EUROPEAN COMMISSION Brussels, 10.2.2020 SWD(2020) 29 final COMMISSION STAFF WORKING DOCUMENT EVALUATION Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL assessing the invoicing rules of Directive 2006/112/EC on the common system of value added tax {COM(2020) 47 final}



Table of contents 1. Introduction 1.1. Purpose and scope 2. Background to the intervention 2.1. Description of the intervention and its objectives 2.2. Baseline and points of comparison 3. Implementation / state of Play 3.1. Description of the current situation 3.1.1. e-Invoicing 3.1.2. Invoicing issuance and content 3.1.3. Other provisions 3.1.4. Archiving 4. Method 4.1. Short description of methodology 4.2. Data collection activities

4.2.1. Legal mapping exercise 4.2.2. Business survey 4.2.3. Targeted consultations 4.2.4. The Public Consultation 5. Analysis and answers to the evaluation questions 5.1 Relevance 5.1.1 The opinion of the stakeholders on the objectives of the Directive 5.1.2 E-invoicing rules: positive impacts and challenges 5.1.3 Invoicing rules 5.1.4 Specific invoicing regimes 5.1.5 Other issues analysed 5.2 Effectiveness 5.2.1 The uptake of e-invoicing 5.2.2 The reduction of administrative burdens on businesses 5.2.3 Functioning of the Internal Market 5.2.4 SME promotion 5.2.5 Tax control and VAT fraud 5.3 Efficiency 5.3.1 The change in the administrative burdens generated by the provisions on e-invoicing 5.3.2 Administrative burdens and savings

5.3.3 Regulatory costs and costs savings 5.4 Coherence 5.4.1 Coherence with other pieces of EU legislation 5.4.2 Coherence with other EU initiatives in the field of invoicing 5.4.3 Coherence with other EU strategies 5.5 EU added value 5.5.1 Simplification of e-invoicing and invoicing rules 5.5.2 Reduction of regulatory fragmentation 5.5.3 Increased uptake of cash accounting 6. Conclusion 6.1 The achievements of the Directive 6.2 Other issues Annex 1: Procedural information Annex 2: Stakeholder consultation 1. Familiarisation interviews 2. Targeted consultation in fieldwork Member States 3. Targeted Consultation – E-mail survey of Tax Authorities 4. Targeted Consultation – E-mail survey of VAT Practitioners 5. A public consultation addressed to all stakeholders and members of the public Annex 3: Methods and analytical models

Application of the Standard Cost Model Annex 4: Invoicing issuance and content – implementation by Member States Annex 5: Cash accounting scheme – implementation by Member States Annex 6: Archiving – situation in the Member States Annex 7: Evaluation matrix Glossary BAU Business-As-Usual BCAT Business Controls that create a reliable Audit Trail Bn Billion B2B Business-to-Business B2C Business-to-Customer B2G Business-to-Government DG TAXUD Directorate General for Taxation and Customs Union EC European Commission ECB European Central Bank EDI Electronic Data Interchange eIDAS electronic IDentification, Authentication and trust Services EMSFEI European Multi-Stakeholder Forum on Electronic Invoicing EO Economic Operator ERP Enterprise Resource Planning EU European Union EUR Euro GDPR General Data Protection Regulation IO Issuance of an Invoice I&A Integrity and Authenticity MNC Multinational Corporation MS Member State(s) MTIC Missing Trader Intra Community OCR Optical Character Recognition OECD Organisation for Economic Co-operation and Development PC Public Consultation PDF Portable Document Format PI Private Individuals p.p. Percentage Points QES Qualified Electronic Signature SID Second Invoicing Directive (Directive 2010/45/EU) SME Small and Medium-sized Enterprise SP Service Provider TA Tax Authority VAT Value Added Tax VTTL VAT Total Tax Liability VP VAT Practitioner XML Extensible Markup Language 1.Introduction 1.1.Purpose and scope This Staff Working Document sets out the results of the evaluation of the invoicing rules laid down in Directive 2006/112/EC ('the VAT Directive'). Article 237 of this Directive requires the Commission to present an overall assessment report, based on an independent economic study, on the impact of the invoicing rules introduced by Directive 2010/45/EU ('Second Invoicing Directive') and applicable since 1 January 2013, notably the extent to which they have effectively led to a decrease in administrative burdens for businesses. To prepare the above report, the Commission launched a study to evaluate the invoicing rules assessing the functioning and impact for businesses and tax administrations of the current invoicing rules introduced by the Second Invoicing Directive. The conclusions of this evaluation will allow the Commission to assess the need to amend the current invoicing rules included in the Value Added Tax (VAT) Directive. The evaluation covers five evaluation criteria: i) relevance, ii) effectiveness, iii) efficiency, iv) coherence and v) EU added value. The evaluation covers the period from 1 January 2013 (i.e. the transposition date of the Second Invoicing Directive) until mid-2018. From a geographical point of view, the evaluation covers all 28 Member States (MS). The complementary in-depth interview programme was conducted face-to-face in a representative sample of seven Member States being Germany, France, Italy, the Netherlands, Poland, Portugal and Romania and the findings were extrapolated in order to draw conclusions applicable to the whole European Union (EU). 2.Background to the intervention 2.1.Description of the intervention and its objectives Directive 2010/45/EU, amending Directive 2006/112/EC on the common system of value added tax as regards the rules on invoicing (Second Invoicing Directive) aiming at addressing the shortcomings of the First Invoicing Directive entered into force on 11 August 2010 and its provisions had to be transposed by the Member States by 31 December 2012. The Intervention Logic in figure 1 illustrates how the provisions of the Second Invoicing Directive (SID) should achieve their policy objectives. Figure 1 – Intervention Logic of the Second Invoicing Directive

As depicted above, the SID aimed at contributing to four general policy objectives (impacts): 1.The reduction of the administrative burdens on businesses. A number of revisions of the VAT invoicing provisions aimed at simplifying the invoicing rules thus reducing the administrative burdens of businesses; 2.The reduction of VAT fraud. A part of this impact is also linked to the functioning of invoicing rules, such as the underreporting of the VAT via false or irregular invoices, the claims of excessive deductions, or the so-called carrousel or Missing Trader Intra Community (MTIC) fraud schemes; 3.The improved functioning of the Internal Market. The SID seeks to remove the regulatory barriers to cross-border transactions due to the invoicing rules and their application across the EU; 4.SME promotion. The SID introduces targeted simplifications and fosters the adoption of favourable tax regimes such as the cash accounting scheme and e-invoicing. The SID includes a set of specific objectives (outcomes) which should contribute to the general objectives, as follows: -Directly, for example, by reducing the costs borne by businesses to comply with legal obligations and lowering the regulatory barriers faced by cross-border trade; -Indirectly, for example, by fostering i) the adoption of specific invoicing regimes and thus lowering the administrative burdens on businesses, in particular the SMEs; and ii) the increase of e-invoicing uptake for both domestic and cross-border transactions; -The SID aimed at achieving other specific objectives such as a higher uptake of the cash-accounting scheme, a measure designed to support SMEs, and the improvement of tax controls for intra-EU supplies by shortening the delays between the economic transaction and its VAT chargeability. For the purpose of the assessment, the changes introduced by the SID, being the activities and outputs in the Intervention Logic, are grouped as follows: 1) changes to the content of standard invoices and other invoice requirements, which support the simplification objective; 2) new provisions on cross-border invoices and the limitations of national discretionary powers on invoicing regimes, to achieve a reduction of the regulatory fragmentation; 3) removal of mandatory technological requirements and the introduction of the equal treatment of paper-based and electronic invoices, which foster the increase of the e-invoicing uptake; 4) introduction of the option to require deductibility on a cash basis, which is expected to increase the attractiveness of the cash accounting scheme for the Member States. A number of factors that can influence the achievement of the general and specific objectives of SID were analysed. These factors have been grouped in five categories: 1)The business resistance to changes. This has a potential to limit or delay the adoption of new and simpler invoice regimes and processes. 2)The stakeholders’ limited return from change. For instance, for some SMEs the return on investment from shifting to e-invoicing may be negative given the limited benefits attainable due to the small volume of invoices exchanged. Similarly, the potential negative effects of cash-accounting – stemming from the more burdensome accounting procedures – may well reduce its attractiveness for economic operators; 3)The national VAT legislation. Existing divergent national requirements in areas not covered by the SID may still lead to uncertainty and add complexity for economic operators. For instance, different national storage rules may still represent a barrier towards the e-invoicing adoption. 4)The adjacent national/EU legislation and policies. Reporting requirements, archiving rules and law enforcement practices largely remain a matter of national law. The consequent cross-country differences may negatively affect the performance of the Directive. 5)The maturity of the IT sector. The capacity to supply secure and interoperable e-invoicing solutions and services at reasonable costs influences the likelihood of economic operators (especially SMEs) to adopt IT solutions. 2.2.Baseline and points of comparison

Before the SID entered into force, the invoicing rules of the VAT Directive included a large number of optional provisions allowing Member States to maintain and apply their national rules. An evaluation study published in November 2008, supported by a public consultation, highlighted that these different options were considered the biggest burden. This was especially highlighted for cross-border situations since it meant that businesses might have to comply with different requirements for the same transaction. The rules included in the VAT Directive with regard to e-invoicing were considered a hurdle to the development of e-invoicing. The lack of a uniform definition of an e-invoice (i.e. the equal treatment of paper and e-invoices) as well as of technical neutrality was hampering the use of e-invoicing. The SID addressed a number of the above issues and introduced a number of changes to the VAT Directive in the following areas: 1)Invoice issuance and content. The largest group of provisions being rules on when, by whom, and how a standard VAT invoice is to be issued, rules applicable to specific invoicing regimes (i.e. summary, simplified, or self-billing invoices), and rules applicable to invoices for cross-border transactions; 2)e-Invoicing. A small group of provisions amended under Section 5 (renamed ‘Paper invoices and electronic invoices’), of the Chapter 3 on invoicing; 3)Cash accounting and other provisions. A residual group, included (i) rules on cash accounting; (ii) rules on the chargeability, deductibility, and payment of VAT; and (iii) rules on the treatment and registration of transfer of goods for valuation purposes. 3.Implementation / state of Play 3.1.Description of the current situation This section presents the analysis of how the SID has been transposed and implemented by the Member States, focusing on whether Member States have correctly transposed the Directive but also measuring the extent to which the national legal framework changed because of the Directive. For the sake of clarity, the analysis is grouped in four thematic areas. 3.1.1.e-Invoicing A number of consequences derives from the SID with regards to the e-invoicing rules, in particular i) on the e-invoice definition, ii) on the technological neutrality and iii) on the equal treatment of paper and e-invoices. The SID modified the definition of e-invoice as ‘an invoice that contains the information required in this Directive, and which has been issued and received in any electronic form’ (Article 217). As further clarified in the Explanatory Notes , the Directive does not prescribe any specific electronic form, and thus includes ‘invoices as structured messages (such as XML, Extensible Markup Language) or other types of electronic formats (such as an email with a PDF (Portable Document Format) attachment or a fax received in electronic not paper format)’. Currently, in all Member States but Bulgaria, the VAT national legislation provides for a definition of an e-invoice. In 24 Member States, the e-invoice definition in the national legislation mirrors the one of the Directive. In a minority of cases, it is enriched with examples of acceptable electronic formats, encompassing both structured and unstructured messages . Three Member States introduced an e-invoice definition somewhat diverging from the Directive. The SID provided for the technological neutrality of e-invoicing solutions by establishing that the taxable person can determine ‘the way’ to ensure Integrity and Authenticity (I&A) of e-invoices (Article 233). The Directive provides only examples of approaches to ensure I&A, namely: (i) technological solutions integrated by controlled data exchanges, i.e. Electronic Data Interchange (EDI), (ii) technological solutions integrated by data level controls, i.e. Qualified Electronic Signature (QES), and (iii) ‘Business Controls that create a reliable Audit Trail’ (BCAT) between the invoice and the corresponding supply of goods or services. The technological neutrality principle has been uniformly transposed in the EU, as no Member State establishes the use of particular technologies for e-invoicing. Different technological solutions listed in the Directive are also explicitly mentioned as available options in the amended national VAT legislation, in the secondary regulations and in other administrative documents (circulars) of the majority of Member States. As illustrated on figure 1, in most of Member States (24), any means for ensuring I&A of e-invoices is currently accepted without further conditions. Still, in three of these countries, the adoption of a solution different from the one mentioned in the national legislation requires a prior consultation and validation (Cyprus and Spain) or a notification (Ireland) of the proposed method by the tax authority. In the other four Member States (i.e. Czech Republic, France, Hungary and Portugal), the use of a solution to ensure e-invoice I&A different from those specified in the ‘closed’ list foreseen in the national legislation is not accepted . Thus, the proper transposition of the freedom of evidence principle in the amended VAT legislations is somewhat questionable. However, the inclusion of the BCAT option in these lists, in practice, allows using any technology that taxpayers may consider appropriate to automate their invoicing process. . Legend: MS with a closed list of methods to guarantee e-invoice I&A MS that fully transposed the ‘freedom of evidence’ principle MS that impose conditions to the use of ‘other means’ Non-EU MS Source: Study on the evaluation of invoicing rules of Directive 2006/112/EC. Legislative requirements on e-invoices beyond those that exist for paper invoices were removed in all Member States which had imposed them. Prior the transposition of the Directive, four Member States – Cyprus, Ireland, France, and the Netherlands – imposed on taxpayers some sort of prior notification to the tax authority in order to be allowed to issue e-invoices. All these legal requirements have been removed, in line with the principle that tax authorities should allow a taxable person the choice between issuing paper or e-invoices. 3.1.2.Invoicing issuance and content The SID introduced a significant number of changes to the issuing of invoices and their content. For clarity reasons, these changes were classified into three areas: i) standard invoices ii) specific invoicing regimes iii) cross-border provisions.

The Directive's provisions on invoice issuance and content were very well transposed in national legislation. As shown in the table in Annex 4, no Member State was identified as non-compliant for 12 out of 15 indicators, while, in two other cases, only two discrepancies in transposing the EU provisions were identified in the national legal framework. The changes at national level and the implementation of optional provisions are described and illustrated in more detail in Annex 4. Standard invoices The SID adds or simplifies some clauses to be included on standard invoices (Article 226). Specific invoicing regimes The Directive amends three specific invoicing regimes, and namely the rules on: (i) self-billing; (ii) simplified invoices; and (iii) summary invoices. More specifically: ·Self-billing invoice (Article 224): The Directive removes the possibility for Member States to impose further conditions on the prior agreement and the acceptance procedure for the issuance of self-billing invoices. ·Simplified invoice (Articles 220a, 226b and 238): Prior to the SID this regime was optional for Member States. The new Article 220a requires all Member States to allow simplified invoices when (i) the amount of the transaction is lower than EUR 100; and (ii) for documents or messages treated as an invoice. Article 238 grants Member States the possibility to extend this regime for transactions up to EUR 400 or to specific business sectors. ·Summary invoice (Article 223): Prior to the SID, Article 223 allowed the Member States in which the transaction took place to impose its own national conditions on the use of summary invoices. The SID (i) removes the possibility to add national conditions; (ii) provides that summary invoices can cover at least one month of transactions; and (iii) allows Member States to extend the period that can be covered by summary invoices. Cross-border provisions The SID introduces a number of changes to the invoicing requirements applicable to cross-border transactions, in view of reducing burdens and increasing harmonisation. ·Applicable rules (Article 219a): The SID adds a new article clarifying which jurisdiction determines the invoicing rules for cross-border transactions. Article 219a states that the applicable national invoicing rules – except for those related to storage – follow the determination of the place of supply. However, the supplier's own national invoicing rules apply, regardless of the place of transaction, to cross-border supplies when the customer is liable for the payment of the VAT. ·Time of issuance (Article 222): the Directive mandates a single time limit to issue invoices for certain cross-border transactions. For other transactions, Member States remain free to impose any time limit for the issuance of invoices. ·Content of cross-border invoices: the content of cross-border invoices is modified by the SID. According to the new Article 226a, when the Member State of establishment of the supplier is not the same one in which the VAT is due and the customer is liable for paying the VAT, information on the VAT rate and VAT amount payable can be omitted from the invoice. Article 230 prescribes that the amount of the VAT payable or to be adjusted is expressed in the currency of the Member State in which the tax is due. The SID also adds another conversion method to express the VAT amount in the appropriate currency in Article 91 of the VAT Directive, i.e. the reference to the latest European Central Bank (ECB) exchange rate. The Directive removes the possibility for Member States to introduce a general requirement for the translation of invoices, by repealing Article 231. ·Invoice for payment on accounts on intra-EU supplies (Article 220(1)(4)): the SID removed the obligation for Member States to require an invoice in case of payment on accounts received before an intra-EU supply of good (a VAT exempt transaction) is carried out. At the same time Member States remain free to require an invoice for these transactions, based on Article 221(1). Attribution of legal changes and prioritisation of provisions The SID caused a number of changes in the national invoicing legislations. Some of the changes were mandated by the Directive, other changes were optional for Member States and some other changes were introduced by the Member States as additional simplifications and thus not foreseen by the Directive. The SID worked in some cases as a trigger to review the overall invoicing framework. In all cases, the extent of the changes caused depends on how previous national legislation was framed and thus the Directive had an uneven impact on the national legal frameworks. As described in more detail in Annex 4, for three provisions, most of national legislations were already in line with the SID since changes in legislation occurred in less than ten Member States. These include the requirements to translate all invoices, the removal of the duty for providers of financial services to issue an invoice for intra-EU transactions, and the changes to the regime of summary invoicing. For four of the SID provisions, the changes in domestic legislation affected between 10 to 19 Member States depending on the provision. These include changes to the self-billing regime and a number of cross-border provisions. Finally, for three further provisions, the changes concern 20 Member States or more. These relate to the case of simplified invoices and the time limits for invoicing intra-EU transactions, or even the whole EU regarding the modification of the clauses to be mentioned on standard invoices. Prioritisation of provisions in the area of invoicing issuance and content The provisions in the area of invoicing issuance and content were prioritised based on the extent of legal change (i.e. the number of Member States in which they caused a changed to the national framework) and the local VAT practitioners’ perception of whether they had affected the behaviour of companies. This was necessary to determine which of the provisions had to be subject to a more thorough assessment. Provision (and Article) Prioritisation Applicable jurisdiction – Article 219a Substantive Issuance - Insurance and financial services – Articles 220.2, 221.2 Minor Invoice on payments on accounts for intra-EU supplies – Article 220.1.4 Minor Simplified Invoice – Articles 220a, 226b, 238 Substantive Timing – Article 222 Substantive Summary Invoice – Article 223 Minor Self-billing – Article 224 Substantive Content - Standard Invoices – Article 226 Minor Content - cross-border supply with reverse charge – Article 226a Minor Currency conversion – Articles 91, 230 Minor Translation – Article 248a Negligible Source: Study on the evaluation of invoicing rules of Directive 2006/112/EC , January 2019

3.1.3.Other provisions Cash accounting The Second Invoicing Directive introduced one specific change targeting SMEs. The new Article 167a grants Member States the possibility to introduce the so-called ‘combined cash accounting’ for certain micro-enterprises, i.e. a regime through which both VAT payment and deduction are linked to, respectively, receiving and paying the price of the supplies. The analysis of the transposition of the cash accounting provision shows no discrepancies between EU prescriptions and national legal frameworks. The implementation at national level is shown in annex 5. VAT chargeability The SID introduced two changes concerning the rules for the intra-Community supply and acquisition of goods, with the aim of fighting cross-border VAT fraud: 1) the Directive amended Articles 66, 67 and 69 and aligned the chargeability of intra-EU supplies and acquisitions of goods, which is now set upon issuance of the invoice, or no later than the 15th day of the month following the taxable event, 2) it introduced more stringent rules for the intra-EU continuous supplies of goods (Article 64), which became chargeable at the end of each calendar month. With respect to the chargeability of intra-EU supplies and acquisition of goods, the situation of the national legislations prior to the SID was rather homogeneous. A majority of Member States already had foreseen that the VAT chargeability date was set each month no later than the 15th of the month following the chargeable event, or upon issuance of the invoice. Currently, all Member States have converged towards the common date of chargeability provided for by Articles 67 and 69. Regarding the chargeability of intra-EU continuous supplies of goods, in the majority of Member States (15), the practice was similar to the current SID provisions. In eight Member States, the chargeability of VAT coincided with the dispatch or arrival of the goods, so that there was no specific provision at all for continuous supplies. Finally, in three Member States, the VAT chargeability was linked to the receipt of the price (or at the end of the year if the price was not paid), while, in one Member State, it took place at the end of the tax reporting period. The situation has now been harmonised. 3.1.4.Archiving The provisions on the archiving of invoices were not amended by the SID. Since different archiving rules and e-invoicing storage requirements could represent a barrier for the uptake of the e-invoice and an obstacle for cross-border trade, their current status of implementation has been assessed. Regarding the storage period, Member States are free to determine the period of storage (Article 247(1)) which varies from 4 to 10 years with the majority of countries opting from 5 to 7 years (detailed overview can be found in figure 1 of Annex 6). On the place of storage, Article 245 establishes the freedom to store invoices abroad, however, Member States may impose additional requirements. Detailed overview of the implementation including the additional requirements is included in figure 2 of Annex 6. Following Article 247(2) Member States may require that invoices be stored in the original form in which they were sent. Such restriction is imposed currently only by three Member States. Other Member States allow the conversion, although some Member States only allow the conversion from paper invoices to electronic ones (a detailed overview of the situation regarding the storage form is included in figure 3 of Annex 6). 4.Method 4.1.Short description of methodology The evaluation was supported by the external study and based on a set of evaluation questions, connected to the five evaluation criteria defined by the Commission Better Regulation Guidelines, namely (i) relevance; (ii) effectiveness; (iii) efficiency; (iv) coherence; and (v) EU added value. The Standard Cost Model (SCM) was used in order to quantify the administrative costs and costs savings. The detailed description of the application of the model is included in Annex 3. 4.2.Data collection activities A number of data collection activities took place to support and underpin the evaluation. The full range of information regarding the different activities can be found in Annex 2. 4.2.1.Legal mapping exercise The legal mapping exercise undertaken by the external consultant consisted of a review of the national legal frameworks on VAT invoicing rules in order to: (i) assess the status of transposition; (ii) examine the main differences in interpretation and application of invoicing rules across Member States; and (iii) assess the extent of the legal change in each country. To achieve these aims, this fact-finding activity gathered accurate information on how the 28 Member States have implemented the Directive and on the relevant national norms prior to its adoption. 4.2.2.Business survey The business survey aimed at collecting information necessary to evaluate the uptake of the e-invoicing. The business survey covered 250 respondents in each of the eight countries and resulted in over 2 000 completed questionnaires which were subsequently analysed. More details on the business survey are included in Annex 2.

4.2.3.Targeted consultations Targeted consultations aimed at gathering information and opinions on the invoicing rules from a vast range of private and public stakeholders. In total, 202 stakeholders participated in the targeted consultation. Economic operators represent the most important category with 83 stakeholders, followed by business federations and tax authorities. From a geographical perspective, stakeholders from 26 Member States participated in the consultations, thus ensuring a very comprehensive coverage. The consultations also covered 13 EU-level organisations, and 7 multi-national companies. The process of targeted consultations is described in detail in Annex 2. 4.2.4.The Public Consultation The Public Consultation was carried out in order to gather the appreciation of stakeholders and citizens on the working of the Directive and the possible need for revisions. A total of 175 valid responses were received from 23 Member States. The majority of respondents (113) answered the public consultation in their professional capacity, while 62 private individuals participated in their personal capacity. More details about the public consultation can be found in Annex 2. 5.Analysis and answers to the evaluation questions This section provides the assessment and answers to the five evaluation criteria. A more compact overview of the assessment of evaluation criteria is included in table in Annex 7. 5.1Relevance This sub-section provides an overview on the relevance of Directive 2010/45/EU. 5.1.1The opinion of the stakeholders on the objectives of the Directive During the targeted and public consultation stakeholders were asked to assess the importance of the objectives of the Directive (see Section 2.1 above) together with a fifth possible objective, that is legal certainty. All the Directive policy objectives are said to be important or highly important by a large majority of stakeholders (no less than 69%). The public consultation showed that stakeholders consider the establishment of clear invoicing rules (legal certainty), and the reduction of differences in invoicing rules across EU countries (harmonisation) as top priorities. The responses by tax authorities and business stakeholders about these two goals are largely homogeneous. 5.1.2E-invoicing rules: positive impacts and challenges The review of the national legal frameworks on e-invoicing points out that both the fragmentation and the complexity have largely decreased across the EU as a result of the transposition of the SID. To illustrate this evolution, Member States were categorised by the degree of strictness of the national requirements regarding the e-invoicing. The national e-invoicing requirements of all Member States were categorized into four groups, i.e. (i) ‘liberal’, (ii) ‘moderately strict’, (iii) ‘strict’, and (iv) ‘very strict’. The categorisation was based on two main criteria: (i) the openness towards the methods accepted to prove the e-invoice I&A, and (ii) the existence of specific e-invoicing requirements, such as the explicit acceptance by the recipient, the prior notification to the tax authority, or specific requirements on EDI. After the transposition of the SID, a much more coherent framework has emerged, with the vast majority of Member States adopting a rather ‘liberal’ approach by removing national specific e-invoicing requirements. Before the Directive came into force, 17 Member States were categorised as ‘strict’ or ‘very strict’. After the transposition of the Directive the situation changed: 24 Member States can now be labelled as ‘liberal’ and only four countries remain ‘moderately strict’. Figure 3 – Member States convergence towards a liberal and harmonised e-invoicing framework (source Figure 18 of the Study) Before the Directive After the Directive Liberal Strict Non-EU countries Moderately strict Very strict The legal changes triggered by the transposition of the SID improved the e-invoicing regulatory framework significantly, especially for domestic transactions. According to a majority of stakeholders, the evolution in the past five years has been towards easier e-invoicing requirements. The stakeholders’ consultations highlighted two positive changes: (i) the equal treatment of paper and e-invoices and the consequent removal of national e-invoicing specific requirements (e.g. such as the use of a given e-signature in Germany or the obligation to sign and stamp invoices in Romania); and (ii) the acceptance of invoices in PDF format (in some cases, in connection with the introduction of a clear-cut e-invoice definition), which mainstreamed an easier e-invoicing solution, especially for micro firms. The two main challenges highlighted by the stakeholders concern the unclear legal requirements and the BCAT. The analysis by business size class shows that unclear legal requirements represent a bigger barrier for larger companies (and conversely a minor one for micro companies). Based on the evidence gathered from the targeted consultation, this may be explained by two main factors. First, larger companies are comparatively more concerned with legal compliance, while micro firms tend to exchange unstructured e-invoices with a limited awareness of or compliance with I&A requirements. Second, large companies are more likely to have a significant share of cross-border transactions, in which legal uncertainties may be felt more strongly. In other words, the legal requirements are not an issue for all the stakeholders.

The BCAT represent an issue for business stakeholders. A number of stakeholders pointed to the vagueness of the BCAT option and the lack of some practical definitions and examples of ‘business controls’ and ‘reliable audit trail’, in the SID as well as in the Explanatory Notes. Sixteen Member States attempted to fill this gap through secondary legislation as well as guidance documents, providing more or less detailed instructions on how business controls can be implemented in practice. Despite these national efforts, in most cases, economic operators do not regard the guidance provided on BCAT as adequate or sufficiently clear. This translates into doubts on how this option should be applied in practice and whether it will be accepted during tax audits. 5.1.3Invoicing rules Positive impacts The introduction of SID had three main positive impacts. Firstly, the Directive fostered the convergence towards more liberal invoicing rules. This is the result from the joint effect of: (i) the Directive revision; (ii) national decisions on how to implement optional simplifications; and (iii) national interventions in areas in which the Member States still retain discretionary power. Based on the external study, in 2013 most of Member States (16) fell in the strict or very strict categories for what concerns invoicing rules, while presently the majority of them (21) fall in the liberal category. In addition, no Member State belongs to the ‘very strict’ category any longer (four of them did in 2013). Secondly, the rules for cross-border invoicing became a little bit simpler. About 20% of the business stakeholders saw an improvement since 2013 when SID became applicable. Such an improvement could be interpreted as limited however the small magnitude of pre-existing problems does limit the simplification potential that could be achieved by the Directive. Thirdly, the evaluation looked in detail at three further elements which 70% of the business stakeholders interviewed consider to work well or very well. The elements are the following: (i) Article 219a on the applicable invoicing rules; (ii) the new uniform time limit for the issuance of invoices for intra-EU transactions; and (iii) the inclusion of the ECB exchange rate among the currency conversion methods. Challenges There are two main complexities identified by the stakeholders regarding the invoicing rules: i) the invoicing issuance, and ii) the content of invoices. Regarding the invoicing issuance, the stakeholders do not perceive compliance with VAT rules for standard invoices as complex. Two-thirds of the companies and business federations interviewed do not point out to any invoicing requirement which is either too complex or excessively burdensome. This is because the compliance with the applicable rules has become a steady part of a firm’s knowhow, so that it poses them no significant problems for most of their transactions. The vast majority of tax authorities and business stakeholders do not consider compliance with invoicing rules as a severe source of problems. Secondly, business stakeholders express a positive assessment with regards to the working of the norms governing the content of standard invoices (i.e. Article 226). Only 15% of stakeholders consider that they do not work so well or not well at all. However, the main critique on this provision voiced by stakeholders does not concern the Directive itself, but the ‘formalism of tax authorities’ in enforcing Article 226. 5.1.4Specific invoicing regimes Simplified invoices Available evidence from the fieldwork indicates that the uptake of this regime varies both across industries and countries. Simplified invoices are commonly only used in specific sectors, such as accommodation and restaurant, retail trade, petrol stations and transport services, which feature a high number of low value deals and a relatively higher importance of Business-to-Customer (B2C) transactions. From a geographical perspective, the fieldwork has shown that the uptake of this regime is uneven. This regime is more commonly used – albeit always sector-specific – in countries such as Germany, Portugal, Romania and the Netherlands, and very uncommon in other countries, such as Poland or Italy. Summary invoices A summary invoice is no different from a standard one, the only difference is in the description of the goods or services provided, which makes reference to multiple supplies. Summary invoices remain mostly a sector specific tool, more commonly used for the provision of goods rather than services, and in specific sectors (e.g. petrol stations, utilities, large wholesalers). Summary invoices can reduce, sometimes significantly, the number of invoices issued and received by economic operators having long-term business relationships with a stable supply chain. However, the relevance of summary invoices to business’ needs is hardly supported by evidence about their current uptake and the recent trends. Indeed, over 50% of the stakeholders considered summary invoices seem not very commonly used. In terms of evolution, the vast majority of stakeholders saw no change in their usage, confirming that the modifications introduced by the Directive did not have a significant effect on this regime. Self-billing The use of the self-billing regime is concentrated in very few industries, or, more precisely, in very few companies within specific industries. It is commonly used when very large companies – mostly in the manufacturing sector, and, in particular, the automotive industry – impose self-billing on their vast range of suppliers, as a way to receive all invoices in a single, and usually automatically processable form. Taking into account how ‘specialised’ the use of self-billing is, VAT practitioners and business federations interviewed consider its uptake within the overall economy as ‘limited’ or ‘very limited’. 5.1.5Other issues analysed Archiving. The degree of complexity of archiving provisions for paper invoices is assessed as modest. Over 60% of stakeholders answer that paper-based archiving is ‘easy’ or ‘very easy’ to implement, while only a minority of them (approximately 17%) consider these rules to be ‘difficult’ or ‘very difficult’. These results point to the fact that businesses have probably grown accustomed to longstanding rules on the storage of paper fiscal documents. Cash accounting. Following the implementation of the new Article 167a, cash accounting became available in eight additional countries, while in four Member States its scope was increased. Even if business stakeholders consider the cash accounting scheme as very important, its uptake points out that this regime responds to the needs of only a limited number of companies. In 9 out of the 11 countries in which exact data or reliable estimates were available, less than 4% of micro enterprises opt for this regime, and, in 7 Member States, its share is below 1%. The additional costs and complexity of the accountancy requirements and resistance from customers limit the cash accounting uptake, which, however, has little to do with the SID provisions.

Tax control. On tax control, out of 24 respondents from national tax authorities, 20 are of the opinion that there are no or only minor issues with the statement that ‘VAT invoicing rules are not in line with the needs of tax control activities’. At the same time, several authorities suggest that invoicing rules are far from being the most important factor for tax control. The limited (and declining) importance attributed by tax authorities to invoicing rules also appears from the growing trend in introducing additional, e-reporting requirements. VAT chargeability. The view of tax authorities and VAT practitioners on the working of the new VAT chargeability rules is negative. More than half of the respondents commented that the new rules on the chargeability of intra-EU supplies and acquisitions of goods, including the specific rules for continuous transactions, do not work well, or not at all. The main explanation provided is that they are not fit to achieve their expected purpose. Indeed, on one side, fraudsters are well versed in complying with formal obligations, including timing and chargeability issues, so that no changes to their behaviours could be expected from these provisions. On the other hand, the study concludes that acting on chargeability rules rather than improving the real time and electronic reporting of intra-EU transactions could not significantly improve the quality and timeliness of the information put at disposal of the enforcement authorities for fraud identification and prevention purposes. 5.2Effectiveness The following sub-section presents the assessment of effectiveness of the invoicing rules, namely whether and to what extent the SID has achieved its objectives namely i) the reduction of the administrative burdens on businesses, ii) the reduction of VAT frauds, iii) the proper functioning of the Internal Market and iv) SMEs promotion (see section 2.1. for more detail). 5.2.1The uptake of e-invoicing Since 2014 there has been a considerable growth in the uptake of e-invoicing in the EU. The average annual growth rate was estimated to be higher for unstructured e-invoices (8.8 p.p. for micro firms and 6.0 p.p. for larger firms) than in the case of structured e-invoices (about +4 p.p. for all size classes). In 2017, about 18 billion invoices have been issued in the EU. Out of these, 5 billion were electronic invoices, 3 billion of which were emitted in an unstructured format. The Directive had a measurable impact on the increased acceptance of unstructured e-invoices. The simplification brought about by the Directive in a number of Member States fostered an amount of companies to switch from paper invoices to unstructured (PDF) e-invoices. This is especially true for those Member States that had previously in place a number of more stringent e-invoicing requirements. Based on the study, the SID lead to a 30% increase in the uptake of e-invoices in the Member States that had significantly reduced their regulatory requirements, and to a 15% increase in those Member States that introduced only a moderate reduction of their regulatory requirements. Driving factors of change The push from trading partners can be considered as the main reason why the business population at large, and, in particular, micro and small companies have been adopting e-invoicing over the last five years. From a structural point of view, the fact that a large multinational moves to an automated system and requires all its trading partners to adopt it is de facto the main reason for its adoption. The other very important, albeit geographically concentrated, driver for the adoption of e-invoicing is the mandatory Business-to-Government (B2G) e-invoicing requirements. While it obviously plays no role in the Member States in which it is not yet in force, it is invariably mentioned as a major driver in the countries (e.g. Italy) or market segments concerned (e.g. medium and large companies in France). Obstacles to change The main message from the stakeholders is that there is no major barrier to change for e-invoicing. This opinion is the strongest among the micro-enterprises. There are nevertheless two minor barriers that deserve attention. The first element is the lack of interest from suppliers and customers which was mentioned as a hindering factor by more than 50% of the economic operators. A second hindering factor mentioned by about one third of the participants is the lack of familiarity with e-invoicing technologies. 5.2.2The reduction of administrative burdens on businesses The SID is estimated to have reduced administrative burdens on companies by about EUR 540 million in 2017, and about EUR 1.04 billion over the 2014-2017 period. Most of these savings – EUR 920 million – are due to the higher uptake of unstructured e-invoicing driven by the SID. The estimated administrative burden savings are considerably lower than previous estimates of the savings achievable by e-invoicing assessed by the EU Baseline Measurement of Administrative Burdens Project. The estimated EUR 18 billion savings resulted from the reduction of burdens due to the IO ‘VAT bookkeeping in sufficient detail for inspection by tax authorities’, that includes the activities for reviewing and booking sale and purchase invoices, and keeping sale and purchase ledgers. This IO was estimated to generate about EUR 35 billion of administrative costs, of which about EUR 27 billion attributable to burdens. It was estimated that, if all companies switched to automatically-processable invoices, about half of these costs could be saved, because of the automation of the bookkeeping process. The EUR 18 billion figure was thus highly hypothetical, as it provided a maximum saving potential assuming that (i) all companies switched to e-invoicing; and (ii) only automatically-processable e-invoices were used. These assumptions are different than the reality under the SID as the uptake by businesses of the e-invoicing is not 100% and the e-invoicing encompasses less structured e-invoices and more unstructured e-invoices. The evaluation did not assess the saving potential of e-invoicing, but assessed the actual administrative burden savings under the current circumstances. Therefore, the savings which have actually occurred are almost exclusively due to the uptake of unstructured (i.e. not automatically-processable) e-invoices. Consequently, the savings calculated by this evaluation are inevitably and significantly lower. The invoicing issuance, though, had limited impact in terms of cost reductions since it produced savings of EUR 114 million throughout the whole period. Two main factors explain why the savings in the area of invoicing issuance reached this level. First and foremost, invoicing is a routine activity for companies, and they are very much acquainted with complying with the invoicing rules applicable to their usual transactions. When entering a new market or undertaking a different activity, they have to familiarise themselves with the new requirements. For standard transactions invoicing is hardly perceived as a costly activity at all, except for very large issuers and receivers given the high number of invoices. Secondly, the business resistance to changes in invoicing practices is a hindering factor to the uptake and impact of certain simplifications introduced by the SID. This implies that, even when new and less costly invoicing regimes are designed or promoted, their uptake may remain uneven. 5.2.3Functioning of the Internal Market

The Directive should have improved the functioning of the Internal Market by i) increasing the uptake of e-invoices in cross-border transactions, ii) improving legal certainty and reducing the burdens generated by cross-border invoicing rules and iii) creating the conditions for more competition in the market for e-invoicing service providers. The increase in the uptake of e-invoicing in cross-border transactions The business survey data shows that in 2018 the share of companies having issued a cross-border e-invoice was 34%. When looking only at companies which have cross-border transactions, the share is 72%. In terms of volume, e-invoices represent about 44% of the total intra-EU invoices issued, with micro companies issuing about 36% of their cross-border invoices in electronic form, while for large enterprises the share reaches up to 52%. These numbers reflect an increase compared to 2014 when the share of companies which issued cross-border e-invoices was at 12% and considering companies which sell cross-border, the share was 27%. Such increase in the uptake of the cross-border e-invoicing suggests that some complexities and difficulties have been removed. This was largely acknowledged by stakeholders. Legal certainty and administrative burden of cross-border invoicing rules The Directive introduced four significant changes to the rules applicable to cross-border invoices: (i) the new rules on the applicable invoicing regimes (Article 219a); (ii) the uniform time limit for the issuance of invoices for intra-EU transactions (Article 222); (iii) the new rules on currency conversion (Articles 91 and 230); and (iv) the simplified content of invoices for cross-border transactions subject to reverse charge (Article 226a). Furthermore, the new rules on self-billing (Article 224) also simplified the use of this regime for cross-border transactions. These changes increased the legal certainty of the invoicing rules applicable to intra-EU transactions. The promotion of lower prices and/or increased availability of suppliers for e-invoicing services The simpler and more harmonised rules introduced by the SID could have improved the functioning of the Internal Market by reducing the barriers to competition in the market for the provision of e-invoicing services. In turn, this would increase cross-border market entry and decrease the switching costs for companies for resorting to another provider, thus eventually putting a downward pressure on market prices. The evaluation showed that there seem to exist two relevant market segments based on the size of customers, with different players and competitive conditions. On one side, there is the high-end segment, where customers consist of very large companies issuing or receiving a bulky volume of structured e-invoices (more than 1 000 000 per year). Only few e-invoicing service providers operate in this market segment; international competition exists in this segment and moderately increased over the recent years. On the other side, there is the low-end segment, which includes the remaining business population issuing or receiving at least 1 000 invoices per year. Several players, mostly domestic, entered this market segment. The harmonisation which resulted from the SID is seen as a positive factor in reducing barriers to entering other Member States’ high-end market segment. The effect of the SID on the low-end segment has been very limited since the cross-border competition is very scarce in this segment. The evaluation concludes that the evolution of the competitive conditions in the market of e-invoicing services did not result in the decrease of market prices. 5.2.4SME promotion Most of the measures of the SID apply to both large enterprises and SMEs. However, by simplifying the regulatory framework and, thus, reducing administrative burdens, they have the potential to be especially beneficial for SMEs, which usually suffer red tape more than large companies due to their smaller size. Furthermore, the Directive has also amended two invoicing regimes fully or partly targeted to SMEs, namely cash accounting and simplified invoices. Unstructured invoices SMEs benefit from about 55% of the burden reduction due to the more widespread use of unstructured e-invoicing, while the rest goes to large enterprises, even though they represent about 0.2% of the overall business population. This is due to structural factors, and, most importantly, to the fact that large firms issue a disproportionately higher number of invoices, namely 41% of the total volume. All in all, SMEs and micro-companies benefited, on average, from savings on the issuance of e-invoices of about EUR 110 over four years. The benefits for large companies instead amounted to about EUR 120 000 per year. The evaluation shows that SMEs and micro companies using e-invoicing tend to stick with the simplest solutions (i.e. PDFs via email), since the potential benefits hardly justify, for most companies, the purchase of more automated solutions. Regulatory cost savings generated by SME-dedicated measures Cash accounting., The evaluation study estimated that about 60,000 additional micro enterprises benefitted of the cash accounting scheme thanks to the SID. The reasons for such a limited uptake are twofold. On one side, opting for the cash accounting regime requires an adjustment to the accountancy process, which may result in a higher advisor’s fees. On the other side, the financial cost savings from cash accounting are very limited for a typical micro company. Indeed, in normal times, the financial relief is limited to the first tax period. Consequently, overall cost savings due to the higher uptake of the cash accounting scheme generated by the SID have been estimated at EUR 33 million over the 2014-2017 period, or about EUR 550 per micro enterprise. Simplified invoicing. The changes introduced by the SID to the simplified invoice regime led four countries to introduce it, and sixteen more to enlarge its scope. In terms of uptake, the use of simplified invoices varies across countries, and it is largely limited to specific industries, such as accommodation and restaurants, retail trade, petrol stations, and transport services. A simplified invoice allows micro companies to save between EUR 0.5 (if customers’ data are to be included) and EUR 2.2 per invoice issued. Given the uncertainty on the real diffusion of simplified invoices, annual savings have been estimated to fall in the EUR 22-70 million range, with a central value of EUR 38 million. 5.2.5Tax control and VAT fraud

The effects of the SID on VAT fraud and evasion have been analysed by testing the link between two mechanisms: i) by promoting the use of e-invoice, the Directive might have improved the organisation of tax control activities e.g. by shortening the duration of VAT audits or increasing the number of audits and ii) the different implementation modalities at national level might have had an impact on the outcomes of tax control activities, the level of VAT compliance and irregularities detected. The possible impacts of the SID have been assessed with respect to the following indicators: on the one hand the adjusted VAT Gap, and on the other hand the number and value of detected VAT irregularities. Impact of the Directive on the organisation of tax control activities Ideally, the SID could have led to the shortening of the average duration of VAT-related audits because of the more widespread use of e-invoicing. However, the data received from five countries on the audits the year before and after the entering into force of the SID show that the average duration of the VAT-related audits did not decrease. Impact of the SID on VAT compliance To assess if and to what extent the implementation modalities of the SID have affected the fight against VAT fraud, two specific impacts have been analysed. Firstly, whether the relaxation of invoicing requirements was detrimental to tax control. Secondly, whether the relaxation of e-invoicing requirements positively affected tax control activities. The study demonstrated that the SID had no considerable impact on the level of controls undertaken, on the number and value of VAT irregularities discovered and on the level of VAT compliance. 5.3Efficiency This section presents the analysis of the regulatory costs and cost savings generated by the Directive. The following general considerations apply throughout the subsequent analysis: firstly, except for the financial cost savings from cash accounting, all the other regulatory costs and cost savings are of an administrative nature. Secondly, all administrative costs and cost savings analysed are considered administrative burdens. The cost savings concern additional or unnecessary activities to the Business-as-Usual (BAU) factor which is considered as 0%. For more details on the calculations of the costs and burdens and the analytical methods, please see Annex 3. 5.3.1The change in the administrative burdens generated by the provisions on e-invoicing The main effect of the Directive in terms of e-invoicing uptake has been a broader use of unstructured e-invoices. This means that, today, a larger number of companies issue and receive unstructured e-invoices compared to the situation prior to the Directive, and that, within each company, a larger share of invoices is issued/received in unstructured electronic form. Issuing an unstructured invoice The invoice issuance process is made up of three stages: collection of the customer and transaction data, drafting of the invoice and its delivery. Collection of customer and transaction data. An invoice includes two sets of data: (i) the customer data, e.g. his/her name, address, VAT number where required; and (ii) the transaction data, e.g. the description of the goods/services provided, the taxable amount, the applicable VAT rate, exemption, or regime, the clauses that need to be mentioned, and the VAT due. Drafting the invoice. This activity consists in inputting the data collected into the invoice. It can be carried out by hand, with the help of a non-dedicated software (such as a word processor or a spreadsheet), via a web portal, or automatically by means of an invoicing solution or an ERP module. Delivering the invoice to the client. An unstructured e-invoice can be delivered by sending an email with an attached document (e.g. PDF) or with a web link from which the invoice can be downloaded, or by uploading the document into a web portal. In terms of invoicing process, the evaluation tested the four sizes of companies (micro, small, medium, large) against four main types of invoicing processes. These processes are the following: ·Basic invoicing. Companies do not have an internal invoicing solution and issue their invoices either by hand or using non-dedicated software (such as a word processor or a spreadsheet). ·Invoicing solutions. These companies have an internal invoicing solution, either a self-standing software or platform, or a module integrated in their Enterprise Resource Planning (ERP) system. The solution can have various degrees of automation.

·Service providers. These companies make use of an external service provider for some or most of the activities. The level of automation can vary significantly. ·Mixed bag. These companies use several of the solutions described above. The distribution of the above groups among the companies varies with the number of invoices issued, and, thus, with the business size. Still a small share of micro companies adopt dedicated invoicing solutions, and few large companies still rely on basic invoicing processes. The table below shows the distribution of companies across the 16 segments. Size class Basic invoicing Invoicing solution Service provider Mixed bag Total Micro 64% 13% 21% 2% 100% Small 31% 21% 41% 7% 100% Medium 20% 21% 48% 11% 100% Large 8% 26% 49% 17% 100% Source: Study on the evaluation of Invoicing Rules: authors’ elaboration based on business survey and targeted consultation. The evaluation shows that there are neither one-off nor recurrent costs specifically linked to issuing an unstructured e-invoice. This is because the licensing cost of the software to draft the invoice, create a PDF file, as well as the internet connection can be regarded as part of the company’s overall activity. Two cost savings are generated by a company when an invoice is no longer issued on paper but as an unstructured e-invoice, namely 1) personnel’s time because of the faster delivery for unstructured e-invoices and 2) postage and printing costs. These savings are estimated at about EUR 3.2 per invoice. The analytical model used for the evaluation considers that the SID generated two further savings: 1) resulting from a higher number of companies which adopted unstructured e-invoices – the additional population effect 2) resulting from the fact that within each company the share of unstructured e-invoices has grown over the years – the internal company effect. Both savings have been measured for each of the 16 segments across the 2014-2017 period, while the year 2014 was taken as a baseline. Total savings were estimated by multiplying the number of additional unstructured e-invoices compared to the baseline year by the saving per occurrence, per each segment. In 2017, estimated annual cost savings from unstructured e-invoices issuance amounted to about EUR 500 million, while in the overall period the Directive is estimated to have generated almost EUR 920 million cost savings at EU level. Receipt of an unstructured invoice Receiving an unstructured invoice is made up of three main stages: ·Invoice reception, directly from the supplier or through a service provider. ·Invoice data checking. This activity consists in the formal verification of the invoice data. ·Invoice data entering. This is done by manually inputting the invoice data into a company’s financial records or ERP system, or extracting the data through an Optical Character Recognition (OCR) technology integrated with the ERP. Cost savings per occurrence. The cost for receiving unstructured e-invoices is essentially equivalent to receiving paper ones, as it requires a similar number of activities to be performed in a similar way, mostly manually. However, the receipt of unstructured e-invoices can generate some time savings in case firms use Optical Character Recognition (OCR) solutions. This is because paper invoices must be scanned before being sent to the OCR software and often require manual review while PDF invoices can be sent directly to the OCR software. The amount of cost savings, based on the average EU hourly salary of a clerk has been assessed at EUR 0.98/invoice. Total savings generated by the SID for receiving unstructured invoices were estimated by multiplying the number of additional e-invoices received by companies adopting the OCR per occurrence over the 2014-2017 period. It appeared that the implementation of an OCR is justifiable only when a large volume of invoices is processed, so micro and small companies were excluded. The estimated annual cost savings amounted to about EUR 3.4 million in 2017 and to about EUR 6 million in the period 2015-2017. 5.3.2Administrative burdens and savings Issuing an invoice for cross-border transactions The issuance of a cross-border invoice requires the same activities as for domestic invoices, but the invoicing process and the resulting document can be different from the domestic ones for the following reasons: ·Business reasons. These include, for instance, the possibility that it may be more cumbersome to retrieve customer data.

·Applicable VAT regimes. Certain cross-border transactions are subject to specific VAT regimes therefore, the resulting invoice will have to reflect such a specific regime and include the clauses mandated by Article 226 of the VAT Directive. ·Specific invoicing rules. Cross-border transactions are also subject to specific invoicing rules, which have been amended by the SID. Obviously, the difference between domestic and cross-border invoices due to business reasons do not generate costs or cost savings that can be attributed to the Directive, or to the VAT rules. As for the applicable VAT regimes, the cost and cost savings for complying with the revised Article 226 were considered. With respect to specific invoicing rules, the cost and cost savings due to the applicable invoicing regime (Article 219a) and the uniform time limit for intra-EU transactions (Article 222) were taken into account in the analysis. Article 226 – Invoice content. The SID introduced a number of standard clauses for certain regimes applicable to cross-border transactions. In particular the clause ‘reverse charge’, applicable to most of the cross-border B2B provisions of services, can be used, removing the need to make reference to national or EU legal provisions. However, according to VAT practitioners and business stakeholders, the revised Article 226 did not result in either significant costs or savings for companies. Article 219a – Applicable invoicing rules. The article did not produce significant costs and savings since the measure entered into force. In terms of cross-border transactions, the vast majority of companies (more than 85% of the respondents to the targeted consultation) do not issue different invoices for cross-border transactions, except for the different content due to the applicable VAT regime. When differences exist, the need to adapt to the destination legal requirements was mentioned only by a minority of companies, and, in particular, by multinationals. Article 222 – Uniform time limit for intra-EU transactions. None of the companies with cross-border activities reported any impact from the new provision on the time limit, the awareness of which was also limited. Since this provision hardly affected the companies’ behaviour, it could generate no significant costs or cost savings. In a nutshell, for the issuance of a standard invoice for cross-border transactions, cost and savings due to the SID have been assessed as negligible or absent. Issuance of a simplified invoice The calculation of cost savings from the issuance of simplified invoices was provided only for 7 fieldwork Member States since the data necessary for the calculations was very difficult to obtain or almost non-existent. Regarding the number of simplified invoices or the share of companies using them, assumptions had to be made based on qualitative feedback from business federations, VAT practitioners and economic operators. There was also limited information on the cost parameters since the business survey and targeted consultations were not focusing on the B2C supplies (e.g. restaurants, retailers, providers of accommodation), so the gap had to be filled via qualitative information obtained from VAT practitioners and economic operators. For the fieldwork Member States, the SID triggered changes in five of them, namely Italy, Romania, the Netherlands, Poland and Portugal, so the cost savings linked to the Directive are only valid for these five Member States. Regarding the population, it appeared that simplified invoices are used almost exclusively by micro enterprises, and, in particular, by those issuing paper or basic e-invoices. From the moment a micro company has an invoicing solution (or uses a service provider), the gains from reducing the information content of an invoice are very limited, so that it will most likely issue standard invoices for all transactions. In the five fieldwork Member States in which the SID caused a legal change to the simplified invoicing regime, it is estimated that about 55 million simplified invoices have been issued in 2017. Of this, about 36 million of simplified invoices can be attributed to the SID. Given the number of simplified invoices and the saving per occurrence, this translates into about EUR 38 million burden savings for the five fieldwork Member States. Issuance of a self-billing invoice The SID intervened on self-billing by removing the possibility for Member States to impose additional requirements other than (i) the prior agreement; and (ii) the acceptance of the invoice. These requirements were a possible source of burdens for both domestic and cross-border transactions. Seven countries had such requirements in place, such as the duty to notify the tax authority of the prior agreement, to ask for an authorisation, or to have the statement notarised. Five of these Member States have removed these requirements (Estonia, Hungary, Malta, Poland, and Romania). According to the evidence gathered from two fieldwork Member States – Poland and Romania - the removal of the notification and the authorisation procedures only slightly reduced the administrative burdens. The cost savings at aggregate level were estimated as negligible because of the following considerations: a) the process did not change much since most of self-billing agreements are still entered in written form, even in countries where it is not mandatory; b) the geographical scope is limited to five Member States and c) the number of companies entering in those agreements is very limited (mainly very large manufacturing companies). This limited amount of savings was also confirmed by the few stakeholders which had some direct experience with self-billing. Financial cost savings due to cash accounting The financial cost savings arise because cash accounting taxpayers are not obliged to pay VAT before receiving the related payment from their customers, hence pre-financing costs do not occur. When the payment duration is longer than the time granted for paying the VAT after the end of the tax period, the VAT taxable person has to pre-finance part of its VAT due, which can be done either through loaning money from a bank at a certain interest rate, or by using its own resources, and thus bearing the opportunity cost of capital. The savings of these financial costs represent the cost savings attributable to the introduction of the cash accounting scheme. Out of the 22 Member States applying cash accounting for micro companies, late payments pose a problem in 15 countries. Further attribution was based on whether and to what extent the SID caused changes in the national legislation. As a result five further Member States were excluded from the analysis. The financial cost savings generated through the cash accounting scheme that can be attributed to the SID have been estimated at about EUR 33 million over the 2014-2017 period for the ten Member States where changes had an impact. This would mean the cost saving of about EUR 550 per each cash accounting taxable person. Additional cost savings could arise in specific circumstances, but it is impossible to assess them quantitatively.

The taxable persons who opt for the cash accounting scheme incur additional costs. Introducing VAT cash accounting implies that taxable persons need to monitor payments, a task that would not be done otherwise. When the accountancy records are done internally the additional costs can be limited. However, when the accountancy obligations are kept by an external tax advisor – as is the case for most of the cash accounting taxable persons - this could increase the advisory fees. 5.3.3Regulatory costs and costs savings The evaluation tested the assumption that the SID may have caused regulatory costs to tax authorities, which had to adapt to the new rules, and to enforce them on economic operators. These costs are incurred because of the need to train the personnel to the revised provisions, to buy IT equipment to verify e-invoices, or because of changes to the operational costs of conducting e.g. risk analysis or tax audits. According to tax authorities, the costs for the above activities are non-existent or negligible. This was confirmed during the discussions with tax authorities in the fieldwork Member States. Tax authorities explained that the new rules mostly concerned economic operators and hardly affected the way in which tax authorities function. 5.4Coherence This Section presents the analysis of the coherence of the SID, namely to what extent the SID is consistent with other EU policies and initiatives in the field of VAT and in related areas. 5.4.1Coherence with other pieces of EU legislation The consistency of the Directive was assessed with respect to five EU legislative areas. The figure below provides an overview of the results of the areas which were identified through the stakeholders’ feedback and desk research. Figure 4 – Public consultation and targeted consultation of tax authorities, VAT practitioners and service providers Public consultation and targeted consultation of tax authorities, VAT practitioners and service providers Accountancy rules (Directive 2013/34) The VAT invoice is also relevant for accountancy rules. Accountancy rules are regulated by national legislation, international rules as well as by the Accounting Directive which aims at coordinating the national rules on financial statements. However, the Accounting Directive never makes an explicit reference to invoices, to invoicing rules, or to the VAT legislation. The majority of stakeholders, namely more than 70% of them, consider that the accountancy and VAT rules are not in conflict. However, some practical issues were identified by stakeholders. The most important one is the probationary value of an e-invoice. The VAT legislation establishes the legal value of an e-invoice, and makes clear that, subject to the requirements on I&A, it should be treated equally to a paper invoice. However, the same principle was not uniformly and immediately replicated under the accountancy rules. In particular, a few stakeholders voiced the concern that until recently an e-invoice would have had a lower probationary value for accounting purposes (or in courts, for civil litigation), up to not being accepted as a probationary means for certain controversies. Another issue raised was the discrepancy between the time at which the transaction must be registered under accounting rules and the time of the VAT chargeability. However, stakeholders confirmed that such discrepancy would arise only in a very limited number of cases. Consumer protection rules VAT invoicing rules and consumer protection rules can only have a limited interaction. Such a small overlap does not create obstacles or uncertainty for economic operators or tax authorities. The main reason for the limited interaction is that the scope of the two legislative areas is mostly non-overlapping. Data protection rules of Regulation 2016/679 (GDPR) About a quarter of the interviewees consider that the GDPR may have a negative interaction with the VAT invoicing rules. Most of the economic operators and VAT practitioners consider that including personal data on invoices poses no problem with respect to GDPR – as long as it is not sensitive data, such as medical information. If certain invoice fields were considered as personal data, the impact for both economic operators and e-invoice service providers would be significant. It would require restructuring the invoice processing architecture and, most likely, would lead to the exclusion of any personal information from the invoice. Storage period. Since storage of invoices is mandatory because of the VAT Directive and the national norms, it is also lawful from a GDPR perspective. However, this also implies that, when the national storage period expires, invoices containing personal data should be destroyed, since their conservation is no longer necessary for complying with a legal obligation. To avoid any data protection risk, companies and service providers may have to delete invoices once the storage period is elapsed, even though they may want to keep it for business reasons. It is unclear whether this will be the case, especially considering that the minimum storage period for VAT invoices is of five years, and thus any problem may occur as of May 2023 only. Rules on e-signature and EDI

E-signatures. E-signatures are regulated by the eIDAS Regulation (electronic IDentification, Authentication and trust Services), which replaced the e-signature Directive. The eIDAS Regulation aims at establishing common rules for the Internal Market for electronic trust services, by ensuring their recognition and workability across borders. It provides norms for (i) the certification authority, i.e. the entity issuing the certificate; (ii) the secure signature certification devices (e.g. the smart card, token or software that creates the signature); as well as (iii) specific services, such as e-signatures, e-seals, time stamping, and registered e-delivery services. With respect to I&A requirements, two services are specifically relevant: (i) the e-signatures, which are explicitly mentioned in the Directive, and (ii) the e-seals. While both services can be used to certify the author and the integrity of an electronic document, the e-signatures also attest the willingness of an individual (and thus can be used, for instance, to sign e-contracts). The eIDAS Regulation grants certain legal effects to the e-signatures and the e-seals. E-signatures are admissible in court and QES shall be treated equally to handwritten signatures. Furthermore, QES, unlike the basic and advanced ones, shall be mutually recognised across countries. E-seals are admissible in courts, treated equally to paper-based certification and, most relevant for e-invoicing, provide users with a presumption of integrity and correctness of the sealed data. More than 75% of tax authorities, VAT practitioners and e-invoice service providers claimed during the targeted consultation that no issue of coherence exists between the eIDAS Regulation and the VAT invoicing rules. Directive 2014/55 on the use of e-invoicing in public procurement The Directive on the use of e-invoicing in public procurement is the piece of EU legislation bearing the closest relation with the VAT e-invoicing rules. This is acknowledged in Article 9 of the former, where it is explicitly stated that ‘[this Directive is without prejudice to the provisions of Directive 2006/112/EC’], in order to prevent possible conflicts. According to the Directive 2014/55, it will be mandatory for all public entities to receive and process e-invoices complying with the European standard (EN 16931) by April, 2019 . An increasing number of Member States (13) went further, by requiring that public entities accept only e-invoices. The format of which can be based on the European standard introduced by Directive 2014/55, as well as on other national or international formats. The most relevant difference between the VAT Directive and Directive 2014/55 is the divergent e-invoice definition adopted. Notwithstanding the different definitions, in practice, the two acts serve different purposes so they are not in contradiction. In the words of a tax authority, “VAT provisions remain untouched by the different legal definition of Directive 2014/55/EU, and thus the latter creates no issues”. This is indeed confirmed by stakeholders. 5.4.2Coherence with other EU initiatives in the field of invoicing The European Multi-Stakeholder Forum on Electronic Invoicing (EMSFEI) and Fiscalis, aim at creating a common knowledge and sharing of best practices, thus facilitating the harmonisation of rules and the adoption of e-invoicing. The former concerns both private operators and public authorities, while the latter concerns tax authorities only. European Multi-Stakeholder Forum on Electronic Invoicing (EMSFEI) A number of EMSFEI contributions helped to clarify the national implementation and application of the SID. These include, in particular, the 2013 study on the Directive implementation and the remaining cross border issues, and the 2017 follow-up on implementation and regulatory issues. In line with these findings, the targeted consultation showed that the stakeholders have a positive opinion of EMSFEI. The quasi-unanimous view of the interviewees is that the EMSFEI positively or very positively contributed to the implementation and application of the VAT Directive e-invoicing rules. No critiques have been raised concerning its interaction with the existing rules. Fiscalis programme The Fiscalis programme are a series of multiannual action programmes aimed at supporting the implementation of the EU fiscal policy. The current programme, Fiscalis 2020, covers the period 2013-2020. Its general objective consists of improving the functioning of the taxation systems in the Internal Market, in particular, by enhancing cooperation between the participating countries, their tax authorities and their officials. Only 6 out of 1 100 joint actions financed so far by Fiscalis 2020 were mainly and directly concerned with e-invoicing rules. The limited relevance of Fiscalis 2020 actions for e-invoicing was indeed confirmed by tax authorities during the interviews. 5.4.3Coherence with other EU strategies The degree of alignment of the Directive with other EU strategies was assessed by evaluating the consistency of their respective objectives. Based on the analysis of EU policies, the following two strategies were found to deal – sometimes only marginally – with e-invoicing: ·The Single Market Strategy; ·The Digital Single Market Strategy; The Single Market Strategy

The Single Market strategy is an EU overarching policy, which provides the general direction for the Internal Market policies, as well as a framework for coordinating an array of other sectoral policies (e.g. for energy, trade, capital markets). Its main aim is to revive and modernise the EU Single Market, so to improve its functioning. One of the general objectives of the SID is directly relevant and aligned with the general objective of the Single Market Strategy. The Digital Single Market Strategy The Digital Single Market Strategy is one of the sectoral policies of the European Commission. It covers the so-called Information and Communication Technology sectors, i.e. any economic activity related to the Internet, the digital technologies, and the communication networks. The Digital Single Market Strategy specifically aims at ensuring that ‘individuals and businesses can seamlessly access and exercise online activities under conditions of fair competition, and a high level of consumer and personal data protection, irrespective of their nationality or place of residence’. A number of legislative proposals was adopted further to the strategy, among others the new rules on VAT e-commerce, the new rules to stop unjustified geo-blocking or the rules on cross-border parcel delivery services and revised consumer protection rules. The strategy does not explicitly mention e-invoicing rules and policies. At the same time, e-invoicing was, and still is, capable of contributing to the interventions spurred by the strategy. In particular, the first pillar of the strategy aims at ensuring ‘better access for consumers and businesses’ to the single Market, ensuring the removal of ‘key differences between the online and offline worlds’ and the lowering of ‘barriers to cross-border online activities’. This is aligned to two of the specific objectives of the SID, namely the simplification and harmonisation of e-invoicing rules. In particular, the equal treatment mandated by the SID for paper and e-invoices matches very well the need to reduce differences in how business is conducted online or offline. 5.5EU added value This Section illustrates the assessment of the EU Added Value namely whether the outcomes and the impacts achieved by the Directive would have been achieved had the intervention not taken place at EU level, i.e. by means of national or bilateral policies. The assessment of EU Added Value was carried out regarding the following objectives of the SID: i) the simplification of e-invoicing and invoicing rules; ii) the reduction of regulatory fragmentation of VAT invoicing rules; and iii) the uptake of cash accounting. The assessment followed a quali-quantitative approach based on the feedback from stakeholders. More specifically, stakeholders were asked to state (using a qualitative scale) to what extent the objectives would have been achieved in the absence of the SID. The qualitative scale was then converted into numerical values and used to estimate the probability that the change would have occurred without the SID. The complement to this probability rate is the so-called the EU added value (EUAV) factor, i.e. the share of outcomes and impacts which have occurred because of the EU intervention. 5.5.1Simplification of e-invoicing and invoicing rules E-invoicing rules By simplifying the applicable rules, the Directive has positively contributed to a more widespread diffusion of unstructured e-invoicing. The SID is estimated to have added 1.6 p.p. to the annual growth of the e-invoicing uptake among micro companies, and about 0.5 p.p. for companies with ten or more employees. This has, in turn, generated about EUR 900 millions of administrative burden savings. To assess the EUAV, it was necessary to establish to what extent Member States would have liberalised e-invoicing rules without the SID. So tax authorities and VAT practitioners were asked about the occurrence of changes to the e-invoicing rules and 30% of them considered that the changes were ‘very likely’ and ‘likely’ to occur. Some changes would have occurred in any case as more and more Member States would have progressively introduced the liberal approach into their national legislation. However, the majority of the stakeholders pointed out at the same time that the main driver of change in the VAT area remains the EU legislation, and that fewer Member States would have introduced significant reforms if not prompted by the EU policies. The Member States’ interventions would have been more limited, both in terms of countries covered and the depth of the reforms introduced, should the SID not have been adopted. The EUAV factor for the simplification of e-invoicing has been estimated to be 62%. By applying this factor, the EUAV on the uptake of unstructured e-invoices can be estimated to be between 0.3 and 1 p.p. (depending on the size of the company). This translates into about EUR 570 millions of cost savings. Invoicing rules With respect to the simplification of invoicing rules, the Directive had two main effects: it increased the degree of legal certainty and it contributed to reducing administrative burdens. Stakeholders were asked to assess the relevant importance of various policy drivers for the simplification of the invoicing rules. The mandatory provisions of the SID were considered the most important legislative driver, and the role in the simplification of invoicing was considered as positive or very positive by the vast majority (87%) of respondents. For the optional Directive provisions and the national drivers, the role played was still positively assessed, but at a lower level (positive answers varied between 60% and 66% of respondents). At least one third of stakeholders considered it ‘very likely’ or ‘likely’ that the simplification would occur without the adoption of the SID. This could have happened for a plurality of reasons as for example internal pressure to fight VAT fraud or a genuine simplification of national invoicing rules. However, in several Member States the Directive was instrumental in creating the opportunity for Member States to simplify the invoicing rules and/or to introduce additional simplifications, which went beyond the minimum required by the SID. Consequently, the EUAV factor has been set at 60% meaning that a large part of the legal certainty would not have been generated without the SID. Specifically in the area of simplified invoice, the additional EU benefits can be estimated at about EUR 70 million over the 2014-2017 period. 5.5.2Reduction of regulatory fragmentation The Directive generated two main benefits for economic operators: i) the uptake of cross-border e-invoicing; and ii) harmonisation in the area of invoicing rules. The share of stakeholders considering that a comparable harmonisation process would have happened without EU intervention is low (15%). The stakeholders pointed out that, while a progressive simplification of invoicing and e-invoicing requirements was likely, this would have hardly happened in a fully convergent way. It can thus be concluded that the SID played an important role in smoothening the functioning of the Internal Market that took place over the last four years. 5.5.3Increased uptake of cash accounting

The possibility to introduce a cash accounting regime targeted to micro enterprises was already available prior to the SID. However, to make it more interesting to Member States, the SID introduced Article 167a, which generalised the possibility to postpone both VAT payments and deduction, thus limiting the negative impacts on the public budget cash flow. This was possible also under the previous rules, but an explicit derogation had to be requested to the VAT Committee. After the SID the number of Member States opting for this regime increased - eight more countries introduced cash accounting for micro enterprises, and four more expanded their existing schemes. A number of Member States consider that changes would have occurred even without the introduction of Article 167a by the SID. However, this view is not shared by all stakeholders, who consider the likelihood rate of introducing or enlarging the cash accounting scheme without the SID at 45%. The EUAV factor is thus set at 55%. As the additional uptake of cash accounting caused by the Directive is estimated to have generated about EUR 33 millions (see section 5.2.4) of financial cost savings, the additional EU benefits can be estimated at about EUR 18 millions over the 2014-2017 period. 6.Conclusion The evaluation results in a largely positive assessment of the Directive. It contributed to the simplification and harmonization of invoicing and e-invoicing rules across the EU. The Directive had an overall positive contribution to its general policy objectives, namely i) the reduction of the administrative burdens on businesses, ii) the reduction of VAT frauds, iii) the proper functioning of the Internal Market and iv) SMEs promotion. 6.1The achievements of the Directive In particular, the SID has contributed to foster the (unstructured) e-invoicing uptake, to reduce the administrative burdens on businesses, to increase legal certainty for economic operators, and more generally to support the proper functioning of the Internal Market. As a main impact, the SID contributed positively to the burden reduction objective and has produced administrative burden savings of almost EUR 1 billion in the 2014-17 period. The major benefits generated by the simplification of the e-invoicing rules are estimated to have occurred because of the e-invoicing rules being enacted at EU level. The higher uptake of e-invoicing attributed to the Directive is the main driver of the reduction in administrative burdens. The issuance of a higher number of unstructured e-invoices is estimated to have generated about EUR 920 million of cost savings over the 2015-2017 period. At the same time, the unstructured format allows achieving only a (minor) part of the potential savings from e-invoicing, thanks to a quicker issuance process, in particular for data handling and the elimination of paper and postage costs. Only automatically-processable structured e-invoices allow for a full (or quasi-full) automation of the invoicing process. Consequently, the estimated amount of savings generated by the SID in this area is considerably below the potential EU aggregate gains from e-invoicing discussed in the literature. This is the outcome of the conscious policy decision of the SID not to differentiate between structured and unstructured e-invoices and thus not to push for structured e-invoicing. A number of benefits in the area of invoicing rules also occurred because of the action at EU level. The revision of the Directive improved the legal clarity and certainty of invoicing rules and smoothened the working of the Internal Market for cross border operators thereby contributing positively to the achievement of one of the SID’s objective. These results were appreciated by stakeholders. At the same time, these changes led to only negligible burden reduction and had no significant impact on costs. The contribution of the Directive to its objective of reducing VAT fraud and improving controls was limited. The Directive had no or negligible effects on the effectiveness and efficiency of tax control activities. Tax authorities consider the provisions of the SID aligned with their needs, even though invoicing rules do not play a major role in the fight against tax evasion compared to other rules. The SID had a positive impact on the achievement of the last objective of the Directive, namely SMEs promotion.The SID benefited smaller companies because of the burden reduction generated by simpler e-invoicing solutions. The SID was a reason why additional Member States opted for or enlarged the cash accounting scheme over the last five years. At the same time the uptake of the cash accounting regime remains limited and thus also its impact. The functioning of the invoicing rules is positively evaluated by stakeholders, signalling no emerging issues. The main hindering factor remains that, for most of micro companies, benefits are small, and that only certain specific companies find cash accounting truly beneficial. 6.2Shortcomings of the Directive Only a very few aspects of the SID were identified as potentially problematic, but they were not assessed either by businesses or by Member States as very significant. In particular, with reference to the current e-invoicing regulatory framework, the BCAT option included in the SID to prove the e-invoice I&A is considered by the stakeholders as lacking clarity. Some stakeholders complained about the difficulties and costs of compliance with archiving rules. The complexity and regulatory fragmentation of the archiving rules for e-invoices has increased unevenly since the transposition of the SID. This relates to certain countries having adopted very detailed rules on the e-archiving of fiscal documents, which obviously also apply to e-invoices. The area of archiving was however not covered by the adopted SID. Several stakeholders that operate cross-border point to an insufficient level of harmonisation in other areas. In particular, the additional e-reporting requirements which have been and are being imposed by several Member States in a non-harmonised way and the national formats and platforms for exchanging B2G e-invoices. Following the adoption of Directive 2014/55, mandatory e-invoicing requirements for B2G transactions have been introduced by several Member States over the last five years in a rather disharmonized way. However, the situation is still in a flux given that the harmonised standard (hEN) has recently been adopted (in April 2018), and that certain provisions of Directive 2014/55 normally entered into force as of April 2019. More time is required for the effects of the harmonised standard to occur, in order to consider whether and to what extent the current differences remain a barrier to trade. Annex 1: Procedural information

1.Lead DG – DG TAXUD The initiative was planned under PLAN/2017/1293-TAXUD . 2.The evaluation was supported by an independent study carried out by a consortium led by Economisti Associati. The contract with the contractor was signed on 3 November 2017. The Final Report was submitted in January 2019 and published in February 2019. 3.The first meeting of the Inter-Service Steering Group (ISSG) took place on 20 June 2019 to inform the members about the upcoming study and the Terms of Reference. Two meetings with the ISSG took place (on the First Interim Report and on the Final Report). The remaining Reports of the Study were sent to the members of the ISSG for comments, which were largely taken into account by the contractor. Annex 2: Stakeholder consultation The consultation collected data and evidence to evaluate the invoicing rules introduced by the SID. To this aim the consultation gathered the views of the stakeholders on two topics: firstly, how the SID met its set objectives and to what extent the invoicing rules are still aligned with stakeholders' needs and secondly, the stakeholders' views on possible improvements. The consultation process consisted of: 1.Familiarisation interviews; 2.Business survey 3.Targeted Consultation in fieldwork Member States; 4.Targeted Consultation – E-mail survey of Tax Authorities; 5.Targeted Consultation – E-mail survey of VAT Practitioners; 6.A public consultation addressed to all stakeholders and members of the public. 1.Familiarisation interviews The familiarisation interviews were conducted during the inception phase (between December 2017 and January 2018), to gather a better understanding of the overall functioning of the Directive, and elicit comments and opinions from the key EU-level stakeholders and experts regarding the legal changes introduced and their possible effects as well as implementation issues. A total of 14 stakeholders were interviewed face-to-face or via telephone, based on semi-structured checklists.

The interviews conducted involved different categories of stakeholders, namely eight VAT practitioners or federations thereof, two EU business federations, two service providers or federations thereof, and two other stakeholders. In accordance with the Assignment’s proposal, the key targets for the familiarisation interviews were the members of the various EU-level expert groups, such as the EU VAT Forum and the VAT Expert Group. There were also two focus group discussions, namely: (i) one with some members of the European Multi-Stakeholder Forum on e-Invoicing, organised with the support of DG GROW at the margins of the Forum’s official meeting held on 9 December 2017 in Brussels; and (ii) one organised within the framework of BusinessEurope’s VAT Group meeting, with the participation of eight national business associations and six multinational corporations. Finally, a two-day working meeting was held in Stockholm with the legal compliance team of Trustweaver, one of the leading e-invoicing services providers in the EU. 2.Business Survey The Business Survey was carried out in eight Member States – France, Germany, Italy, the Netherlands, Poland, Romania, Spain and Sweden. The selection of the Member States took into account the geographical diversity of EU regions and the different national e-invoicing frameworks. The deployment of the survey was entrusted to YouGov. The questionnaire consisted of a small number of close-ended, matrix questions, aimed at gathering information on: (i) the volume of invoices and e-invoices annually exchanged, (ii) the