Around the world, tax authorities are tightening their controls on VAT collection from invoices, aiming to close what’s known as the VAT Gap. *

Countries in regions like South America have already introduced measures to address this, with impressive results, and now similar initiatives are expanding globally.

If your business trades internationally, it’s likely these mandates will soon impact you, if they haven’t already.

Transalis eInvoicing specialist Nathan Roe takes a look at how VAT mandates are taking shape, the various implementation models, and the potential benefits they offer.

Whether you’re new to VAT mandates or already familiar with them, this post provides insights and updates designed to help you stay informed.

Let’s start with the basics. Government-mandated eInvoicing refers to the legal requirement that companies must send and receive invoices in a digital format, specifically approved by a country’s tax authority.

The goal is to increase transparency, reduce tax evasion, and close the VAT gap – that’s the difference between expected and actual VAT revenue collected by governments.

In Europe, countries like Italy and Turkey already have these requirements in place, while others are set to join soon. For instance, France, Belgium and Poland have announced plans to mandate eInvoicing by 2026, with the UK expected to start consultation as early as Spring 2025. *

The transition to mandated eInvoicing means that businesses will need to shift from paper or PDF invoices to either fully electronic or a hybrid model of PDF and electronic, according to local government regulations.

Failing to meet these standards can result in penalties, payment delays, and potentially lost business relationships.

When it comes to VAT mandates, there isn’t a single, universal approach. Countries choose different models based on their specific needs and systems. Here’s a quick look at the main types:

Understanding which model applies to each country you do business in is crucial. The requirements, timeline, and steps will vary depending on the region.

The idea of more government oversight may sound daunting, but mandated eInvoicing can actually bring a host of benefits to your business.

First, there’s the potential for significant cost savings. By moving to a digital process, businesses can reduce reliance on manual invoice handling, printing, and mailing – all leading to lower administrative costs.

Additionally, digital invoicing streamlines payment processing. Transactions become faster, errors drop, and transparency increases. Businesses may also find it easier to manage cross-border transactions by having a consistent, digital approach to invoices. Over time, these efficiency gains can strengthen financial control and improve your company’s cash flow.

At Transalis, we’re leaders in eInvoicing solutions, helping businesses of all sizes simplify and automate their invoicing processes to ensure full compliance with global VAT mandates.

Our flexible solutions integrate seamlessly with your existing systems, making compliance a straightforward step, not a challenge.

At Transalis, we’re leaders in eInvoicing solutions, helping businesses of all sizes simplify and automate their invoicing processes to ensure full compliance with global VAT mandates.

Our flexible solutions integrate seamlessly with your existing systems, making compliance a straightforward step, not a challenge.

* Source: Billentis ‘Global e-invoicing and tax compliance report’ (April 2024)