The EU E-Invoicing Shift and Why Data Accuracy Is Everything
The move toward mandatory e-invoicing across the European Union is accelerating rapidly. While the EU’s VAT in the Digital Age (“ViDA”) proposals aim for greater harmonisation, the reality is that there is still a patchwork of national systems. One of the key differences between these local systems is how and to whom your invoice data is sent.
Clearance vs. Non-Clearance: Two Paths for EU Member States
Across the EU, there are 27 different approaches but only 12 member states have in place, or are proposing to use, what’s known as a “clearance model”. In this approach, every e-invoice is sent first to the VAT authority for validation before it is forwarded to the buyer.
The remaining countries will follow more decentralised models, where invoices go directly to the buyer or a service provided for validation and maybe be sent to the tax authority separately in some cases thereafter.
Whether you’re invoicing in a “clearance” country or not, the quality of your invoice data determines whether your invoice will be accepted, processed, and paid. It also ensures you remain on the right side of the tax authorities.
The Importance of Data Accuracy
In e-invoicing, your invoice is no longer just a record, it’s a dataset. Unlike a paper invoice that a human can interpret, e-invoices are machine-readable files (often XML or UBL). Every field must match the required format exactly: VAT numbers, product codes, tax rates, addresses, and payment details.
Errors here don’t just mean “someone will call to clarify.” In many systems, the invoice will be rejected automatically or even worse, accepted into the wrong category, triggering compliance issues or payment delays.
Common pitfalls include:
- Mismatched VAT IDs between buyer and seller records.
- Incorrect VAT rate coding for goods/services.
- Using free text instead of standardised codes.
- Typos in mandatory address or country codes.
Why Data Accuracy Still Matters Outside Clearance Models
It might be tempting to think that if a particular country isn’t clearance-based, you have more flexibility. In reality, inaccurate data can create serious issues:
- Post-audit detection can lead to retroactive penalties and interest.
- Mistakes in customer invoices still delay payment, harming cash flow or business relationships.
- For cross-border trade, mismatched data can trigger alerts in multiple jurisdictions and can trigger audits.
Even in countries without mandatory e-invoicing, tax authorities can use other tools to monitor data quality effectively. Take the Czech Republic, for example. While it has not yet implemented e-invoicing, the introduction of the VAT control statement has enabled authorities to identify errors and inconsistencies in invoice data very efficiently. The Czech tax office can spot an error as quickly as the following month after the control statement has been submitted.
Findings suggest that its implementation has had a positive fiscal effect, contributing to a reduction in the VAT gap. As a result, businesses VAT registered in the Czech Republic will be more aware of mistakes than those in countries like Italy, which already use e-invoicing systems but where the tax office is less efficient with the checks it completes the data given. This shows that compliance depends less on whether e-invoicing legislation exists and more on how tax authorities leverage the data they receive.
Whichever model applies, accurate, complete, and standardized invoice data is the foundation of compliance and smooth operations. Ultimately, getting your data right is essential everywhere and will be the difference between smooth operations and costly setbacks.
Best Practices for Getting E-Invoicing Data Right
- Validate VAT numbers before issuing invoices
Using an embedded determination solution such as Meridian’s ARCO Determination, you can automatically validate VAT numbers against VIES or national databases in real time. This ensures that invoices are compliant before they are issued, reducing the risk of penalties and delays. - Use correct tax rates and coding schemes for products
Determination automates the selection of correct tax codes and ensures that VAT rates are applied accurately. By leveraging this functionality, you can ensure product and service tax codes across your organisation are correct, reducing inconsistencies and errors in your invoices.
- Automate data checks in your ERP system
By integrating a determination solution such as ARCO into SAP, you can catch formatting and calculation errors before submission. This automation prevents rejected invoices, speeds up processing, and ensures compliance with each country’s technical specifications. - Maintain master data discipline
Continuously monitoring of customer and supplier records to keep master data accurate and up to date are key in any organisation. Coupled with a determination solution’s validation rules, this ensures that invoice data remains consistent across systems and jurisdictions.
Schlussfolgerung
Whether your invoices go directly to a tax office through a clearance system or straight to customers, accurate data is essential for smooth operations and compliance. Meridian’s ARCO Determination solution automates and enforces best practices, keeping your invoice data accurate, consistent, and aligned with the latest regulations.
By using these solutions, Meridian ensures your invoice data is complete, compliant, and ready for any jurisdiction while reducing penalties, preventing payment delays, and saving time. With Meridian Determination, getting your e-invoicing data right is not just best practice; it is effortless, reliable, and fully auditable.