How to Implement Electronic Invoicing? A Practical Guide for Beginners
E-invoice
Jan. 20, 2026
Every paper invoice costs the European Union economy €8. With electronic invoicing, this cost is reduced to 40 euro cents.
The difference speaks for itself. Issuing a paper invoice costs €1.40, while in Hungary an e-invoice costs only 6 forints. Electronic invoicing operates at 40% lower costs – this can mean significant savings for your company.
In 2025, a change came: electronic invoices must comply with the European standard EN 16931.
This guide introduces the basics of electronic invoicing. You will learn about the legal background, technical requirements, and steps for successful implementation. Both novice and experienced entrepreneurs will find useful information to help them navigate the world of e-invoicing.
What is electronic invoicing and why is it important?
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Electronic invoicing is a new approach to document management. Section 259 of the VAT Act is clear: any invoice issued and received in electronic form is considered an electronic invoice.
Differences between paper-based and electronic invoices
Not all invoices sent digitally are electronic invoices. The key difference is that electronic invoices are issued in a certified electronic format, transmitted electronically, and stored electronically by both parties. Paper-based invoices can also be sent by email, but they are only valid when printed out.
There are significant differences in terms of costs:
Paper-based invoices: issuing, enveloping, mailing
Electronic billing: no printing, paper, or postage costs
When is an invoice considered truly electronic?
Three conditions must be met: it must be created electronically, issued electronically, and received by the recipient in digital form. Simply sending a PDF is not enough—it must also meet authenticity and integrity requirements.
The VAT Act stipulates three criteria:
Authenticity of the invoice (who issued it)
Data integrity (not modified)
Readability throughout the entire retention period
This is most often ensured by means of a qualified electronic signature and a time stamp.
Background to mandatory electronic invoicing
Mandatory introduction is underway in Hungary. From July 1, 2025, electricity and natural gas traders will be required to issue electronic invoices to all non-residential customers.
The obligation is two-way: not only must electronic invoices be issued, but they must also be received and archived. Companies must set up an appropriate electronic invoicing and archiving system.
Preparation is time-consuming. IT infrastructure development and staff training are necessary for a successful transition.
Legal and Technical Requirements
In Hungary, electronic invoicing is regulated by the VAT Act. This legislation specifies the mandatory transition schedule and operating conditions.
Hungarian Electronic Invoicing Rules
The VAT Act is clear: an electronic invoice is only one that has been issued electronically AND accepted electronically. An invoice created on a computer but sent in printed form is not an e-invoice. The consent of the invoice recipient is required, but this may be tacit – for example, if they pay the invoice.
The legislation sets out three criteria:
Authenticity of origin (identification of issuer)
Data integrity (protection against modification)
Readability throughout the entire retention period
These can be ensured by any reliable business control procedure. The law specifies two specific methods: qualified electronic signatures and EDI-based invoicing.
Digital Certificate and Time Stamp
The law on electronic signatures provides the legal framework. A digital certificate is an electronic document that proves the correspondence between the signing and verification keys.
The law does not make electronic signatures and time stamps mandatory, but they are the most effective means of authentication. An electronic signature verifies the identity of the issuer, while a time stamp records the exact time of issue.
A timestamp is data that certifies that the document existed at the time of timestamping and has remained unchanged since then.
File Formats and Content
The format of electronic invoices can be freely chosen – they can be in PDF, image file, or text format. However, during tax authority audits, they can only be submitted in the formats specified in the Invoicing Regulation.
Accepted formats for NAV:
.txt (text file)
.csv, .dbf, .mdb, .xls (Excel formats)
.xml format
unformatted print files
The electronic invoice must contain the mandatory information specified in the VAT Act. This information is identical to the content of traditional invoices. It must also include a reference to electronic issuance: "Elektronikus," "Electronic," or "Elektronische Rechnung."
In the electricity and natural gas sectors, electronic invoicing will be mandatory for non-residential customers from January 1, 2025. This affects not only service providers but also invoice recipients, who must also prepare for receipt and storage.
Practical steps for introducing e-invoicing
The transition to electronic invoicing affects several areas at once. Successful implementation requires coordination between partners, internal processes, and technical solutions.
Choosing the right invoicing software
The choice of invoicing system determines the success of the entire process. The program must comply with legal requirements and be able to generate invoices with electronic signatures and time stamps. Without this, partners will face additional work during acceptance.
When making your selection, it is worth considering the following:
Legal compliance and automatic updates
Easy to use
Secure e-invoice storage
Reliable customer service
Additional features: inventory management, webshop connection
For cloud-based systems, a browser is sufficient for use. The service provider stores e-invoices, which is more secure than local storage.
Partner consultation and consent
The recipient's consent is required for electronic invoicing. This can be given in writing, verbally, or tacitly—for example, by paying the invoice. According to the NAV, it is advisable to record the agreement in writing.
Clarify in the partnership agreement:
E-invoice format (PDF, XML)
Method of transmission (e-mail, system connection)
Treatment process
You cannot oblige your partners to accept electronic invoices. Discuss the transition with them in good time.
Organizing delivery and tracking
Email is the simplest method, but it does not allow you to track the status of the invoice. More advanced solutions send a notification to the buyer, who downloads the invoice via a secure connection.
E-invoice delivery process:
Sending notification of first delivery attempt
In case of unsuccessful delivery, another attempt will be made after five business days.
After the second attempt, the invoice shall be deemed to have been delivered five working days later.
In modern systems, downloads can be tracked – you can see when the customer viewed the invoice.
Archiving and long-term preservation
Electronic invoices may only be stored in electronic form. A printed version does not replace the original. During storage, you must ensure that:
Protection against deletion and destruction
Protection against subsequent modification
Protection against unauthorized access
Readability for 8 years
When choosing an archiving solution, consider the size of your company, the volume of invoices, and retrieval requirements. You can choose a reliable service provider, your own server, or cloud-based storage.
Report the archiving location to the tax authority. Perform archiving regularly, either monthly or quarterly.
Preparing for the Changes of 2025
The 2025 European invoicing changes require preparation. Concrete steps are needed to ensure a smooth transition.
Introduction of EN 16931 standard from 2025
From July 1, electronic invoices must comply with European standard EN 16931 in terms of both content and structure. The standard ensures the interoperability of invoices between EU member states. Hungarian data reporting is also aligned with this – the NAV Online Invoice system complies with the standard, and domestic data reporting is based on this uniform structure.
Following the adoption of the ViDA (VAT in the Digital Age) package, Member States may introduce mandatory e-invoicing from March 25, 2024. From 2030, this will become mandatory for all EU Member States.
System Update and Compliance Check
As a first step, check whether your current billing program is capable of generating invoices in accordance with EN 16931. If not, a system update or the introduction of a new solution will be necessary. The recipient side must also be prepared to interpret the new structure.
Before changing service providers or updating your system, perform internal testing and data protection compliance checks. The validation rules for the Online Invoice system will change – it is worth consulting with developers now.
Automation and Efficiency Improvement
The uniform standard means a uniform processing format. This facilitates the automatic processing of electronic invoices. Invoices can be entered into your accounting systems more easily, reducing manual intervention and the risk of data entry errors.
The changes coming in 2025 reinforce the European direction: electronic invoicing will become the default form of operation. This means both legal compliance and business advantages through more efficient financial processes.
Summary
The introduction of electronic invoicing is no longer an option, but a business necessity. The costs of paper-based processes and European standardization are both pointing in this direction.
The three pillars of a successful transition: selecting the right software, conducting partner consultations, and developing a reliable archiving system. Compliance with the EN 16931 standard will be mandatory from 2025—it is worth keeping this in mind when choosing a system.
The initial investment pays off. A well-functioning e-invoicing system not only ensures legal compliance, but also simplifies financial processes.
Start planning now. Compare the available solutions, inform your colleagues, and consult with your customers. The sooner you start preparing, the smoother the transition will be.
Electronic invoicing enables more efficient operations. It is worth taking advantage of this opportunity now.
Frequently Asked Questions
Q1. What is electronic invoicing? Electronic invoicing involves issuing, transmitting, and storing invoices in electronic form. This method is more cost-effective and environmentally friendly than traditional paper-based invoicing.
Q2. What are the advantages of e-invoicing? Electronic invoicing significantly reduces costs, speeds up processes, and is environmentally friendly. It also improves data accuracy and makes it easier to manage and store invoices.
Q3. How can electronic invoicing be introduced? To introduce e-invoicing, choose a suitable invoicing program, consult with your partners, set up a secure archiving system, and provide training for your employees. It is also important to comply with legal requirements.
Q4. What legal requirements must be met for e-invoicing? Electronic invoices must ensure the authenticity of their origin, the integrity of their data content, and their legibility. Special technical solutions (e.g., electronic signatures, time stamps) may be required for issuing and storing invoices.
Q5. What should be considered when storing electronic invoices? E-invoices must be stored exclusively in electronic form for at least 8 years. It must be ensured that the invoices are protected against deletion, modification, and unauthorized access, and that they remain legible and understandable throughout the entire storage period.
