E-Invoicing Compliance In Ireland (Explained)

Ireland is among the countries in the European Union expected to adopt electronic invoicing as stated in the 2014 Directive. EInvoicing is the exchange of an electronic invoice document between a buyer and a supplier, and it delivers efficiencies, lowers costs, and improves compliance and business relationships.

An electronic invoice is an invoice that’s processed and transmitted in a structured data format, allowing for automated and electronic processing, as described in Directive 2014/55/EU.

A structured eInvoice has data from the supplier in a computer-readable format. You can instantly import it into the buyer's Account Payable (AP) system without entering it manually.

Ireland has chosen PEPPOL (Pan European Public Procurement Online) as the delivery method of e-invoices to the public sector. It is an 'eDelivery' network for transmitting public procurement documents and is broadly supported across eighteen nations in Europe.

PEPPOL lets suppliers “connect once and connect to all” businesses and public administrations across Europe on this network.

But how does eInvoicing work in Ireland? And are there benefits of making the switch for your business?

This article will explore:

  • What is e-invoicing in Ireland?
  • Is e-invoicing mandatory for all?
  • What are the e-invoicing standards in Ireland?
  • How to send and receive compliant e-invoices in Ireland
  • How Ireland ensures e-invoicing compliance
  • How to get started on eInvoicing in Ireland

Let’s dive in!

What is e-invoicing in Ireland?

EInvoicing is a digital solution enabling public sector companies and contractors to receive and process electronic invoices based on the European standard. Ireland adopted eInvoicing in 2020, hoping to enjoy lower costs, faster payments, improved business to Government (B2G) eProcurement, and facilitate cross-border trade.

The European Commission in 2010 set a goal for e-invoicing to be the primary method of invoicing within the European Union (EU) by 2020.

Directive 2014/55/EU1 on eInvoicing states that paper and electronic invoices are similar, and both guarantee the credibility of origin and issue date until in custody of the recipient.

The EU endorsed the Directive on eInvoicing in public procurement on April 16, 2014.

The objective was that once the Directive has been switched into the laws of EU nations, eInvoices will easily flow across the EU.

The Official Journal of the European Union mandated the Directive on e-invoicing in public procurement in May, adding that member states, including Ireland, had until November 2018 to adopt eInvoicing.

The demand for eInvoicing has further risen due to the Covid19 crisis.

Cash-strapped economies needed a boost for their budgets and, VAT is among the most critical sources of tax revenue for governments. However, statistics find a huge VAT gap estimated at roughly EUR 164 billion across the European Union. So, countries have advocated for digitalization to lower the lost VAT revenues.

Ireland is among the countries modernizing VAT reporting systems to prevent VAT avoidance/evasion, and heighten compliance and, as a result, increase their VAT revenues.

So, adopting eInvoicing alongside approaches, including Real-Time reporting (RTR) and Standard Audit File for Tax (SAF-T), has become a focus for many EU nations.

By 2020, Ireland, among other EU states, should have finalized switching to the so-called 'e-invoicing Directive' (2014/55/EU).

The benefits of eInvoicing for the Government and businesses include:

  • Reducing costs: Since eInvoicing is an automated invoicing tool, it lowers operational services and processing costs. Also, less time is spent by staff on time-consuming manual procedures with physical files, lower system development, and training costs.
  • Achieve faster payment: Because you no longer have to read and enter information manually, eInvoicing reduces administrative burdens and time-to-payment for invoices.
  • Improving B2G eProcurement: eInvoicing helps organizations manage their contracts in any EU nation, making public procurement businesses more presentable for everyone.
  • Facilitates cross-border trade: The automated and timely processing of organizations' invoices in the EU eases cross-border trade operations between nations.
  • Accurate, complete data: E-invoicing, together with systemic automated audit, lessens data-entry errors.
  • Security controls: Lets businesses set up and manage systems tightly.
  • Improved traceability: The invoicing system controls inbound data.
  • Tax compliance. EInvoicing strictly adheres to all European Union directives.

Is e-invoicing mandatory for all?

Public bodies must make the necessary provisions to ensure they adhere to the obligations stated in the Directive. However, it still isn't compulsory to submit eInvoices to public bodies in Ireland at this stage.

Irish public bodies were expected to be able ‘to receive and process eInvoices by April 18, 2019, but the sub-central Government offered the alternative to postpone until April 2020. To date, 85% of Central Government bodies are eInvoicing enabled.

This Directive applies to invoices linked to 'contracts' above European Union thresholds.

However, contracts proclaimed secret or those accompanied by special security measures are exempted.

So, all public administration bodies and local authorities in Ireland have to be able to send & receive eInvoices.

Still, suppliers aren't required to send electronic invoices in the country under this Directive.

What are the e-invoicing standards in Ireland?

The Irish Government has put in place several standards to ensure that eInvoicing goes smoothly, including a format, platform, and archive details. The country has chosen PEPPOL, which lets e-invoices be exchanged according to European standards. The union-wide project PEPPOL lets international corporations use standardized and electronic procurement processes.

The Irish format is PEPPOL BIS. However, the public administrations have established their own CIUS-CEFACT format. You can exchange documents by accessing the OpenPEPPOL network through access points.

Also, you're expected to retain all books, documents, and records relevant to your business for six years.

However, maintaining certain records is subject to particular time frames. In cases where someone waived exemption from VAT on property letting, you must keep all records connected to those lettings for six years following waiver cancellation.

Where someone makes a claim under VAT legislation or appeals to the Appeal Commissioner, records relevant to the matter must be kept for six years or until the matter in question is completed.

How to send and receive compliant e-invoices in Ireland

From the moment an invoice is created until archived, it must pass through several processes and steps. The procedures and automation levels may vary significantly between sectors, regions, and entities, but eight universally valid steps are followed.

The overview below shows how to send and receive a digital invoice that complies with the European standards on eInvoicing.

Still, you'll have to first connect your business to an accredited Peppol Access Point provider like Storecove.

Here's how to go about it:

  • Seller prepares the eInvoice. This step involves compiling information, including a list of items, person-hours, usage of services, etc. - any information needed to issue an invoice.
  • Seller issues the eInvoice, which is created in their ERP system then exported into the appropriate format.
  • Seller sends the eInvoice through the Peppol Access Point. Buyer receives the invoice, correctly identifies it, and assigns it to the relevant internal process.
  • Buyer approves the invoice after reviewing it to confirm that it matches the prices and quantities ordered and received.
  • Buyer books invoice into accounts- The necessary information from the eInvoice is automatically entered into the accounting system(s) and assigned the relevant accounting keys.
  • Buyer schedules payment- Payment is scheduled based on contracted terms or payment information detailed in the invoice.
  • Buyer archives the invoice for later retrieval.

How Ireland ensures e-invoicing compliance

When your company wants to access services and solutions to enable standard compliance with the eInvoicing Directive, there are five main elements you ought to select.

The items necessary for basic, minimum eInvoicing compliance, which you will need to choose on the NASF (Notification to Activate Services Form), include:

  • EDocument Management Portal account (Yearly Fixed Cost - up to 10,000 invoices included annually)
  • Set-up Framework Client particular PEPPOL AP and SMP services (one-off setup charge)
  • PEPPOL and SMP Services (Yearly fee)
  • Registering SMP as PEPPOL receiver (Yearly fee)
  • Service Operation Management (Yearly fee).

How to get started on eInvoicing in Ireland

Ireland is slowly switching to eInvoicing as guided by the EU directive, which requires all public entities to use eInvoicing by 2020. EInvoicing offers many benefits. So, the time to adopt eInvoicing for your business is now.

Designed to adapt to your company's needs and changing regulations, Storecove is a trusted Peppol access point provider that will adapt as eInvoicing evolves.

More information on Peppol in Ireland?

Contact us for more information or request a demo with one of our e-invoicing experts.

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