6 misconceptions about e-invoicing

The use of electronic invoicing (e-invoicing) has gotten a lot of attention recently.

It’s rapidly transforming the way businesses across Europe handle their financial transactions. With the European Union pushing for widespread adoption and individual countries implementing their own mandates, e-invoicing is no longer just a convenience - it's becoming a necessity.

However, as with any significant change, misconceptions are popping up everywhere. Whether you're running a small business in Spain, a mid-sized company in Germany, or a large enterprise in France, it's crucial to separate fact from fiction when it comes to e-invoicing.

Are PDF invoices sufficient? Can we still send them off by email?

Are all businesses expected to use them - even freelancers?

Read on as we debunk six common myths about e-invoicing that persist across European markets. From the nature of e-invoices themselves to the scope of businesses affected, we'll clarify the realities of this digital transformation.

By understanding the truths behind these misconceptions, you'll be better prepared to navigate the evolving e-invoicing compliance mandates throughout Europe.

This seems to be the most common misunderstanding about e-invoicing.

There are two main errors in this belief. The first misconception is that a PDF invoice is an e-invoice.

It’s important to understand that an e-invoice isn’t just about going paperless or digitizing PDF invoices. An e-eleinvoice must contain what’s called a minimum data set in a structured format.

This means it must be issued, transmitted, and received in a specific format that can guarantee the issuer’s identity and confirm the accuracy of its information.

Different European countries have their own approved formats:

• Factur-X is widely used in France and Germany, and we already offer it in the Qonto invoicing tool.
• FatturaPA is standard in Italy, officially mandated for all transactions submitted to the Public Administration since 2019.
• ZUGFERD and XRechnung are common in Germany.
• UBL (OASIS Universal Business Language) is used in various countries including Denmark and the Netherlands.

Secondly, many businesses across Europe will soon be unable to exchange invoices exclusively by email. Instead, countries are implementing government-approved platforms or networks for sending and receiving invoices:

• In Italy, invoices must pass through the Sistema di Interscambio (SDI).
• Spain’s approved e-invoicing format for B2G (business-to-government) transactions is FacturaE.
• France is introducing the Public Invoicing Portal (PPF) and certified private platforms.
• Poland’s in the process of rolling out their National e-Invoicing System (KSeF).

While the specific systems vary, the trend across Europe is clear: dedicated e-invoicing platforms are replacing email as the primary method for exchanging invoices between businesses.

This is a widespread misconception throughout Europe. In reality, e-invoicing requirements typically apply to businesses of all sizes, including freelancers.

The obligation applies at an enterprise level and all the way down the ladder - even if you're just starting out and only send one or two invoices a month.

However, the specifics and timelines can vary by country:

• France's upcoming mandate will eventually apply to all businesses; it’s currently being rolled out in phases based on company size.
• In Italy, e-invoicing has been mandatory for all VAT-registered businesses since 2019, with only a few exceptions for the smallest enterprises.
• In Germany, the ability to receive e-invoices becomes mandatory in 2025, with a two-year grace period for issuing them, allowing businesses to continue using non-electronic formats until 2027 if agreed upon by the recipient.
• In Romania, the RO E-Invoicing system became mandatory for all B2B transactions starting from January 2024, regardless of company size. This includes small businesses and freelancers who’ve registered to declare VAT.

While some countries may offer exemptions or longer transition periods for very small businesses or those below certain VAT thresholds, the overall trend in Europe is toward universal adoption of e-invoicing.

It's also worth noting that even if a freelancer or small business is exempt from issuing e-invoices, they’ll often still need to be capable of receiving them from larger suppliers who’re mandated to use the system.

Regardless of current exemptions, all European businesses should prepare for the eventual adoption of e-invoicing, as it's likely to become standard practice across the continent in the coming years.

If you work with individual clients or clients abroad, you don’t need to use e-invoicing. But you’re still expected to do digital reporting.

While e-invoicing requirements often focus on business-to-business (B2B) transactions, many European countries are expanding their scope to include business-to-consumer (B2C) and cross-border transactions. Even if you're not required to issue e-invoices in these cases, you may still need to comply with digital reporting obligations.

Digital reporting is becoming increasingly common across Europe:

• In Italy, all cross-border VAT transactions must be reported through the Esterometro system.
• Hungary's real-time invoice reporting system covers both domestic and cross-border transactions.
• The Portuguese government's ****e-Fatura app allows VAT-registered businesses to issue e-invoices for B2C transactions without the need for paper copies, provided they meet specific technical and security requirements.
• In Greece, the myDATA (my Digital Accounting and Tax Application) platform mandates that businesses electronically report detailed invoice data for all transaction types, including B2C/retail sales, as part of the country's digital tax transformation.

These reporting requirements typically involve transmitting specific transaction data - such as amounts, VAT details, and customer information - to tax authorities through designated platforms or APIs.

Unfortunately, this isn’t true.

Of course, if you’re exempt from VAT in your country, this declaration isn’t necessary.

Otherwise, businesses will need to keep meeting all their reporting obligations - including VAT declarations - despite the reforms coming into force.

The European Union is working on harmonizing these processes through the VAT in the Digital Age (ViDA) initiative. ViDA aims to:

1. modernize VAT reporting obligations,
2. address VAT treatment of the platform economy,
3. introduce a single EU VAT registration.

While these changes promise to simplify VAT processes in the long run, for now, businesses across Europe are expected to still meet their current VAT declaration requirements alongside any new e-invoicing mandates.

As e-invoicing systems mature, we can expect more automated and streamlined VAT processes, but businesses should stay informed about their specific obligations in each country where they operate.

Many freelancers and business owners worry about this, but it’s not as hard as it seems.

First, it’s true that you’ll need to adjust your organization. As we’ve seen, it’ll soon be against the law to issue invoices solely by email in PDF format. However, this is how many businesses are used to operating at the moment.

While there will be a change, it won’t necessarily add complexity to your business. Of course, a small adjustment period may be necessary. But if you use the right tools, the transition to e-invoicing will be smooth.

If you’re a Qonto client, you’re already set. French businesses using Qonto's invoicing tool currently have Factur-X as the default format, reflecting our proactive approach to compliance.

We're actively enhancing our invoicing system to seamlessly integrate with evolving e-invoicing frameworks across our European markets. We’re working to get Partner Dematerialization Platform (PDP) accreditation to make sending and receiving invoices even more seamless in the Qonto app.

Far from being just another headache, e-invoicing can be seen as a great opportunity for businesses. It offers many advantages:

• Saving time and increasing productivity: going paperless means you can generate and send compliant invoices with all required legal mentions in just a few minutes. Additionally, some digital platforms, especially PDPs, offer advanced features to help you save time managing your invoicing (document search, validation, payment, etc.).
• Better organization: all your invoices are sorted and centralized in one place: the dematerialization platform you’ve selected. You can find them in just a few clicks if needed.
• Faster payments: e-invoice exchanges are instant. With this new setup, you’re sure to send the right document to the right person. They also receive a notification upon receipt. This helps you limit unpaid invoices and reduce payment delays.
• Reduced average invoice processing costs: you also save money by eliminating paper, printing, and mailing costs.
• Secure communication and data: e-invoicing offers better traceability of information as it relies on using specific and highly secure formats. The data is passed through safeguards and can’t be modified.

Make your switch to e-invoicing smooth with Qonto. Get a head start by generating and issuing this month's invoices in Factur-X format.

As a Qonto customer, you can rest assured that you’ll benefit from a 100% compliant tool as soon as the new reforms come into effect.