E-Invoice  – definition, elements, submitting entity, application

E-Invoice  – definition, elements, submitting entity, application

The Law on Electronic Invoicing, which entered into force at the beginning of May of the current year, raised many doubts and controversies including the following: “What are e-invoices?”, “If and who is obliged to start issuing electronic invoices?”, etc.  The enforcement was planned for the beginning of 2022 but the complexity of the e-invoicing issue has led to the postponement of the enforcement of this law until April 30, 2022. In order to make this topic clearer, we will try to answer some of the basic questions, such as the following:

                   What Is E-Invoice?

E-invoice is an electronic record of an invoice (bill), which is issued, received, processed and archived only in electronic form. In other words, e-invoice represents the exchange of invoices (bills) in electronic form, as well as accompanying information, between a business entity and its clients by the means of electronic infrastructure (primarily, via Internet).

According to the Law, electronic invoice is a payout request based on transactions with compensation, as well as any other document affecting the payout, invoices issued for turnover without compensation and received advanced payments, which are issued, sent and received through the electronic invoicing system.

The Law regulates the issuance, submission, reception, processing, storing, content and elements of electronic invoices, and other issues important for electronic invoicing in terms of mutual economic transactions.

                   Who Has the Obligation to Issue E-Invoices?

The obligation to issue electronic invoices have:

– public sector entities – which refer to the general state level and public enterprises that are not at the general state level

– public sector entities, registered for VAT

– public and private sector entities

Exceptionally, there is noobligation to issue e-invoices:

1. for advanced payments/retail supply, in accordance with the law regulating fiscalization
2. for a contractual obligation of the beneficiaries of international framework agreement funds
3. for procurement, modernization and refurbishment of weapons and military equipment, purchase of security equipment and related purchases.

Entrepreneurs and legal entities, which are not registered for VAT, have no obligation to enforce the Law on Electronic Invoicing, but if they want, they can use the system voluntarily and receive, process and store e-invoices. The voluntary “entry” into the electronic invoicing system implies the obligation to use this system in the current and following year.

                   E-Invoice Elements

The Law prescribes the elements commonly contained in an e-invoice and these are the elements prescribed by the Value Added Tax Law: company number of a recipient and issuer, bank account data, payment instruction, etc.) The Rulebook on Electronic Invoice Elements, Form and the Method of Submission of Documents Through the Electronic Invoicing System, the Method and Procedure for Entering VAT Calculation Records in the Electronic Invoice System and the Method of the Electronic Invoicing Standard Application has been adopted. Subsequently, the basic elements that shall be contained in an e-invoice are:

• Legal name or short legal name, i.e. name, address, TIN and company number of an electronic invoice issuer
• Business bank account of an electronic invoice issuer
• Legal name or short legal name, i.e. name, address, TIN and company number of an electronic invoice recipient
• Business bank account of an electronic invoice recipient
• Number, date and place of an electronic invoice issuance
• Date of the delivery of goods, i.e. provision of services or advanced payment
• Amount of advanced payment, if any
• Payment instruction
• Information about the type and quantity of delivered goods or the type and scope of provided services
• VAT base
• VAT rate
• The amount of VAT added to the base
• Total electronic invoice amount
• Note related to the provision of the law regulating VAT, based on which VAT was not calculated

                Electronic Invoicing System and Electronic Invoicing Standard

Electronic invoicing system is used for the issuance, submission, reception and storage of e-invoices. The e-invoicing system is defined as an IT solution used to send, receive, record, process and store e-invoices, and managed by a central information intermediary.

E-invoice issuance and reception are performed in accordance with the Serbian electronic invoicing standard (the standard adopted by the national standardization body of Serbia), which is, however, mostly harmonized with the European electronic invoicing standard.

                Entry into Force and Commencement of Application

The Law on Electronic Invoicing was published on April 29, 2021, it entered into force on May 7, 2021, and its application was regulated in the following way:

1. Public sector

– the obligation to issue e-invoices to other public sector entities has been postponed from January 1, 2022 to April 30, 2022

– the obligation to receive and store e-invoices, issued in accordance with the Law, has been postponed from January 1, 2022 to April 30, 2022

– the obligation to enter VAT into the e-invoicing system in electronic form has been postponed from January 1, 2022 to April 30, 2022

– the obligation to issue e-invoices to public sector entities – July 1, 2022

2. Private sector

– the obligation to issue e-invoices to public sector entities has been postponed from January 1, 2022 to April 30, 2022

– the obligation to receive and store e-invoices issued in compliance with the Law – July 1, 2022

– the obligation to issue e-invoices to private sector entities and the fulfilment of other obligations in compliance with the Law – January 1, 2023

                Sending and Receiving International E-Invoices

The electronic invoicing system will enable the reception of e-invoices sent from foreign countries, as well as sending them abroad. The plan is that a central information intermediary, at a certain point, turns into the alleged PEPPOL access point. PEPPOL is an abbreviation for Pan-European Public Procurement – an international network for sending and receiving invoices, which enables its users to send and receive e-invoices within their network. The e-invoicing system users will be allowed to access the alleged PEPPOL access point.

                Private Sector Entities with Foreigners as Their Legal Representatives

The Law on electronic invoicing has not limited this possibility by any provision. Foreign nationals can have and they do have electronic certificate that will enable them to access and work on the eID portal.

                E-Invoice Implementation Goals

Controversies that have been rising since the implementation of the Law on Electronic Invoicing (legal, technical and practical issues) have significantly contributed to the extension of deadlines for the application of this Law. Somewhere behind all the changes and issues arising in every business sphere, including this one, the main reason for the change is lost.

In case of the implementation of the Law on Electronic Invoicing, the goals to be achieved refer to the creation of a legal frame for the harmonization of the Serbian business practice with the EU member countries. The next goal of this law refers to a more efficient control of VAT calculation and collection, thus, the indirect goal is to reduce the possibility of tax evasion.

As a proximate cause of the goals set in this way, it leads to the conclusion that accounting will be significantly automatized, which should partially reduce the amount of routine tasks in the accounting practice. It is assumed that the documentation storage space will also be reduced because the documentation will be stored in electronic form. It remains to be seen in what extent, how, when and if it will take off.