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New rules to simplify VAT e-invoicing for small businesses

Invoicing customers electronically is set to become easier for small and medium-sized businesses, when changes to an EU Directive on VAT invoicing come into effect in the New Year.

Under existing regulations, individual member states can impose a series of conditions on businesses seeking to issue electronic VAT invoices.

The second Directive on VAT invoicing, which takes effect on 1 January 2013, aims to promote and simplify the electronic invoicing process by ‘removing existing burdens and barriers’, and will apply to all member states.

The Directive will allow for the equal treatment of paper and electronic invoices, with the aim of promoting the uptake of e-invoicing.

Research suggests that the majority of invoices are still paper-based, and SMEs spend an average of 25 hours a week managing and chasing invoices, a significant proportion of which remain unpaid.

The new rules will allow small businesses to simplify their systems, reduce costs and improve cashflow.