RO e-Factura, mandatory in 2024 | 7 reasons to choose an ERP system for your electronic invoicing journey

Starting from January 1, 2024, all companies conducting taxable operations within Romania must adopt the electronic invoicing method. Specifically, ANAF has introduced the RO e-Factura system, within which taxpayers are required to report invoices in XML format, both those resulting from B2B transactions and those from B2G relationships.

If you are a company operating in Romania, there are slim chances you haven’t already heard about e-Factura. However, the new electronic system imposes significant changes, and in this article, we will provide answers to the most common uncertainties, but we will also present an optimal Microsoft solution for the new regulations – Dynamics 365 Business Central ERP.

What should you know about RO e-Factura?

In 2024, the e-Invoice system represents the new normality. According to the provisions of Law 227/2015 and Law no. 199/2023 regarding the Fiscal Code, all invoices issued in Romania must be transmitted through the new RO e-Invoice system. Initially, this rule applied only to B2G relationships (between companies and public institutions), but it has now been extended to transactions conducted by taxpayers in B2B contexts (between taxable entities registered in Romania).

But… what is an electronic invoice? No, it’s not that document in PDF format sent to the customer online (via email). In this case, the electronic invoice is an XML file – using the UBL (Universal Business Logic) syntax – which structures the content of an invoice into a set of data. After this conversion, the invoice takes on a new form and can be read by a machine. This ensures that the information is transmitted electronically, received, processed, and automatically approved for payment.

To begin with, all economic operators must register in the SPV (Private Virtual Space), a service launched by ANAF with the aim of creating a single communication channel for any administrative documents. Through the SPV, taxpayers exclusively transmit invoices in XML format.

Is e-Factura mandatory for me?

Regardless of whether you are a commercial company, self-employed individual (PFA), limited liability company (II), or individual entrepreneur (IF), liable for VAT or not, you are obligated to transmit invoices through the RO e-Invoicing system. This obligation applies to transactions whose delivery or provision takes place within the territory of Romania.

The relationships covered within the e-Invoicing system are B2B (between taxable entities registered in Romania) and B2G (between businesses and public institutions). There is no obligation to transmit documents for invoices issued to individuals, except for tourist establishments that collect payment for services with holiday vouchers.

The stages of e-Factura implementation

The transition to a generalized electronic invoicing system is a significant step for the entire business sphere. Therefore, to facilitate the process, during the period from January 1 to March 31, 2024, no sanctions will be applied, considering it as a period of adjustment to the new system. Thus, the implementation of the e-Invoice system will take place in two stages.

Transition stage (January 1 – June 30, 2024)  

In the initial stage of implementing the system, suppliers will need to submit invoices for all taxable transactions carried out in Romania to the new platform. This rule also applies to foreign taxpayers registered for VAT purposes in the country. The procedure will follow these steps:

1. 1. Registration of the legal entity in SPV (Private Virtual Space)
2. 2. Generation of financial documents in both XML format and paper format
3. 3. Registration of invoices in the RO e-Invoice system

During the mentioned period, no sanctions will be applied, and traditional invoices will be still valid.

Old format elimination stage (starting from July 1, 2024)

Starting from July 1, 2024, the rules change. Traditional invoices will no longer be recognized for tax purposes, neither those on paper nor those in formats other than XML established by ANAF. Those who do not comply with the requirements risk fines equivalent to the VAT amount stated on the invoices not transmitted.

Welcome, e-Factura!

The new invoicing method may pose challenges for economic operators initially, but upon completing the entire implementation process, it will become evident that this reform is necessary and brings numerous benefits. The e-Invoice system is welcomed and useful for the entire business sector as it pursues the following objectives:

• • • • Combatting fraud and tax evasion: One of the main reasons for implementing electronic invoicing is to combat fraud and tax evasion. This ensures a higher degree of transaction transparency, and tax authorities can intervene promptly when deviations are detected.
    • • Streamlining tax collection: Particularly in the field of VAT, efficiency in tax collection is achieved by eliminating the bureaucracy associated with managing financial documents, thereby ensuring operational efficiency and significant time savings.
    • • Part of national recovery and resilience plan (PNRR): The e-Invoice system is included in the PNRR and is expected to reduce the VAT collection deficit by at least five percentage points by the second quarter of 2026 compared to 2019. This will result in increased VAT and direct tax collection by at least 7.6 billion lei.
    • • Preventing fraud and counterfeiting: Electronic signatures applied to invoices transmitted in the system also contribute to preventing fraud and counterfeiting.
    • • Limiting ecological footprint: Reduction in paper consumption and limitation of physical transportation of invoices contribute to environmental protection, thereby reducing the ecological footprint.
    • • Innovation and digitalization of companies: The necessity of developing technological solutions for more efficient data management drives innovation and digitalization in companies.

    Through the new e-Invoice system, the digitalization of companies in Romania is taken to another level. Standardization of the electronic invoicing system brings beneficial effects not only on the economy and business activities but also in terms of environmental impact.

Let’s get into the details

The electronic invoice now mandatory, which is why all economic operators need to understand the rules imposed and the risks associated with non-compliance. In addition to the information provided in the first part of the article, there are details of significant importance. Therefore, for an informative and simplified transition process, we will answer some of the most frequently asked questions in the context of the new invoicing method.

Will traditional invoices still be valid?

Although they are still accepted, the traditional format will not be valid for much longer. Starting from July 1, 2024, paper-based invoices or those in the old electronic format will no longer be recognized for tax purposes. Therefore, we recommend transitioning to e-Invoices as soon as possible.

What type of invoices are uploaded into the system?

Only regular invoices are uploaded, not simplified ones, nor fiscal receipts with VAT codes. Additionally, self-invoices are transmitted.

What is the deadline for transmitting invoices?

Invoices issued for deliveries of goods and services in Romania have a deadline of 5 working days from the date of issuance to be transmitted in the RO e-Invoice system.

Is there a predetermined order for transmission?

At this moment, there is no clear rule in this regard. The invoice can be transmitted either to the customer and then to the e-Invoice system, or vice versa. The important thing is to transmit it in the established format and time frame (within the 5 working days).

Can invoices be modified or canceled after transmission?

To err is human, but here we are dealing with electronic systems… so the answer is NO! An invoice that has already been transmitted cannot be modified or canceled. Once transmitted, the invoice can only be modified by issuing a corrective invoice (credit note, with the “-” sign).

Will I be penalized if I do not comply with these rules?

The answer is YES. And we do not recommend deviating from the rules, as the penalties will be quite severe. Non-compliance will constitute a contravention and will incur fines ranging from 5,000 lei to 10,000 lei for large taxpayers, from 2,500 lei to 5,000 lei for medium taxpayers, and from 1,000 lei to 2,500 lei for other legal entities and taxable individuals.

Do I need a special application for e-Factura?

Yes, but there are several alternatives in this regard. You can use the free application provided by the Ministry of Finance, or you can use your own application by interconnecting with the RO e-Invoice system, using a series of microservices exposed as an API (Application Programming Interface).

The most suitable option for entrepreneurs who want to implement an automated electronic invoicing system is an ERP software.

ERP software – your e-Invoicing solution

If you’re looking for a solution to ease your transition to the new invoicing method, we suggest opting for an ERP software integrated with the RO e-Invoice system. This way, the entire process of electronic invoicing is streamlined through automation and tailored to your specific business model.

Enterprise Resource Planning (ERP) software is a solution for businesses in need of a capable and adaptable computer system, and Microsoft Dynamics 365 Business Central is a premium technology within the most popular ERP solutions worldwide. Business Central comes with a set of best practices and validated workflows used by companies across various industries.

With an ERP system proposed by Microsoft, issuing invoices is no longer a burden. Once integrated with e-Invoice, the system automatically generates an XML file upon invoice issuance and transmits it to ANAF. Although implementing an ERP system represents an investment from the taxpayer, it will eliminate several formalities in the future, simplifying the tax burden.

The most significant benefits of using such software include:

1. 1. Operational Efficiency: Issuing fiscal invoices, pro forma invoices, receipts, and other payment documents is done with just a few clicks. Additionally, the simple and intuitive web interface allows you to quickly export your invoices and documents.
2. 2. Invoice Tracking: The ERP system runs in the cloud and can be accessed from anywhere, ensuring that invoices are always visible and at your team’s fingertips.
3. 3. Error Avoidance: Automation of the invoicing process eliminates the risk of errors associated with manual data entry, which are often unavoidable human errors.
4. 4. Reduced Time for Invoice Transmission: Using an ERP system significantly reduces the time spent on the invoicing and simplifies the entire process by eliminating manual actions.
5. 5. Insight Generation: The ERP allows you to analyze your company’s performance. You have access to a wide range of sales management reports such as overdue invoices, invoices issued for a specific client, invoices collected within a certain period.
6. 6. Penalty Avoidance: Due to constant updates, you can be sure that the invoices issued and transmitted in the RO e-Invoice system comply with the current law.
7. 7. Technical Support: In case of any obstacles, issues, discrepancies, the team responsible for implementing the ERP is available to help you identify and resolve them.

The transition to e-Invoice will be a challenging process for many companies in Romania. According to a study conducted by EY Romania, 83% of the participating companies were not prepared for the new system as of January 1, 2024, and only 17% stated that they would be able to report invoices to the new system without impediments.

Using an ERP system relieves companies of many worries and helps them overcome the challenges of transitioning to electronic invoicing. In this context, the LINKSOFT team can help you implement the right ERP solution for your business and its specific needs.

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