Any supplier to the public sector in Estonia must issue electronic invoices. This was mandated in April 2019 after Estonia’s Act on Amendments to the Accounting Act. The government institutions must also be able to receive and process e-invoices.
E-invoicing in Estonia is not mandatory for B2B but is highly encouraged. Estonia is still working towards mandating e-invoicing for all businesses as the country adopted modern e-invoicing just a few years back.
Despite having a history of e-invoicing that dates back almost 15 years, Estonia has yet to have a platform solely for electronic invoicing. This could be a game changer for the government in monitoring how businesses file their tax returns.
It can also offer businesses multiple advantages, such as minimized costs and increased accuracy.
This post will discuss e-invoicing in Estonia, including who it is mandatory for, its requirements and transmission, and what businesses operating in Estonia need to know and do regarding electronic invoicing.
Is e-invoicing mandatory in Estonia?
Electronic invoicing is mandatory for business-to-government (B2G) transactions in Estonia. Public entities were mandated to accept e-invoices in 2017, while the mandate for government suppliers began in 2019.
After the Act on Amendments to the Accounting Act was passed by the parliament in 2019, it added Estonia to a growing list of Baltic countries operating under Directive 2014/55/EU.
Business-to-business (B2B) e-invoicing is still optional, but businesses are encouraged to use it for its numerous benefits.
Who’s in charge of e-invoicing in Estonia?
The responsibility for electronic invoicing in Estonia lies with the Ministry of Finance and the Tax and Customs Board. The Ministry of Finance supervises the regulations and set of laws for e-invoicing.
On the other hand, the Tax and Customs Board ensures compliance. They must monitor transactions to ensure that businesses using e-invoicing do not evade taxes.
Unlike countries like Spain or France, where e-invoicing is mandatory, Estonia does not have a central hub or platform.
Instead, businesses use e-invoicing networks like PEPPOL and reliable access point providers such as Storecove to ensure compliance.
Businesses conducting transactions with the public administration in Estonia can use the service provider of their choice. However, they must ensure adherence to Estonia’s national standards and the European standard EN 16931, Directive 2014/55/EU.
What is the timeline for e-invoicing implementation in Estonia?
E-invoicing in Estonia began almost 15 years ago. However, the major steps impacting businesses have occurred in recent years.
March 2017
The first significant step toward electronic invoicing was mandating public entities to be able to accept e-invoices and process them.
Businesses conducting transactions with the public sector could optionally use paper invoices if they didn’t have the proper infrastructure.
April 2019
In April 2019, Estonia passed an Act on Amendments to the Accounting Act. This allowed the Ministry of Finance to implement Directive 2014/55/EU, which mandated that public sectors and their suppliers use e-invoicing.
This mandate had two timelines, one for suppliers and another for the suppliers. All public authorities were required to be able to receive e-invoices that comply with the Directive 2014/55/EU.
July 2019
Suppliers to the public sector got more time to comply with the mandate, and their date was set for July 2019. They were required to have appropriate accounting software to generate and transmit electronic invoices as per Directive 2014/55/EU.
Beyond 2025
There was a proposition by the Ministry of Finance of Estonia to amend the Accounting Act to include B2B transactions. The proposal allowed buyers to demand an e-invoice for any transaction with a business.
The invoices should be compliant with EN 16931 format for enhanced accuracy. The proposed amendments are yet to be adopted.
This draft law is expected to be implemented anytime from 2025.
What are the requirements for e-invoicing in Estonia?
For those mandated to use electronic invoicing in Estonia, there are various rules and regulations to adhere to.
Let us discuss the necessary e-invoicing requirements in Estonia:
Format
Every e-invoice issued to the public sector in Estonia must be in the national XML format (EVS 923:2014/AC:2017) or the European UBL 2.1. and UN/CEFACT CII.
Required information
After delivery of goods or services, an invoice must be issued within 7 days and should include the following characteristics:
- Date of issuance
- Identification number
- Supplier value-added tax (VAT) number
- Addresses of the customer and supplier
- Detailed description of the goods or services transacted
- Prices and discount(s), if any
- The date the goods or services were supplied if it is different from the date of invoice issuance
- The total taxable value of the goods or services
- The VAT rate applied, and the full VAT amount
- The net total amount of the transaction
Archiving
The minimum archiving period for electronic invoices in Estonia is 7 years. You should be able to generate soft or hard copies upon request by the Tax and Customs Board, which conducts audits to ensure compliance.
Digital signature
You can include a digital signature when issuing an e-invoice in Estonia, but this is not mandatory.
You may also like: E-invoicing: everything you need to know.
How can I issue a compliant e-invoice in Estonia?
Issuing e-invoices in Estonia is straightforward if you have a reliable network system. You should also have an e-invoicing service provider to ensure your invoice is in the desired format and has all the required information.
We’ll look at the steps to take to issue e-invoices in Estonia using PEPPOL, which has an extensive network system in Estonia.
Step 1: Creating a profile on PEPPOL
The first step is to create a personal profile on the PEPPOL network. You must register your company and fill in the information to make your business an issuer.
Step 2: Choosing a reliable PEPPOL access point provider
PEPPOL allows e-invoice issuers and recipients to choose their desired access point provider.
Recipients, who are public institutions, must be registered with the Center for Registries and Information Systems (RIK), which is managed by the Estonian Ministry of Justice.
The RIK provides an innovative environment for public organizations by managing the infrastructure for delivering e-invoices to registered companies.
Issuers can use a reliable access point provider like Storecove to ensure a seamless invoicing process. They help businesses transmit invoices that meet the country’s standards.
Step 3: Select the recipient
Most public sectors use PEPPOL, the country's most common network. When sending an invoice, you select your recipient from the PEPPOL register.
The register will include all the information you need to fill out the e-invoice about them.
Step 4: Fill in the details and send the invoice
Include all the information listed in the requirements section above and click “Send.” The e-invoice will be transmitted through Storecove’s PEPPOL access point.
Storecove will ensure that your e-invoice is generated in the required format and has the necessary information.
Step 6: Monitor your invoice’s status
The invoice archive section on PEPPOL allows you to monitor the status of your invoice. You can also double-check to see if you entered the correct information.
Read also: How Do I Send a Peppol Invoice?
How can businesses prepare for e-invoicing in Estonia?
Even though e-invoicing is only mandatory for B2G in Estonia, this will likely be the same for B2B.
Here are ways businesses can stay ahead of the curve and prepare for e-invoicing:
Secure reliable invoicing and accounting software
You can use PEPPOL to generate invoices or integrate your current ERP system to create invoices similarly. PEPPOL is mainly responsible for ensuring that your invoice reaches your customer.
A reliable ERP system can make e-invoicing easier and more achievable. Businesses should have accounting software to generate invoices in the national XML format or the European UBL 2.1.
See also: New PEPPOL Standards: Mandatory ISO Certification for All Access Points
Partner with a reputable electronic invoicing service provider
There are many e-invoicing service providers, but finding one that delivers exceptional results and customer care can take time and effort. Storecove, a reliable PEPPOL access point provider, can help transmit compliant electronic invoices in Estonia.
What are the benefits of e-invoicing in Estonia?
E-invoicing is a good innovation in the business world with multiple advantages, which include:
Cost savings and reduced carbon footprint
Electronic invoicing can slash invoicing costs by at least 50%, making it a budget-friendly option for most businesses. It reduces the use of paper, which is costly and time-consuming.
Employees are prone to making mistakes that cannot be corrected when using paper. Instead, they add to the office waste, increasing the carbon footprint.
Faster and hassle-free payment process
After sending an invoice, most systems send a reminder to customers, making payment processes quicker, which is good for any business.
Easy tracking of finances
Some businesses find themselves on the wrong side of the law concerning tax. It is not always intentional and may be attributed to improper record keeping.
Using accounting software that allows you to archive your invoices can help you keep up with your finances better. You can easily know when your business is making commendable profits or losses and determine when and what taxes to pay.
Takeaway: Revolutionize your business with electronic invoicing in Estonia
E-invoicing is inevitable as technology continues to simplify processes and make things easier. It may not yet be mandatory for all companies in Estonia, but there’s a high chance it will be in the next few years.
Businesses in Estonia can prepare for e-invoicing by finding reliable software providers for ideal ERP systems. They can also partner with e-invoicing service providers such as Storecove and start issuing e-invoices despite being optional.
At Storecove, we help you avoid mistakes when sending electronic invoices. Our team of professionals works with you to ensure compliance and successful delivery. Contact us today to get started.
More information about E-Invoicing in Estonia?
Contact us for more information or schedule a consult with one of our e-invoicing experts.
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