E-invoicing in Estonia – mandatory in dealings between public and private sector

Estonian Parliament adopted already in 15.12.2016 amendments to the Estonian Accounting Act in order to introduce E-invoicing with the aim to promote and to develop further real-time economy in Estonia. For example paper and PDF invoices are expensive, time-consuming to process and require a lot of extra work. Therefore, the aim of the Estonian real-time economy is to show that today's businesses, governments and citizens can save time and money by replacing paper-based economic and administrative transactions with automated data exchange.

The aim is to bring about a structural change in the business environment and in relations with the state, so that business administration and management activities are transformed into back-office activities, significantly reducing the administrative burden on businesses.

E-invoicing as mandatory in dealings between public and private sector

As a result of amendments to Estonian Accounting Act, from 1st of July 2019 , invoices to the public sector can only be sent in e-invoices.

A public sector entity to which e-invoices are to be sent from 1st of July 2019 onwards is defined as the state and a public authority, a local government unit and a local government unit body, other legal persons governed by public law, and foundations, non-profit associations and companies under the direct or indirect control of the above mentioned public sectors. For ease to understand which entities are public entities, the national register "Register of e-invoice recipients" has been established and it contains all organizations accepting e-invoices. The register is part of Estonian Commercial Register and is accessible at https://ariregister.rik.ee/eng.

Standard for e-invoices and their creation

E-invoice is not an invoice which is save pdf format and sent via email. E—invoice is a machine-readable document, based on a common standard, which is sent from one software system to another in order to avoid manual data entry for invoice payment. E-invoice must meet official standard which in Estonia is EVS 923:2014/AC:2017 (Estonian Standards Centre).

E-invoices can be created through ERP systems. For most companies the accounting software is ERP system and all relevant accounting software in use in Estonia, offer e-invoicing. Additionally, Estonian commercial register system offers “e-Financials system” for small and starting businesses by providing web-based accounting software (accessible at https://www.rik.ee/en/e-financials ). E-Financials system enable also to create e-invoices.

Conclusion

Estonia has successfully introduced since 2019 an e-invoice system whereby invoicing to public entities must be done through e-invoices. Further real-time economy development trend is to promote the use of e-invoices also in B2B transactions.

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E-invoicing in Estonia – mandatory in dealings between public and private sector

E-invoicing as mandatory in dealings between public and private sector

Standard for e-invoices and their creation

Conclusion

CONTACT