The Estonian government states that with the Accounting Law amendment published on 27 December 2016, all public procurement authorities (central, regional and local) will accept and process invoices in digital format from 1 March 2017.
In addition, this law mandates the use of certain formats, such as the Estonian standard (national XML-based standard) or the European eInvoice standard, for any eInvoice issued to a public contracting authority as of 1 July 2017.
A contracting authority within the meaning of Article 5 of the Public Procurement Law, together with the public administrations listed in the Accounting Law in force as of 1 July 2019, shall submit an invoice that can be processed by the machine (structured eInvoice).
eInvoicing Platform and Management Solutions
Estonia’s approach to processing eInvoices is individual rather than centralized like public sector contracting authorities. As a result, several private service providers offer eInvoice exchange services. Estonian private sector e-Invoice service providers include Billberry (@), E-arveldaja (@), Finbite (@), Telema (@) and Unifiedpost (@).
All of these are linked through mutual agreements (so-called roaming agreements) that allow e-Invoices to be sent from one accounting software or one operator’s enterprise resource planning (ERP) solution to another operator’s software. In addition, Estonia also uses Peppol to facilitate communication between eInvoice operators and create more opportunities for companies to exchange eInvoices across borders.
The Estonian government does not mandate or recommend any e-Invoice service providers, and economic operators are free to choose eInvoice solutions. Due to the mandatory B2G eInvoicing, the Estonian Ministry of Finance and RIK agreed that businesses can use e-Financials for free. All organizations billing electronically must register with RIK, which manages all information to forward eInvoices to registered companies and institutions.
Receiving and processing approach
Economic operators must have accounting software or ERP to create eInvoices. Apart from this, economic operators can also have different software providers outsource the creation of eInvoices.
The eInvoice service providers mentioned above also provide eInvoice management services, including the creation of eInvoices. Economic operators are free to contract with other private or public software providers such as Merit Tarkvara or the Registration and Information Systems Center (RIK).
RIK, a government agency under the Estonian Ministry of Justice, offers automated accounting software (eFinancial) to help entrepreneurs organize their accounting. It also allows them to create eInvoices. Unlike all service providers, RIK only charges after one year for its services. However, entrepreneurs can use the e-Finance software free of charge for the first year. On the other hand, the Ministry of Finance and RIK agreed to use the eFinancial software free of charge as of 2019. As a result, if a customer uses eFinancial only to send eInvoices to public institutions, no fee is charged to the customer.
In all cases, service and software providers are required to use an XML-based national standard, EVS 923:2014/AC:2017, for eInvoice exchange. The electronic signature is not required for eInvoices and the archiving period for eInvoices is seven years. While archiving abroad is allowed, e-Invoices are subject to prompt submission to the tax office.
In the B2G environment, e-Invoices must be issued to all public contracting authorities for all suppliers, while mandatory procurement applies to all public contracting authorities. For B2B, e-Invoicing is allowed but not mandatory. There are no explicit requirements for issuing eInvoices. However, the buyer’s approval is required to receive eInvoices in a B2B environment.
Monitoring the e-Invoice application
There is no systemic monitoring system for B2G e-Invoicing. From an eBusiness registry provided by the Center for Records and Information Systems (RIK), it is possible to see if a private company has (only) received eInvoices.
To give a statistic on the matter, over 370,000 eInvoices were received by government agencies, accounting for around 98% of invoices received by the public sector, during Estonia’s first year where only government authorities accepted eInvoices from cooperation partners.