B2B E-invoicing in Israel (2024 Implementation)

The Israeli government has embraced e-invoicing as a means of combating tax evasion by providing an efficient and safe way of exchanging invoicing data. This approach offers various advantages over paper invoicing methods, including increased efficiency, cost savings, improved accuracy, and enhanced transparency.

In 2024, Israel will introduce an electronic invoicing regime for B2B transactions along with a real-time reporting CTC model. Read on to learn all about how your company can transition to this new system to be VAT compliant.

Latest news

E-invoicing in Israel is set to begin in January 2024, starting with invoices with a value of over 25,000 shekels. Detailed instructions with technical specifications will be announced in the near future.

B2B e-invoicing implementation timeline

The Israeli Tax Authority has decided on a phased implementation plan based on an invoice's value as follows:

• 1 January 2024: Mandatory e-invoicing for invoices over 25,000 NIS (approx. 6,211 EUR)

• 1 January 2025: E-invoices over 20,000 NIS (approx. 4969 EUR)

• 1 January 2026: E-invoices over 15,000 NIS (approx. 3727 EUR)

• 1 January 2027: E-invoices over 10,000 NIS (approx. 2484 EUR)

• 1 January 2028: E-invoices over 5,000 NIS (approx. 1,242 EUR)

Israeli e-invoicing VAT tax compliance

Scope

There are 3 taxpayer groups that will be included under this new mandate:

1. VAT registered businesses

2. B2B transactions

3. Taxable invoices

Those not included will be B2G transactions and B2C transactions, including cross-border invoices

Allocation number

The allocation number, or מספר הקצאה will need to be requested via API or government tax platform, which will require an entity to send invoice data. This number then needs to be integrated into the e-invoice before it is delivered to the buyer to be valid and deduct input VAT.

Digital signature

A digital signature will be required to validate e-invoices and for them to remain compliant with the current system.

Archive

E-invoices must be stored for 7 years in a secure archive.

Continuous Transaction Control (CTC)

Israel is aiming to implement a centralized clearance CTC on 1 January 2024 which is a move away from the current inefficient post-audit model. Through the centralized clearance model, the Israeli Ministry of Finance will combat tax fraud and evasion, which were prevalent through the use of illegal invoices. This real-time validation model will make it mandatory for companies to obtain an allocation number, which will be given by the Tax authority; otherwise, the invoice will not be accepted.

How does it work?

1. Invoices need to be transmitted to the Israeli Tax Agency and undergo approval in real time. The Tax Authority will then allocate a distinctive identifier and assess the data for invoice acceptance or rejection.

   • This includes information such as the transaction date, supplier and buyer data, and the total invoice amount excluding VAT.

2. Once the e-invoice is validated by the Tax Authority, it will be returned to the seller, who will forward it to the client.

Benefits

There are many benefits to e-invoices that businesses can capitalize on:

1. Cost savings: E-invoicing eliminates paper, printing, postage, and manual processing, resulting in significant cost savings for businesses.

2. Faster Processing and Payments: With e-invoicing, invoices can be sent instantly and received in real-time, leading to faster processing, quicker payments, and improved cash flow.

3. Automation and data integrity: E-invoicing ensures enhanced accuracy and data integrity through automated validation processes, reducing errors, disputes, and the risk of fraud.

How DDD Invoices can help your business

Here are the benefits of choosing DDD Invoices as your e-invoicing service provider:

• Unlock the ability to send and receive e-documents around the world, without worrying about local e-invoicing 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 electronic invoicing in Israel