Sweden Begins e-Invoicing and Digital VAT Initiative
The Swedish Tax Agency (Skatteverket) is now assessing three different models to comply with the requirements for electronic VAT (DRR) that has been proposed by the European Commision (EC) in order to develop a system that will work in synch with the digital VAT requirements of the 27 member states.
During 2022, the Skatterverket will continue to consult the following three models:
- Standard Tax Audit File (SAF-T) or VAT notification (PTC approach).
- Real-time transaction reporting. For example, SII in Spain or RTIR in Hungary (CTC approach).
- E-invoicing: real-time pre-authorization of invoices by the Administration. For example, in Italy, Poland or France.
As these models are currently being consulted, the Swedish Tax Agency is expected to make a decision in late 2022 or early 2023, with a roll-out in 2024 for companies to comply with these new requirements.
Sweden aims to mandate e-Invoicing
As governments around the world seek to close the VAT gap (lost tax collections), many are turning to mandatory live transaction-based reporting or Continuous Transaction Controls (CTC).
This process comes in various forms, including electronic invoices or transaction listing reports. Most countries are implementing validation checks and cross-check to customer records before invoices are issued in real-time
The trend started in South America, with pioneers such as Chile and Mexico, and is now spreading to Europe and Asia. The EU is evaluating its own version of digital reporting requirements.
However, there is a wide variety of standards in member countries, because many countries have launched their own systems, which presents significant challenges for interoperability.
Therefore, the European Commission is seeking harmonization following its work on the standardization of the core e-invoice.
The European Commission seeks to regulate VAT reporting
The European Commission is seeking to harmonize the different Continuous Transaction Controls (CTC) digital options for VAT e-invoicing and real-time reporting.
To this end, it has initiated a review to introduce harmonized digital reporting requirements (DRR), formerly known as "transaction-based reporting", in all 27 member states.
The review includes a public consultation launched in January 2022, the outcome of which will be considered when making amendments to the VAT Directive before the end of 2022.
The objective of the DRR review is to understand what data could be collected and shared between tax authorities to produce reliable live transaction data, with the aim of detecting VAT fraud.
The EC expects to issue the VAT Directive amending legislation by the end of 2022, and it could be implemented in 2024.
E-invoicing in Sweden
E-invoicing in Sweden has been implemented since 2008, since the Swedish National Financial Management Authority (Ekonomistyrningsverket / ESV) made it mandatory for Swedish central government suppliers.
The requirement is regulated by two ordinances: the Ordinance dealing with authorities' accounting (Förordning (2000: 606) om myndigheters bokföring §21f) and the exchange of electronic information from state authorities (Förordning (2003: 770) om statliga myndigheters elektroniska informationsutbyte § 3).
In these publications, the three formats of electronic invoices accepted by the state agency are indicated:
- PEPPOL BIS
- SFTI Fulltextfaktur
Since then, the Swedish e-invoicing system has been evolving.
In November 2018, Sweden began requiring all suppliers exchanging e-invoices with the central government to use the PEPPOL network.
In 2019, this obligation was extended to regional and municipal public suppliers as indicated by the European Public Procurement Directive.
This directive, approved in June 2018, requires all state suppliers, whether central, regional, or local, to send their invoices in electronic format.
The aim is to promote the use of PEPPOL as an exchange network and to standardize the invoice format to PEPPOL BIS INVOICE 3.0.
Currently, Swedish regulations require government agencies that, in addition to being able to receive electronic invoices, they can also send invoices via the PEPPOL network to other public entities.
In addition to electronic invoicing, they can also exchange electronic orders and catalogs via the PEPPOL network.
The mandatory requirements are reviewed by DIGG (Myndigheten för digital förvaltning), which is responsible for the digitization of public administration processes.