The number of EU member states where electronic invoices are mandatory is rapidly growing 0 8

If until now e-invoices were mainly used in public administration or in cooperation between merchants and state budget institutions, starting this year, an increasing number of countries are implementing the requirement for private enterprises to issue machine-readable invoices to each other.

According to the "VAT in the Digital Age" (ViDA) initiative, the implementation of a digital solution is necessary to eradicate VAT fraud, improve tax administration, and adapt the VAT system to the digital economy.

This year, several countries are fully joining Italy, the pioneer in implementing e-invoices in the EU. In Croatia, starting January 1, invoices must be prepared electronically by all merchants registered as VAT payers.

In Poland, e-invoices became mandatory for large companies starting February 1, and in April, all others joined them.

In France, starting September 1, all VAT payers must be able to accept electronic invoices, and large and medium-sized enterprises must both issue them and be able to prepare electronic reports.

In Greece, where the circulation of e-invoices has already been in effect for both state budget institutions and mutual settlements between merchants, additional invoicing requirements based on income thresholds were established in February.

Requirements will also be tightened in Germany starting next year, where mandatory receipt of structured electronic invoices in public administration has been in effect since January 2025. This requirement will now also apply to the private sector.

In Estonia, Lithuania, Finland, and Spain, electronic invoices are mandatory for all transactions with the public sector, and in Estonia, businesses have the right to request an e-invoice from another business; however, mandatory circulation is being introduced gradually. In Sweden, electronic invoices in public administration have been a given for many years, using the Peppol network.

Initially, it was expected that in Latvia, the circulation of electronic invoices for all merchants would also become mandatory this year, thus joining the EU leaders in implementing e-invoices. However, due to significant challenges, the transition period has been extended to January 1, 2028.

As a result, at present, only those enterprises that cooperate with state budget institutions are required to issue electronic invoices. This requirement came into effect on January 1, 2025, and since then, budget institutions have only accepted documents that are prepared, sent, and received in a structured electronic format, can be automatically processed, and comply with the EU standard LVS EN 16931-1:2017.

"The comprehensive VAT reform at the EU level marks a fundamental turning point in both tax administration and business operations across the European Union. According to the ViDA directive, starting July 1, 2030, the use of structured electronic invoices will be mandatory in cross-border transactions between businesses in member states. This means that previous invoices in PDF format or on paper will no longer be considered sufficient.

Furthermore, alongside the implementation of e-invoices in cross-border transactions, all member states will have to implement Digital Reporting Requirements (DRR) systems that will allow tax authorities to receive significant information about transactions in almost real-time. Thus, both exporters and importers, as well as other companies, need to start preparing for the new requirements in a timely manner and implement appropriate solutions. Users of the Jumis accounting and business management systems need not worry about these issues, as all the latest legislative requirements are integrated into our software in advance," emphasizes Jumis Pro director Viesturs Slaidins.

It is forecasted that with the implementation of comprehensive e-invoice circulation in the EU, the VAT gap will be radically reduced. The "VAT Gap Report 2025" highlights that the VAT gap across the EU in 2023 was 1.6% lower than in 2019. However, it remains relatively high at 9.5%. This means that member states failed to collect almost one-tenth of all VAT revenues that should have entered the treasury if all merchants had paid the tax in good faith.

Electronic invoices will reduce the possibility of VAT evasion, which means that in the best-case scenario, the budgets of countries will be on average nearly one-tenth larger than before. In the case of Latvia, this will be about 5%, as over four years, the VAT gap has already been reduced from 10.1% in 2019 to 5.4% in 2023. For Lithuanians, the potential budget growth will be even 15.1%, and for Estonians, it will be 10.3%.