CFOs and finance managers need a clear guide to e-invoicing regulations. You need to understand the latest mandates, assess if your business is affected, and take steps to stay compliant across countries.
Here we clarify technical concepts and provide practical next steps for compliance and automation in this evolving (and fairly complex) space.
Why SaaS Companies Can’t Ignore E-Invoicing Regulations
E-invoicing regulations are gaining momentum globally, and U.S.-based SaaS and tech companies that sell in Europe, Latin America, or Asia can’t afford to wait. These mandates affect how invoices are issued, reported, and archived — and falling behind can lead to penalties or payment delays.
Global tax compliance isn’t just a “big enterprise” problem anymore. Tax reporting mandates apply to businesses of all sizes in dozens of global jurisdictions. The bottom line? Your business can’t ignore e-invoicing requirements.
If your company is implementing e-invoicing to comply with industry-specific regulations, you’re ahead of the game. The banking industry, for example, may require e-invoicing solutions to reduce the risk of fraud.
You need to make e-invoicing compliance an urgent priority. Countries are moving toward a policy of requiring e-invoices for most types of transactions. If you don’t comply, you may pay fines and penalties. Even worse, you may be prevented from doing business in a particular country until you meet e-invoicing requirements.
Act now to understand e-invoicing rules, so your revenue isn’t affected.
What Are E-Invoicing Regulations?
E-invoicing regulations determine the data format, date field, transmission, reporting, and archiving requirements for digital invoicing.
E-invoicing formats may be XML-based or in some other format. Tax authorities may require you to transmit invoices through designated service providers. All businesses must be able to provide digital reporting to government agencies.
What Is the Difference Between Intracountry and Cross-Border Transactions?
An intracountry transaction is completed within the same country, and a cross-border transaction is between two countries. Why bring this up? E-invoicing regulations largely apply to intracountry transactions. If your business generates cross-border transactions, e-invoicing regulations are not widely enforced yet.
Why Are Governments Mandating E-Invoicing?
Governments are implementing mandatory e-invoicing to increase tax compliance. When business transactions are processed in an electronic format, tax payments increase, and the government’s cash flow improves.
Many countries assess a Value-Added Tax (VAT) on taxpayers. In addition, a Goods and Service Tax (GST) is a type of VAT tax levied based on consumption. A country’s VAT gap is the difference between expected tax revenue and the payments collected. When a tax authority must collect a receivable, the process is time-consuming.
The solution? Improve VAT collection and reduce fraud through real-time reporting. Close the VAT gap by digitizing tax data at the income level. The benefits of e-invoicing include better visibility into domestic and cross-border transactions.
E-invoicing mandates eliminate paper invoices and manual data entry. You can issue invoices, access invoice data, and view purchase orders online. Electronic invoicing saves time and streamlines your workflows. You’ll see cost savings when you spend fewer labor hours on invoice processing.
Who Is Affected?
Do e-invoicing regulatory requirements apply to your business? The answer depends on several factors.
Country or region
The U.S. does not assess VAT taxes at the federal level, and the federal government does not require e-invoicing for all business transactions. U.S. tax authorities drive revenue through sales taxes, subscription taxes, and income taxes, among others.
Many countries, particularly those with a VAT tax system, require e-invoicing. You’ll find a detailed discussion of international e-invoicing requirements below.
A U.S.-based company that only does business domestically may not have to deal with e-invoicing formats immediately. However, if the company does cross-border transactions, management may have to work with an e-invoicing platform.
Type of business
E-invoicing may be determined by the way you do business. You may operate business-to-business (B2B), business-to-government (B2B), business-to-consumer (B2C), or a combination of all three.
Many governments are requiring vendors to use e-invoicing systems. If you only work with B2B transactions, you may not have to automate invoicing in the short term.
Dollar and transaction thresholds
Tax reporting is a bigger burden for small businesses with a smaller staff and less capital. As a result, many tax authorities set minimum thresholds for tax reporting. Companies must reach a dollar amount of sales or a set number of transactions before e-invoicing is required.
Key E-Invoicing Compliance Requirements
Electronic data interchange (EDI) provides guidelines for the content and formatting of electronic business data, including e-invoices. Your business must comply with formatting requirements, mandatory data fields, and invoice submission, and reporting rules.
Standardized Formats
Structured data is key for automation and compliance because the data is easier to search and analyze. You need formats that are machine-readable and provide interoperability, so that data can be shared between systems. Here are some frequently used data formats:
- Extensible Markup Language (XML) is often used for e-invoicing. Data elements can be assigned descriptive labels that make it easier to understand and process the data.
- Peppol is a framework used by European countries to facilitate trade, including e-invoicing. Businesses in Europe use Peppol BIS formatting for e-invoicing.
- Universal Business Language (UBL) is a framework for automating supply chain documents, including invoices, purchase orders, and shipping receipts. This language is based on XML.
- ZUGFeRD: German businesses must use e-invoicing for B2B transactions based on an annual revenue threshold, and ZUGFeRD is a commonly used format. This format is a hybrid of a PDF file and an XML language record.
When you do business internationally, you may have to use country-specific schemas to comply with government agencies.
Mandatory Fields and Data Integrity
Your e-invoice must contain all the data a buyer needs to process and pay the invoice. Think about how your invoices are currently formatted and any invoice-related questions your accounting team receives. That’s a good starting point for this topic.
Here are the common mandatory fields for e-invoicing:
- Invoice ID or number
- Tax rate (as a percentage) or the tax amount (in dollars or another currency)
- Buyer and seller information: The buyer may provide links to facilitate electronic invoice payment
- Due dates and payment terms, including due dates to earn a discount
Additionally, the invoice may reference a specific contract or include delivery details. Invoices provide both line items and the total amount owed. Your customer’s accounts payable (AP) department can speed up invoice processing with the right information.
AP teams also perform validation on invoices to confirm that a purchase is legitimate, and the validation process can vary by country. Accounting systems may require digital signatures and confirm with the purchasing department that the pricing on the invoice is accurate. Companies that use ERP systems must verify that the e-invoice matches the data in the ERP.
Submission and Reporting Rules
E-invoicing requires real-time or near-real-time reporting to tax authorities. Invoices are often submitted through government portals or authorized service providers.
Time limits for reporting vary by country. India requires certain taxpayers to report e-invoices within 30 days of issuance, while Mexico mandates real-time reporting. U.S.-based companies operating in these markets must comply with local timelines.
Where Are E-Invoicing Mandates Active?
E-invoicing mandates vary, depending on the region where you’re doing business. Some countries have mandates in place, others have partial mandates, and a third group has not implemented e-invoicing regulations.
United States
The U.S. does not have a federal mandate for e-invoicing. However, B2G invoicing is encouraged. The Paperwork Elimination Act requires the US federal government to give vendors the option to submit invoices electronically.
Keep in mind that the federal government (and most states) do not have a VAT tax system. The U.S. generates tax revenue through other forms of tax.
Sphere monitors state-level thresholds and exemptions to ensure your business doesn’t miss a registration trigger.
Several private-sector organizations are working to expand e-invoicing:
- The Business Payments Coalition (BPC) “is a volunteer group of organizations and individuals working together to promote greater adoption of electronic business-to-business (B2B) payments, remittance data, and invoices.” BPC’s goal is to create a fully automated process for procure-to-pay and order-to-cash cycles for US businesses.
- The Digital Business Networks Alliance (DBNA) is another U.S. organization created to expand the use of e-invoicing. DBNA’s Exchange Framework allows businesses to share electronic invoices, regardless of the platform or application they use.
Sphere simplifies tax compliance by generating accurate filings and automating submission. With Sphere, you never miss a deadline or misreport exempt sales.
U.S. companies that export to regions that mandate e-invoicing must comply with tax authorities.
European Union (ViDA & More)
The European Commission is modernizing the VAT system in Europe through the VAT in the Digital Age (ViDA) program. ViDA introduced uniform real-time digital reporting for VAT purposes, based on e-invoicing for cross-border transactions between EU countries.
Here are some additional regulations for EU countries:
- France, Italy, and Spain require e-invoicing for intracountry B2B transactions
- Poland will require e-invoicing for intracountry and cross-border transactions by 2026
- Greece will implement e-invoicing for intracountry and cross-border transactions by July 1st 2025
Many countries in Europe use the Peppol network.
Latin America & Asia
Mexico, Brazil, Chile, Colombia, and Argentina have implemented mandatory e-invoicing for intracountry transactions. India requires e-invoicing for most large and mid-sized businesses based on a revenue threshold.
Saudi Arabia, Vietnam, and other countries are expanding real-time clearance for e-invoicing. Japan and China have introduced e-invoicing on a limited basis.
Few countries in Asia require e-invoicing for cross-border transactions.
Who Is Affected (and When)?
You need to understand mandates by region and entity type, and when a particular country rolled out e-invoicing regulations.
Mandates by Region and Entity Type
As explained earlier, B2B, B2C, and B2G rules vary by country. Some e-invoicing rules apply to domestic sales only, and other guidelines address cross-border trade. Your trading partners may have thresholds based on the total amount of sales, or the number of transactions processed.
Timeline of Global Rollouts
Many countries have e-invoicing issuance and reporting requirements in place. The European Union’s ViDA pilot initiative is putting an e-invoicing rollout in place progressively until 2035.
Penalties for Non-Compliance
E-invoicing rules are put in place to increase tax compliance, and countries rely on compliance to generate revenue. Non-compliance reduces cash inflows, and the penalties can be disruptive to your business.
You may pay fines for each rejected or late invoice. France, for example, imposes these penalties:
- Non-compliance with e-invoicing regulations: €15 penalty per invoice, up to a maximum of €15,000 per year
- Non-compliance with digital reporting requirements: €250 per data transmission, up to a maximum of €45,000 per year
A violation may make your company ineligible for tax credits, or your invoice payments could be delayed. A compliance failure could also trigger an audit.
E-Invoicing Examples
Here are two e-invoicing examples that explain the e-invoicing steps for a business.
Germany
German businesses must use e-invoicing for B2B transactions. Assume that you operate a German company and sell goods to another German company. Here is the e-invoicing process:
- Creating the invoice: German companies use the ZUGFeRD data format for e-invoicing. Your billing department creates a PDF-formatted invoice with a PDF file and an XML data file.
- Buyer processes the invoice: The invoice is machine-readable, and the buyer can open the PDF, scan the XML data, and import the invoice details into the accounting system.
The buyer can process invoices in less time and avoid errors, and payments can be processed faster.
Mexico
Mexican businesses register with the SAT (Mexican tax authority) and are assigned a unique vendor number. A CFDI is an XML-formatted file used for invoicing and tax documents.
Companies work with an Authorized Certification Provider (PAC), a third party authorized to certify and generate e-invoices and tax documents for users. The PAC also stores invoices in a secure electronic format.
- The seller transmits an e-invoice to the PAC.
- A PAC validates the data and sends the e-invoice to the buyer.
- The buyer’s accounting system opens the CFDI files and extracts the XML data for the buyer’s accounting system.
- The PAC also sends the e-invoice to the tax authorities (SAT).
As discussed above, each country has a different method for processing e-invoices.
How to Prepare for E-Invoicing Mandates
You have a lot on your plate already, but you need a plan to comply with e-invoicing mandates. Use these tips to determine your exposure and implement an effective plan.
Assess Your Exposure
Start by assessing where you are now, and where you’re headed. Map out current and future sales channels by country. Assume that you operate in the U.S. and plan to expand into Germany.
Determine the e-invoicing mandates in Germany, including the thresholds that require businesses to comply with the mandate. Germany requires B2B e-invoices when your annual revenue is €800,000 or higher. Do the mandates apply to B2B, B2G, or both? How are domestic and cross-border transactions handled? Get the details.
Review Internal Systems
Once you understand the requirements, evaluate whether or not your internal systems can process e-invoices properly.
Your AP or ERP must be able to extract data and format information into the correct entry fields for each e-invoice. You need a compliance function to ensure that e-invoicing is completed in a timely manner. Businesses must educate their vendors so they are ready for inbound e-invoicing.
Partner with a Solution That Scales
You need a partner that can cover multi-region compliance, streamline your operation, and meet your needs as the business scales. Sphere currently automates indirect tax calculation, filing and registration and will be expanding into e-invoicing in the near future.
Here’s how Sphere helps businesses navigate tax compliance:
- Global tax compliance — all in one platform
- AI-enabled tax technology, combined with expert tax professionals, provides accurate tax reporting and compliance in multiple jurisdictions
- Automated tax calculations, filings, and remittance
Sphere’s AI-powered tax research system allows the platform to rapidly expand coverage across products and regions while monitoring for legislation changes.
The Bottom Line: E-Invoicing Compliance Doesn’t Have to Be a Headache
E-invoicing is complex, especially as more countries introduce digital mandates. But with the right systems in place, finance teams can avoid penalties, delays, and mounting administrative work.
It’s frustrating. Trying to track invoice formats, real-time reporting requirements, and varying tax rules across jurisdictions is a heavy lift — particularly for lean U.S.-based teams handling cross-border operations. That’s why automation is essential.
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Sphere automatically calculates the correct total tax per transaction, factoring in state and local tax rules.
Rely on Sphere to keep your records organized and accessible, so you can quickly respond to an audit request.
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