Electronic invoicing, from theory to practice. How does it work in Romania?
Opinion article by Ramona Țariuc, Director, Victoria Dobre, Senior Manager, Alexandru Stancu, Senior Manager, Indirect taxation, Deloitte Romania
Electronic invoicing was introduced late in Romania, but once the process started, the authorities announced a rapid evolution from the pilot project to mandatory reporting for all invoices issued, regardless of the type of taxpayer or the goods sold. The system implemented in our country was inspired by the one implemented in Italy, a state that has taken the first step in this direction ever since 2014. What does the transition to this invoicing and reporting system entail and what are the issues that need to be clarified in order to continue the expansion process from the current phase to the next stage?
In mid-2019, the European Commission launched an infringement procedure against Romania for delaying the transposition/implementation into national law of Directive 55/2014 on electronic invoicing. Two years later, the Romanian authorities adopted an emergency ordinance regarding the administration, operation and implementation of the national RO e-Invoice system, a necessary measure to achieve the objectives assumed by the National Recovery and Resilience Plan, respectively to increase revenues to the state budget.
The decision to develop the electronic invoicing project in Romania was taken after analyzing the Italian model, and the Romanian tax authorities stressed from the beginning that the pilot program for implementing the system for the relationship between private companies and state institutions (business to government – B2G) will lay the foundations for the development of the generalized electronic invoicing system in the relationship between private companies (business to business – B2B).
As a consequence, electronic invoicing started timidly at the end of last year, but the speed with which the changes were implemented on the whole concept, to move to the next stage, is encouraging.
Thus, starting with April, optionally, and with July, compulsory, the taxpayers who supply to other companies (B2B) goods classified as having a high risk of tax evasion will issue invoices using the RO e-Invoice system, regardless of whether the beneficiaries are also enrolled or not. The goods in question are specifically mentioned, namely vegetables, fruits, alcoholic beverages, mineral products such as natural mineral water, sand and gravel, as well as clothing and footwear. The supply of new buildings has also been included in the list published by the authorities.
Therefore, the first taxpayers affected by this measure will be traders, followed by members of the hospitality industry (HoReCa) and real estate developers. However, as the authorities seem determined to generalize this obligation, other categories of taxpayers should also prepare for the implementation of this system as soon as possible.
In addition, given the desire to align with European standards, it is expected that relations with the tax authorities will be increasingly based on technology, and in this context, taxpayers must observe the changes that are taking place so that they can prepare in advance to meet the new requirements.
EU practice
Over time, before implementing regulations with a significant impact, the authorities in our country have organized working groups with representatives of other Member States with similar experiences. In most of the cases, Italy and Poland were sources of inspiration for Romania.
Italy is one of the first EU countries to introduce mandatory electronic invoicing for B2B transactions. The system for issuing and reporting in real-time mandatory electronic sales invoices (SdI) has been introduced since January 1, 2019. SdI reporting has already been a requirement for B2G transactions since 2014.
Italian taxpayers issue electronic invoices in a specific XML format and then upload them to SdI. The system performs some formal checks and, if the invoice is accepted, the platform delivers the e-invoice to the recipient and sends a delivery report to the supplier. Otherwise, a rejection report is issued. If the system is unable to deliver an electronic invoice to the recipient, SdI saves the electronic invoice available to the recipient on the tax authority’s platform and informs the supplier accordingly.
The Italian model was also an example for Poland, who recently introduced the optional electronic invoicing. From January 2022, Polish taxpayers can choose to join the KSeF central electronic invoicing system. In this pilot phase, the receipt of electronic invoices is conditioned by the customer’s acceptance.
Similar to Romania, the Polish authorities have quickly made the necessary amendments by the end of 2021, the year 2022 is set for testing, and, starting with 2023, the system will become generally mandatory.
Poland implements a standardized format, called the structured invoice issued by KSeF in XML format. The required items are very detailed, and the system will assign a unique series (ID) to each invoice.
How will the electronic invoicing system work in Romania
In Romania, the supplier taxpayers will be able to connect to the RO e-Invoice system with the help of the qualified digital certificate used to access the virtual private space (SPV). Similar to the Italian model, the invoice will be drawn up in XML format, this being considered the original copy of the invoice, if it is accompanied by the electronic signature of the Ministry of Finance.
The transmission can be done either by interconnecting the application available at the issuer level, using an interface (subject to pre-authorization), or by using the applications provided free of charge by the Ministry of Finance.
After sending the electronic invoice, the system will perform structure, syntax and semantics verification and validation operations, subsequently generating an automatic reply message. If the invoice complies with the structure, the electronic signature of the Ministry of Finance shall be applied (proof of receipt in the national electronic invoicing system) and shall be communicated to the addressee. If the invoice does not comply with the structure, the issuer receives a message with the identified errors. After correcting them, the invoice is retransmitted through the same system.
Although the theory sounds encouraging, in practice it has resulted, over time, that in the implementation phases of such a measure, various inconsistencies arise due to which the whole process can become difficult. And this time, whether we are analyzing from a commercial point of view or from the point of view of the resources that must be allocated for the use of the system, the new measure is expected to generate an additional administrative burden for the business environment, at least during the initial phase.
The commercial and technical issues that raise questions for taxpayers should be discussed and clarified with the tax authorities by July 2022. These include how to communicate the invoice to a customer not registered in the system, the period of implementation of a connection linking the ERP (Enterprise Resource Planning) system of the taxpayer to the system of the tax authority or the procedure for transmitting invoices containing both high risk goods and other types of goods.
In conclusion, given the complexity of the electronic invoicing system and the experience of other states that have adopted it, effective implementation requires time, communication and cooperation between authorities and the business environment.
DELOITTE
