The Israeli government has adopted e-Invoicing to combat tax evasion and for greater transparency. It has prepared appropriate integration systems for incoming and outgoing parties of invoice data. The digital integration approach in e-Invoicing provides advantages over traditional methods, including increased efficiency, cost savings, improved accuracy, and transparency.
Introduction to e-Invoicing in Israel
In 2024, Israel plans to implement the real-time reporting CTC model and electronic invoicing regime for B2B transactions. The first coverage will apply to VAT-registered businesses to cover only B2B transactions, including invoices and credit notes. However, cross-border invoices are excluded from the scope.
Recent Developments
The transition to e-invoicing in Israel will begin in January 2024, with invoices worth over 25,000 shekels (about EUR 6,211). Due to the current situation, the implementation of mandatory electronic invoicing has been postponed to April 2024.
B2B e-Invoice Implementation Timeline
Currently, electronic invoicing is optional in Israel and only applies to B2B invoices between companies. On the other hand, the Ministry of Finance has published a timeline for the implementation of the electronic invoicing system, which is determined by the value of the invoices.
The Israel Tax Authority’s phased implementation plan is as follows:
- January 1, 2024: Mandatory e-Invoicing for invoices over NIS 25,000.
- January 1, 2025: e-Invoices over NIS 20,000.
- January 1, 2026: e-Invoices over NIS 15,000.
- January 1, 2027: e-Invoices over NIS 10,000.
- January 1, 2028: e-Invoices over NIS 5,000.
Recognition and Authorization
An important issue for countries and companies in e-Invoice integrations is the recognition and authorization processes of e-Invoice. After e-Invoice payers meet the conditions contained in the documents shared by ITA, the tax office assigns an allocation number to the approved invoices. To get this number, invoices must contain the following information:
- Invoice ID
- Invoice type
- Accounting software number
- Issuer VAT number
- Invoice date
- Payment amount
- VAT amount
- The amount of payment including VAT and other mandatory information
Taxpayers who exceed the thresholds specified in the implementation plan are required to request an “Allocation Number” via the API or web portal of the ITA system. The allocation number, once received, must be attached to the tax invoice to ensure tax validity. Buyers can access detailed information through the tax office service by using the allocation number or the last 9 digits on the right. Suppliers are responsible for obtaining and sending the allocation number to the buyer, who can verify the invoice on the government platform.
Requirements for e-Invoicing in Israel
Several key elements must be considered for e-invoicing in Israel, including obtaining an allocation number, providing a digital signature, maintaining data accuracy, securely storing and verifying invoices for 7 years, and technical integration with the Tax Authority system for compliance.
How to send an e-Invoice?
e-Invoices can be sent in two ways:
Automatically through APIs, both test and production environments have unique contact IDs. The allocation number can be obtained automatically by the supplier through the relevant APIs.
It is suitable for small or micro-sized companies that do not have their own ERP system or have a low volume of invoices.
Melasoft e-Invoice Solution for Israel
Multiple companies in many countries use the unique, efficient and fast Melasoft e-Invoice solution. There are many reasons why we are highly preferred. The most important of these is that we can offer different system architecture alternatives. Briefly, we can list our e-invoicing options as follows.
- SAP Addon / Standalone Solution
- Direct Connection / Connection via Integrators
- (CPI/PI/PO/WSO2, etc.)
- Intermediate Layer between SAP and Government Portal
- Single Country / Multicountry
As for the Israeli e-invoicing solution,
As can be seen in the image, the supplier issues the invoice in its own SAP system. It sends the issued invoice to Melasoft SAP Add-on. Melasoft SAP Add-on, on the other hand, sends the invoice issued by the supplier to both the Buyer and the ITA for verification. If the invoice is verified without any problems, ITA assigns an Allocation Number to the invoice. If the invoice is not verified, the ITA will indicate why the invoice was not accepted. The reasons for verification and rejection are also shown in the image.
The capabilities of Melasoft e-Invoice Solution for Israel’s system architecture include monitoring the invoice in HTML, XML and PDF, cancellation of the invoice, sending, status check of the invoice and sending by e-mail.
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