On January 17 2002 the European Union published its new Council Directive of December 20 2001 (2001/115/EC) regarding invoicing requirements in EU member states. The new directive is designed to simplify and harmonize value added tax (VAT) invoicing regulations throughout the European Union. The new directive is part of the Simpler Legislation for the Internal Market project.

Invoices play a central role in the EU VAT system. Invoices provide information as to what VAT regime is applied or applicable, enable tax administrations to carry out controls and may provide for a right to a VAT refund. At present invoice requirements in the European Union vary from very flexible to very strict. Companies operating in more than one member state may have to meet different invoicing requirements in each state.

The Electronic Invoicing Directive mentions 10 statements that may be required for an invoice by EU member states:

  • date of issuance;

  • a sequential number;

  • the supplier's VAT identification number;

  • the customer's VAT identification number;

  • the full name and address of the supplier and its customer;

  • the quantity and nature of the supplied goods or services;

  • the date that goods were supplied or services rendered;

  • the remuneration payable per applicable VAT rate;

  • the applicable VAT rate; and

  • the payable VAT amount.

The directive further defines additional statements that may be required in specific circumstances. Invoices may be made in any EU currency, provided that the VAT payable is stated in the currency of the member state in which VAT is due. The invoice may be made in a non-local language. However, the tax administration may, for control purposes, demand a translation of the invoices.

One important development is that the directive also allows invoices to be sent electronically, provided that the authenticity of its origin and the integrity of its contents are guaranteed. Such a guarantee may be provided by using an advanced electronic signature or by means of Electronic Data Interchange.

Until January 1 2006 EU member states may require that prior notification be given to the competent tax administration regarding the use of electronic invoices. The notification is not a request for approval. Research by the European Commission has shown that electronic invoicing will incur substantially lower costs than regular (paper) invoices. The research showed that an average electronic invoice would cost from approximately €0.28 to €0.47, compared to a cost of approximately €1.13 to €1.65 for regular invoices.

The directive must be implemented in all EU member states by January 1 2004.

For further information on this topic please contact Jan Snel or Daan Arends at Baker & McKenzie, Amsterdam by telephone (+31 20 5517555) or by fax (+31 20 626 79 49) or by email ([email protected] or [email protected]).