Estonian Government approves changes to accounting law

On May 2, 2024, the Estonian government approved a bill that will standardize and simplify the requirements for the circulation and formatting of e-Invoices, marking a significant advancement in digital invoicing processes. This change aims to allow the acquisition or provision of related services flexibly, tailored to each client’s specific needs and economic efficiency.

Unified e-Invoicing standard

The new legislation encourages the implementation of a unified European standard for e-Invoices and eliminates the previously existing double standard in the law. “The principle of transactional and format freedom remains. The state does not prohibit the continued use of any current e-Invoice formats, nor does it preclude the introduction of innovative formats in the future,” explained Rainer Osanik, head of the Financial Information Policy Department.

Right to demand machine-readable e-Invoices

Additionally, all businesses registered as e-Invoice recipients in the business registry, including public sector entities, will now have the right to demand machine-readable e-invoices from their suppliers. “Often, invoices sent via email in PDF format are considered e-Invoices. Unfortunately, such invoices are not machine-readable and often require manual intervention or additional actions. The goal is to reduce unnecessary use of human resources in managing invoices and to enable machines to communicate directly with each other, including cross-border,” Osanik noted.

Feedback and implementation strategy

The changes are based on findings from the study “Usage of e-Invoices in the Public Sector and Business,” conducted by Ernst & Young Baltic AS under the Real-Time Economy program, commissioned by the Ministry of Finance and the Ministry of Economic Affairs and Communications. The feedback from users gathered during the consultation phase also informed these amendments. Under the proposed law, buyers will have the right to demand e-Invoices, a shift from the current requirement for sellers to provide them.

Law Effective Date and Access to Materials

The law is scheduled to take effect on January 1, 2025. Interested parties can review the proposal materials here (in Estonian) for more detailed information on the bill.

Key Takeaways:

  • Standardization of e-Invoice requirements to fit the European standard.
  • Businesses registered as e-Invoice recipients can demand machine-readable invoices.
  • Public and private businesses are encouraged to transition to more efficient invoicing processes.
  • The full adoption of the law begins January 1, 2025.

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