The Difference Between a PDF Invoice and an E-Invoice (2024)

Update of August, 5th 2024

Introduction

PDF Invoices

PDF (Portable Document Format) invoices have been widely used in business transactions for several years. They are typically generated by an accounting system and sent via email or other electronic means. Here are some key characteristics of PDF invoices:

1. Digital Representation: PDF invoices are digital files that accurately replicate the layout and content of a traditional paper invoice. They can be easily viewed, printed, and stored electronically.
   
2. Flexibility and Familiarity: PDF invoices offer a familiar format to both businesses and customers, as they resemble traditional paper invoices. They can be easily customized with branding elements and company logos.
   
3. Manual Handling: While PDF invoices can be generated automatically from accounting systems, they still require manual handling and data entry, either by the invoicing party or the recipient. This manual intervention can introduce errors and delays in the processing of invoices.

E-Invoices

E-invoices, on the other hand, represent a more advanced and automated approach to invoicing. They leverage structured data formats and electronic exchange systems to streamline the entire invoicing process. Here are the key features of e-invoices:

1. Structured Data Format: E-invoices are structured files with a fixed format determined by industry standards. They contain specific data fields that enable automated processing and exchange between different systems. Common formats include XMLor EDIFACT.
   
2. Seamless Integration: E-invoices can be seamlessly integrated into the recipient's financial or accounting systems, eliminating the need for manual data entry. This integration enables faster and more accurate processing of invoices, reducing errors and delays.
   
3. Integration: Initiatives like the International PEPPOL (Pan European Public Procurement On-Line) network have standardized e-invoicing formats across businesses and agencies. This standardization ensures compatibility and interoperability between different systems, promoting efficient invoicing practices.
   
4. Cost and Efficiency: E-invoices offer cost-saving benefits by reducing the need for paper, postage, and manual labor. They enable faster payment cycles, improve cash flow, and minimize the risk of errors associated with manual data entry.

How Will the VAT in the Digital Age (ViDA) Impact PDF Invoices?

The VAT in the Digital Age (ViDA) will have an impact on PDF invoices. The proposed changes aim to modernize VAT reporting requirements and promote the use of digital invoicing systems, and should be implemented by 2030. Here are the key impacts of ViDA on PDF invoices:

1. Mandatory E-Invoicing: The Digital Reporting Requirements (DRRs) under ViDA include the implementation of mandatory e-invoicing. Taxable persons will be required to submit their transaction data digitally to the tax authority, including using e-invoicing to transmit invoice information.
   
2. Clearance and Non-Clearance E-Invoicing: ViDA distinguishes between clearance and non-clearance e-invoicing systems. In a non-clearance e-invoicing system, suppliers can directly send e-invoices to customers without requiring confirmation from the tax authority. This means that PDF invoices, which are typically sent directly by suppliers to customers, can still be used within the framework of ViDA as long as they comply with the standardized digital format required for e-invoicing.The clearance model, on its hand, won’t be deployed as it would require the e-invoice to be validated by a tax authority before the transmission to the recipient.
   
3. Default Electronic Invoicing: ViDA proposes that electronic invoicing, without a clearing system and using structured electronic files, becomes the default system for invoice issuance This means that PDF invoices may be limited to exceptional cases authorized by the relevant Member State, and taxable persons will have the right to issue electronic invoices according to European standards.In a word, ViDA, unlike some countries, won’t impose a specific format, but the e-invoice must be compliant with the EN16931 standard.
   
4. Real-time Data Exchange:As mentioned, ViDA aims to establish a more real-time based data exchange system for cross-border transactions and transactions subject to reverse charge. This means that the deadline for issuing an invoice for such transactions will be significantly reduced from the current maximum of 45 days to 10 days. This shift towards faster data exchange may encourage the use of electronic invoicing systems, including structured electronic files, instead of traditional PDF invoices.

Overall, the impact of ViDA on PDF invoices is that while they can still be used in certain circ*mstances, the focus is on promoting the adoption of e-invoicing and standardized digital formats for more efficient and real-time VAT reporting.

Conclusion