“Difference Between E-Invoicing and Fiscalization"

E-invoicing is the electronic generation, transmission, and receipt of invoices between businesses for goods and services exchanged.

Fiscalization is the process of electronically recording, validating, and monitoring financial transactions, particularly sales, to ensure compliance with tax regulations and facilitate government oversight.

Both have their purposes and are used in tandem to combat VAT fraud and digitalize the tedius invoicing and reporting processes.

E-invoicing

E-invoicing, also known as electronic invoicing, is a digital document that has several benefits over its physical counterpart while serving the same goal as a conventional paper-based invoice. The electronic invoice was developed with the intention of exchanging and recording a transaction between a company and its clients in a structured data format.

E-invoicing offers many advantages, such as:

• Automation - This can aid in reducing human error from manual data entry, speeding up the invoicing process, and allowing employees to focus on fewer routine tasks.

• Cost savings - E-invoicing can help save over 60% of the time and money spent on paper invoices.

• Compliance - Through utilizing a service provider such as DDD Invoices, companies do not have to create their own e-invoicing system and do not have to deal with the bureaucracy that comes with both of these processes.

E-invoicing in Europe

Europe has been focused on digitalization and expanding e-Procurement initiatives for a considerable time. The European Commission's VAT in the Digital Age ViDA proposal aims to further enhance European digitalization by introducing VAT-related objectives. This led to the creation of Directive 2014/55/EU, which officially came into effect on April 16, 2019.

This directive mandates that all public administrations in Europe must be capable of receiving and processing B2G invoices in electronic format from their suppliers. Each Member State may adopt and implement this directive within its own legal framework.

The ViDA proposal sets a requirement for B2B e-invoices in cross-border transactions within the EU to be issued within two days after the implementation date of 1 January 2028. This means that invoices must be electronically submitted in accordance with EN 16931 EU e-invoice standard, which specifies that paper and PDF invoices will no longer be accepted after the deadline.

In order to see the different e-invoicing mandates in each European country click here.

Fiscalization and real-time reporting

Fiscalization involves the electronic recording and validation of financial transactions for taxation purposes. It encompasses the use of specialized systems or devices to track and report sales, ensuring compliance with tax regulations. By implementing fiscalization, governments can effectively monitor and regulate business transactions, enhancing their oversight and control through real-time transaction reporting.

The main difference between fiscalization and e-invoicing is that fiscal law typically deals with B2C transactions, while e-invoices are typically issued for B2G or B2B transactions.

While fiscalization in 2023 typically has a real-time reporting aspect, it is not always included in the fiscalization regime. Similarly, there are different mandatory regulations for fiscal receipts and electronic invoices.

Four types of fiscalization

1. Hardware fiscalization

This form of fiscalization involves the utilization of fiscal devices, spanning from online fiscal printers to online cash registers. Countries like Italy, Poland, and Bulgaria implement this approach.

2. Software fiscalization

In this fiscalization model, Point of Sale (POS) software plays a crucial role, transmitting fiscal data directly to tax authorities or undergoing a rigorous certification process. This method is adopted by nations like Albania, France, and Norway.

3. Hardware and software fiscalization

This category entails a synergy between hardware and software-based fiscalization. It is employed by countries such as Austria, Slovakia, and Germany.

4. Online fiscalization

An approach where the fiscalization process occurs directly on the tax authorities' servers, ensuring instant reporting and validation of transactions. Countries like Slovenia, Croatia, and Montenegro rely on this method. There is the option for a country to not have a fiscalization regime in place, but in 2023, it is fairly rare. In order to see more details on the types of fiscalization systems in different European countries, click here.

DDD Invoices: a fiscalization and e-invoicing solution

Want to issue compliance e-invoices and real-time reports with ease? Here are the benefits of choosing DDD Invoices as your e-invoicing and fiscalization solution:

• Unlock the ability to send and receive e-documents worldwide, without worrying about local compliance issues. Through our API, we automatically fill in your invoice data and send the invoice to the proper authorities, letting you focus on your core business processes and we manage the bureaucracy.

• Seamlessly integrate into your current invoicing system, ERP or CRM in as little as one day. Enjoy an error-free and automated invoicing process through our secure and reliable service.

FAQs about e-invoicing and fiscalization