In his policy note, the Belgian Minister of Finance, Mr Van Peteghem, confirmed the intention to gradually make electronic invoicing mandatory for businesses-to-business (B2B) transactions.
The measure is aimed at reducing the Belgian VAT gap, which is the difference between the expected VAT revenues and the VAT revenues that are effectively collected. For the year 2018, the Belgian VAT gap was estimated to amount to 3.6 billion euros or 10.4% of the expected total VAT revenue.
Belgium is not the first country that is trying to improve VAT collection by obliging businesses to issue their invoices electronically. Many EU countries, for example France and Poland, have already announced that e-invoicing will become mandatory in the next couple of years. In Italy and various other countries around the world, especially in Latin America, e-invoicing is already obligatory.
What could the Belgian B2B mandate look like?
At this stage, no information is available on the timing of the e-invoicing mandate nor on the practicalities. A working group on e-invoicing was only established this spring (as one of seven working groups aimed at reducing the VAT GAP) and the project is still in an early phase.
As it is the intention to impose the e-invoicing obligation gradually, it can be expected, based on examples from abroad, that large businesses will be the first to be impacted, followed by medium-sized businesses and in the latest stage SMEs and micro businesses. If this proves to be the case, only a fairly limited number of businesses would be impacted from the outset of the mandate.
Important clues on the potential direction of the e-invoicing mandate can also be found in statements made by the Belgian Prime Minister in his previous capacity as Belgian Minister of Finance. In February 2020, Mr De Croo, referred to PEPPOL as an example of a uniformly usable standard, when he stated that he believed electronic invoicing needed to be mandatory in a couple of years.
Peppol (Pan European Public Procurement OnLine) is an international framework for e-Invoicing and e-procurement. Within the Peppol framework e-invoices are exchanged in a structured format (UBL) based on standardized document specifications and via PEPPOL Access Points (typically an e-invoicing service provider).
Over the past couple of years, the Belgian government has also been embracing the PEPPOL framework when making e-invoicing mandatory for certain business-to-government (B2G) supplies of goods or services. Experience from France and Italy learns that business-to-government e-invoicing is often used as a stepping stone for a business-to-business (B2B) e-invoicing mandate.
Since 2016, Belgium also established its own Peppol authority, a body that is responsible for the promotion, the diffusion and the proper use of Peppol within Belgium and that contributes to the consolidation of the Peppol framework and the continuous evolution of its components.
As such, it would not be a surprise if the government leverages this experience with Peppol when making e-invoicing mandatory for all businesses.This means that e-invoices in principle would need to be issued in a structured format and sending pdf invoices via direct email (as currently is often done) would no longer be possible.
What is in it for businesses, and how to prepare?
True e-invoicing offers numerous benefits for businesses compared to paper invoices or digital paper like pdf invoices sent via email. The advantages cover a broad spectrum ranging from increased automation possibilities to ecological benefits. According to a study carried out on behalf of the Belgian government the potential savings associated with the generalization of e-invoicing are estimated at 3.5 billion euros per year.
Although it is still early days and most details are still unknown, it is never too early to start preparing for these changes. Feel free to reach out to our PwC specialists to discuss the impact these changes will have on your AP/AR processes and how to best prepare.
If you are struggling to obtain a clear view on the e-invoicing and e-reporting obligations imposed to your business globally or on your future roadmap, you can also check out Electronic Compliance Radar, our new solution to help businesses keep track of current and future e-invoicing and e-reporting obligations.
Contributors & PwC Contacts:
- Ellen Cortvriend, Director PwC – Global e-invoicing & e-reporting CoE lead
- Sven Geenens, Tax Manager, PwC
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