How will the new Belgian eInvoicing law impact Financial institutions
Introduction of eInvoicing in Belgium
Following the request submitted to the European Commission on October 6, 2023 to obtain the Council’s authorization to derogate from the Directive 2006/112/EC (similar to the ones already obtained, e.g., by Italy, France or Germany), the law related to the introduction in Belgium of mandatory electronic invoicing for B2B transactions has been adopted by the Chamber (see 55K3743) and published in the Belgian Official Gazette on 20 February 2024. The law will enter into force as from the 1st January 2026, subject to Council’s authorization to derogate from the Directive 2006/112/EC.
It is important to note that:
- This law does not address mandatory electronic reporting (but it is expected that this will be addressed at a later stage).
- The rules could be further amended, if needed, to be fully compatible with the final rules adopted at EU level.
Despite the grace period of almost two years, organizations should now plan to create readiness for the introduction of eInvoicing in Belgium.
Here is a selection of some technical points that should be of particular interest to the Belgian financial sector.
1. Obligation to issue a "structured electronic invoice”
The obligation to issue a structured electronic invoice requires the convergence of three elements:
- Supplier – It must be a VAT-taxable person established in Belgium (including a VAT-group), with some specifically defined exception, such as a taxable person who carries out exclusively transactions exempted under article 44 of the Code (note: there is no reference here to the VAT deduction right).
- Recipient – It must be a taxable person who must provide a VAT identification number for the concerned transaction with the exception of a taxable person who only carries out transactions exempted under Article 44 and which do not entitle them to a deduction.
- Concerned transactions – The transactions for which a structured electronic invoice must be issued concern, a.o., only supplies of goods and services which
(1) must be considered as located in Belgium for VAT purposes, with in principle, the exception of transactions for which the reverse charge mechanism applies by virtue of article 51, § 2, paragraph 1, of the Code (in that case, except in case of self-billing, Belgium is not the competent Member State for invoicing purposes); or
(2) are not exempt under article 44 of the Code.
If one of these elements is not met, from a Belgian perspective, the issuance of a structured electronic invoice would not be mandatory. For instance, under the current provisions:
(1) a Belgian VAT-taxable person who carries out exclusively transactions exempted under article 44 of the Code would never be obliged to issue such invoice;
(2) a mixed Belgian VAT-taxable person may only be obliged to issue such invoice for transactions not exempted based on article 44 of the Code, and;
(3) a Belgian VAT-taxable person would not be obliged to issue such invoice in B2C situations. Of course, in that case, issuance of such structured electronic invoice would still be possible on a voluntary basis, but subject to the acceptance of the recipient.
2. Obligation to receive a "structured electronic invoice”
Where the issuance of a structured electronic invoice is required, the recipient (including a VAT-group) is obliged to accept a structured electronic invoice.
This notably means that:
- Taxable persons (including VAT-group), who (1) only carry out transactions which are exempt under article 44 of the Code but which give them at least a partial right to deduct (notably under article 45, § 1, 4° of the Code) or (2) carry out both transactions subject to VAT and transactions which are exempt under article 44 of the Code, must have taken the necessary steps to be able to receive structured electronic invoices.
- In case of VAT-groups, all members of this VAT-group must fulfil this obligation, even if an individual member only carries out transactions exempted under article 44 of the Code, for which this member would not be entitled to deduction.
3. VAT-group
Members of a VAT-group will have to issue invoices or specific documents for their transactions to other members of that VAT-group in accordance with the terms and conditions laid down for structured electronic invoices if they had been required to issue a structured electronic invoice for that transaction in situations where the recipient had not been a member of the same VAT-group.
4. Technical specifications
To ensure the semantic, syntactic and technical interoperability, the PEPPOL-BIS (“Pan-European public procurement online – Business Interoperability Specifications”) format is to be imposed as the main reference.
Taxable persons will have the option of derogating provided that:
(1) both parties involved in the transaction to be invoiced have agreed to derogate from these standards, and;
(2) the invoices issued meet the (most up to date) European standards EN 16.931-1 and CEN/TS 16.931-2.
As a final remark, beyond Belgian development on these matters, we can only recommend that players active abroad keep abreast of developments on eInvoicing in these countries, as the subject is constantly evolving.
Why setting up a multi-competence team is a must
Establishing a multi-competence team encompassing professionals with diverse skills in IT, Finance, Tax, and Transformation is critical for the entire implementation of eInvoicing projects, extending beyond the initial impact and gap assessment phases. Throughout the implementation journey, IT specialists contribute their technical prowess to design, integrate, and maintain the eInvoicing infrastructure. Their continuous involvement facilitates the seamless functioning of the system, addressing any unforeseen technical challenges that may arise during the implementation process. This collaborative synergy between IT and other domains helps create a robust and sustainable eInvoicing solution that evolves with the organization's needs.
Finance professionals within the team contribute their financial acumen to navigate the intricate landscape of invoicing and financial regulations. From configuring financial workflows within the eInvoicing system to achieving ongoing compliance with changing financial regulations, their expertise plays a crucial role in sustaining the financial integrity of the invoicing processes. The ongoing collaboration between IT and Finance makes for an eInvoicing solution that not only meets the technical requirements but also aligns seamlessly with financial best practices, fostering a holistic approach to the implementation process.
Tax experts play a pivotal role in navigating the complex terrain of tax regulations governing eInvoicing. By integrating tax expertise into the eInvoicing solution, organizations can automate the application of indirect taxes accurately, reducing the risk of errors and achieving compliance. Their insights are invaluable in having a system that adheres to tax laws, minimizing potential liabilities and risks associated with non-compliance, allowing for the development of a robust eInvoicing solution that not only streamlines processes but also aligns seamlessly with tax requirements.
Transformation specialists bring a holistic perspective to the team, focusing on the broader organizational impact of eInvoicing implementation. Their knowledge facilitates a comprehensive assessment of how the project aligns with overall business strategies, so that the transformation is not only technically sound but also aligns with the organization's goals, needs and wants. By integrating professionals with transformation expertise, the multi-competence team can drive a strategic and sustainable approach to eInvoicing implementation, addressing challenges beyond the immediate technical and financial aspects.
How we can assist you
EY, with its multi-disciplinary team comprising experts from Tax, Technology, and Finance Transformation teams, can provide comprehensive assistance throughout the entire lifecycle of your eInvoicing project, supported by the accelerators and tools we have developed.
