through the Peppol network. By integrating accounting systems with Euroconnector, businesses can not only send e-invoices, track their status, and exchange messages but also receive e-invoices from business partners automatically.
- Unifiedpost offers integrated invoicing solutions for both Peppol and local e-invoice platforms, ensuring correct e-invoice creation and transformation into European-standard data files.
The mandatory B2G and B2B e-invoice requirements introduced in Estonia and other countries are not only a significant step for local markets but also have a direct impact on Lithuanian businesses. If your company works with foreign partners in markets where e-invoicing is becoming mandatory, now is the best time to prepare for these changes. This will not only help you comply with regulations but also optimize business processes, saving time and costs.
