Article

E-Invoicing in Iceland

28 March 2023

Embracing the Digital Age

Iceland is a global leader in e-invoicing adoption with an impressive adoption rate, making it one of the most digitally advanced economies in the world. Unimaze takes a closer look at the country’s digital transformation journey.

We examine the benefits of e-invoicing in Iceland and how it has contributed to economic growth, providing valuable insights for businesses and policymakers alike.

We’ll also evaluate how businesses can implement e-invoicing and Unimaze’s role in helping them get started.

E-Invoicing in Iceland: A Quick Overview

E-Invoicing/CTC Model

  • B2G: Interoperability/Peppol
  • B2B: Post Audit

Mandatory Infrastructure

  • B2G: Contracted service providers and Peppol
  • B2B: Not Applicable

Mandatory e-Invoice Format

  • B2G: UBL 2.1, Peppol BIS
  • B2B: Not Applicable

Issuing Mandate

  • B2G: Suppliers to all contracting authorities
  • B2B: No explicit requirements

Receiving Mandate

  • B2G: Public authorities to accept e-invoices compliant to EN 16931
  • B2B: Buyer’s consent required

Digital Signature

Not Required

Archiving Abroad

Allowed under specific conditions

Archiving Period

7 years

E-Invoicing in Iceland

The Timeline

E-invoicing in Iceland has been in development for over a decade.

In 2009, the Icelandic government mandated that all public sector entities use e-invoicing in their procurement processes.

In 2010, the first e-invoicing solution was introduced in Iceland, followed by the establishment of a national e-invoicing platform in 2011.

In 2016, the government passed a law requiring all businesses to accept e-invoices from their suppliers by 2019, to streamline invoicing processes and reduce costs.

Since then, e-invoicing has become increasingly common in Iceland, with many businesses adopting the technology to improve efficiency and reduce environmental impact.

Government Initiatives to Promote E-Invoicing in Iceland

The Icelandic government has taken significant steps to promote the exchange of digital invoices between businesses and government entities.

These initiatives aim to increase efficiency, reduce costs, and improve transparency in the invoicing process.

One of Iceland's most notable government initiatives is the implementation of mandatory e-invoicing for all public sector entities.

Since 2019, all suppliers to the public sector have been required to submit their invoices electronically using a standardized format. This requirement has helped to streamline the invoicing process, reduce errors, and improve the speed of payment processing.

To support the adoption of e-invoicing by private sector businesses, the Icelandic government has also introduced a range of incentives and support measures.

For example, businesses can receive financial assistance to cover the cost of implementing e-invoicing systems.

Besides, the government has established a dedicated e-invoicing portal to facilitate the exchange of electronic invoices.

In addition, the Icelandic government has launched an awareness-raising campaign to promote the benefits of e-invoicing and encourage businesses to adopt the technology.

This campaign includes educational materials, workshops, and training programs to help businesses understand the benefits of e-invoicing and how to implement it effectively.

E-Invoicing Adoption Rate in Iceland

Iceland is one of the countries at the forefront of digitalization and has made significant progress in adopting electronic invoicing.

According to the Icelandic Business Register, approximately 52% of all invoices sent in Iceland are electronic. This is a significant increase from just a few years ago when e-invoicing adoption was much lower.

One of the key factors driving e-invoicing adoption in Iceland has been the government's efforts to promote digitalization and streamline business processes.

Another factor contributing to adopting e-invoicing in Iceland is the country's advanced technological infrastructure.

Iceland has a highly developed telecommunications network, with high-speed internet and mobile coverage available nationwide. This has made it easier for businesses to adopt e-invoicing and other digital processes.

Furthermore, the COVID-19 pandemic forced many businesses to shift to remote work and digital processes. Thus, e-invoicing has become more attractive for companies looking to streamline their operations and reduce the need for physical paper documents.

How E-Invoicing Works in Iceland

In Iceland, businesses that want to send and receive e-invoices must work with a service provider authorized to use the Icelandic national e-invoicing system, Rafræn Reikningur (RR).

Unimaze is a leading service provider in Iceland and an authorized Peppol Access Point provider. As an Access Point, Unimaze can connect Icelandic businesses to the broader Peppol network, enabling them to exchange e-invoices with other businesses worldwide.

Unimaze acts as an intermediary between businesses and RR, providing the technical infrastructure and support necessary to enable them to use the system.

Unimaze will help your business integrate its accounting software with RR, ensuring you can generate e-invoices and send them directly from your ERP or system.

When customers receive an e-invoice, they can view it online or download it as a PDF file. They can also pay the invoice electronically through RR, which offers a range of payment options, including bank transfer, credit card, and PayPal.

One of the advantages of using Unimaze as your service provider is that we offer additional services and support to businesses, such as assistance with compliance and regulatory requirements, as well as training and troubleshooting.

Benefits Of E-Invoicing for Businesses in Iceland

From faster payment processing and improved accuracy to enhanced security and better customer relationships, e-invoicing offers a multitude of benefits for businesses in Iceland.

Here’s what it means for Icelandic businesses to shift from paper to e-invoices.

  1. Say Goodbye to Paperwork and Hello to Savings: E-invoicing eliminates the need for paper-based invoicing, reducing the costs associated with printing, postage, and manual data entry. This means businesses can save money and invest in more important things, like growth and development.
  2. Faster Invoicing, Faster Payments: E-invoicing enables businesses to send and receive invoices quickly and securely, reducing payment delays and improving cash flow.

With e-invoicing, businesses in Iceland can get paid faster and stay ahead of the game.

  1. Leave Errors in The Past: Manual data entry can lead to invoice errors and inaccuracies, but e-invoicing eliminates this risk. With e-invoicing, businesses can rest assured that their invoices are accurate and complete, reducing the risk of disputes and delays.
  2. Time Is Money: E-invoicing streamlines the invoicing process, reducing the time and resources required to create, send, and process invoices. This means that businesses can focus on what really matters - growing their business and serving their customers.
  3. Security First: E-invoicing provides a secure and tamper-proof invoicing method, reducing the risk of fraud and ensuring that sensitive financial information is protected. With e-invoices, businesses can rest easy knowing that their financial data is safe and secure.
  4. Happy Customers, Happy Business: Electronic invoicing improves the customer experience by providing a fast, convenient, and transparent invoicing process. By offering a seamless invoicing experience, businesses can build better customer relationships and set themselves apart.
  5. Compliance Made Easy: E-invoicing helps businesses comply with regulatory requirements and maintain accurate financial records, reducing the risk of penalties and fines.

With e-invoicing, businesses can stay on top of their regulatory obligations and focus on what they do best - running their business.

Unimaze Can Help You Get Started With e-Invoicing in Iceland

As the leading service provider and authorized Peppol Access Point in Iceland, Unimaze is uniquely positioned to help businesses get started with e-invoicing by offering a range of customized solutions.

Whether starting with e-invoicing or looking to streamline your existing invoicing processes, Unimaze has the expertise and tools to help you succeed.

Our e-invoicing solutions include the Unimaze Digitizer, automated invoice processing, archiving, compliance, and regulatory support.

Unimaze's cloud based electronic invoicing solutions are designed to help businesses improve efficiency, reduce costs, and maintain compliance with regulatory requirements.

What’s more, Unimaze offers a user-friendly electronic invoicing platform that can be easily integrated into your business's existing systems, enabling you to start sending and receiving e-invoices quickly and seamlessly.

Unimaze also provides real-time invoicing data and analytics, allowing you to make more informed business decisions.

To get started, Book a Meeting with one of our e-invoicing in Iceland experts to discuss your business's unique needs.

e-Invoicing in Iceland: FAQs

Do I Charge VAT to Customers in Iceland?

Yes, if you are a business registered for VAT in Iceland, you may need to charge VAT to your customers in Iceland. The amount depends on the nature of the goods or services you provide and the VAT rates applicable to those goods or services.

What are the VAT Rules in Iceland?

In Iceland, the VAT (Value Added Tax) rules are governed by the Icelandic VAT Act, which sets out the rules and requirements for VAT registration, invoicing, reporting, and payment.

Here are some key aspects of the VAT rules in Iceland:

  • VAT Registration: Businesses with a taxable turnover of at least ISK 2,000,000 (approximately €14,000) in 12 months must register for VAT.

Iceland has three VAT rates: 24%, 11%, and 0%. The standard rate is 24%, the reduced rate is 11%, and the zero-rate applies to certain goods and services, such as exports, food items, and healthcare services.

  • Invoicing Requirements: Invoices must include specific information, such as the VAT registration number of the supplier and customer, the VAT rate and amount, and the date of supply. Invoices must be issued within 15 days of the end of the month in which the supply was made.
  • VAT Returns: Businesses must file VAT returns monthly or quarterly, depending on their turnover. The deadline for filing VAT returns is the last day of the month following the end of the reporting period.
  • VAT Payment: VAT must be paid to the tax authorities by the deadline for filing the VAT return.
  • VAT Refunds: Businesses can generally claim back VAT paid on purchases used for their business. The deadline for claiming VAT refunds is the end of the second calendar year following the year in which the VAT was paid.

Businesses need to understand and comply with the VAT rules in Iceland to avoid penalties and ensure compliance with the law.

Can You Claim VAT Back in Iceland?

Yes, businesses can generally claim the VAT back in Iceland if they are registered for VAT and if the VAT they have paid is related to their business activities. This means that if a business has purchased goods or services that are used for their business, they can usually claim back the VAT paid on those purchases.

However, certain rules and limitations exist to claim the VAT back in Iceland, and businesses must comply with the relevant regulations and requirements.

For example, businesses must keep accurate records of their VAT-related transactions and submit regular VAT returns to the Icelandic tax authorities.

Businesses need to seek professional advice on VAT regulations and requirements in Iceland to ensure compliance and maximize their ability to claim back VAT.

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