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VAT Invoicing Rules

 Second Directive on VAT Invoicing (Council Directive 2010/45/EU) and Explanatory Notes

The second Directive on VAT invoicing was adopted on 13 July 2010 and  its provisions shall be applied by Member States as from 1 January 2013.

It aims to promote and further simplify invoicing rules by removing existing burdens and barriers. It establishes equal treatment between paper and electronic invoices without increasing the administrative burden on paper invoices and has the aim to promote the uptake of e-invoicing by allowing freedom of choice regarding the invoicing method.

For a clear understanding of the main VAT invoicing rule changes as from 1 January 2013 a set of Explanatory Notespdf Choose translations of the previous link  has been written in 21 languages. Please click on the speech bubble.


The European Commission on 28 January 2009 adopted a proposal to change the VAT Directive (2006/112/ECpdf) in respect to the invoicing rules, and published a Communication on the technological developments in the field of electronic invoicing.

The aim of the proposal is to increase the use of electronic invoicing, reduce burdens on business, support small and medium sized enterprises (SMEs) and help Member States to tackle fraud. The proposal simplifies, modernises and harmonises the VAT invoicing rules. In particular, it eliminates the current barriers to e-invoicing in the VAT Directive by treating paper and electronic invoices equally. The proposal is a key element of the Commission's Action Programme to reduce burdens on business by 25% by 2012, and is part of the Commission's strategy to combat VAT fraud more efficiently. For more information see the press release (IP/09/132 Choose translations of the previous link  ), the frequently asked questionspdf(41 kB) Choose translations of the previous link  , the proposal for a directive (COM/2009/21), and the Communication (COM/2009/20).



 Preparatory study on VAT invoicing

A study on the VAT invoicing rules contained in the VAT Directive (2006/112/EC) was carried out for the European Commission by PricewaterhouseCoopers. It aims to look at the four principal areas of invoicing - the requirement to issue an invoice, the content of an invoice, electronic invoicing and the storage of invoices - with a view to mapping the existing legislation in all Member States, analysing burdens on business and Member States' control needs, and providing recommendations for a more harmonised and modern set of VAT invoicing rules. The main parts of the study and their annexes are available from the following links:


Final Report
Phase 1: Mapping of invoicing legislation
Phase 2: Evaluation of legislation
Phase 3: Recommendations

 First Directive on VAT Invoicing (Council Directive 2001/115/EC)

The main piece of EU legislation on VAT invoicing is Directive 2001/115/EC, which has amended the 6th VAT Directive and had to be implemented into national Law before the 1st January 2004. The VAT invoicing rules are now contained in the VAT Directive (2006/112/EC). For details on how to apply the new rules in practice consult the list of Frequently Asked Questions (FAQ) for traders.

This measure has been of significant practical benefit to firms operating within the Internal Market because it  ensures that they have only to deal with a single, simplified set of rules on invoicing valid throughout the EU instead of  different sets of national legislation. At the same time, the Directive  requires Member States to recognise the validity of electronic invoices and allow cross-border electronic invoicing and electronic storage. The result is a significant reduction of firms' administrative costs, in particular for medium-sized and small firms and an important boost to electronic commerce, which was hampered by obsolete invoicing rules. The simplified rules  also aim to facilitate tax authorities' efforts to fight fraud.

The Directive was adopted by the EU Council on 20 December 2001. The Commission proposal was presented in November 2000, as part of the new VAT strategy launched by the Commission in June 2000 to bring about pragmatic improvements in the operation of the VAT system. The VAT strategy has been updated in October 2003.

The  Directive on VAT invoicing establishes

  • a list of ten mandatory general items of information that must be included on every invoice, plus four additional items that may be required in specific circumstances,
  • simplified arrangements for small companies and small-value invoices,
  • the requirement for Member States' tax authorities to recognise the validity of electronic invoices without any notification or authorisation system, on condition that the authenticity of origin and integrity of data are guaranteed through the use of electronic signatures or Electronic Data Interchange (EDI). Electronic signatures allow someone receiving data over electronic networks to determine the origin of the data and to check that it has not been altered. EDI is a system of secure electronic information transmission used by businesses,
  • the possibility in certain circumstances of outsourcing invoicing operations to a third party or to the customer (i.e. self-billing),
  • free choice of the place and method of storage of invoices and the acceptance of electronic storage, including on-line storage in a Member State other than the Member State in which the firm in question is located.


The proposal was prompted by complaints to the Commission from traders. Invoices are an essential part of the VAT system since they constitute the evidence on the basis of which the purchaser can deduct VAT that has been charged to him.

Each Member State had different rules concerning the obligatory information to be included on invoices and the form the invoices should take in order for VAT authorities to recognise their validity. With the establishment of the Internal Market firms were increasingly carrying out taxable operations in Member States where they are not established, and were finding that those operations were subject to several sets of VAT legislation. Moreover, many firms operating on an EU-wide scale had started centralising their invoicing operations, entrusting to a single branch the task of issuing invoices on behalf of all other branches established in different Member States. This centralisation of invoicing operations, which can have a clear economic rationale, was made difficult by the existence of fifteen different sets of invoicing rules.


 Electronic invoicing

Electronic invoicing, which can cut invoicing costs significantly, is now developing rapidly, notably as a result of the growth of electronic commerce. But in some Member States, electronic invoicing was previously prohibited or had to be accompanied by parallel transmission of paper invoices. In others it was permitted subject to varying conditions. Firms established in several Member States required therefore special authorisations in certain countries to apply cross-border invoicing arrangements and had to use a technology specific to each Member State for the creation, transmission and storage of the electronic invoices. They also had to cope with recording different items of information for each country, storing information for a different period in each country and sometimes even making simultaneous electronic and paper transmissions of data.


 Background documents