EU accounting and tax glossary

Bookkeeping

Recording income and expenses in the period they belong to, regardless of when the cash moves. The standard method for companies across the EU.

Taxes

Instalments of income or corporate tax paid during the year based on the previous year's tax, settled against the final liability in the annual return.

Bookkeeping

The yearly balance sheet, profit and loss account and notes that companies must prepare, approve and file with a public register.

Documents

The legal duty to keep invoices and accounting records for a set number of years in a readable, authentic and unaltered form.

Bookkeeping

The size limits above which a company's annual accounts must be audited by a statutory auditor. Set nationally within EU size categories.

National regimes

The French simplified status for sole traders: contributions and, optionally, income tax paid as a percentage of turnover, with VAT exemption under the franchise thresholds.

Digital and data

Assigning each document to the right expense or income category and ledger account automatically, based on its content and the user's previous choices.

Payments and banking

Matching every transaction on the bank statement with an invoice, receipt or other record so the books and the bank agree.

Bookkeeping

Recording income when money is received and expenses when they are paid. Simple, allowed for small businesses in many EU countries.

Bookkeeping

The structured list of ledger accounts a business posts to. Some countries prescribe a national chart, others leave it to the company.

Taxes

The tax companies pay on their annual profit. Rates and bases are national; the EU coordinates only anti-avoidance rules and the minimum tax for large groups.

Documents

A corrective document that reduces or cancels an invoice already issued, for example after a return, a discount or an error.

Digital and data

The contract required by Article 28 GDPR between a controller and a processor, setting out what the processor may do with personal data.

Bookkeeping

A cost incurred to earn taxable income that reduces the tax base. Must be documented, business related and not excluded by law.

Bookkeeping

Spreading the cost of a long-lived asset over the years it is used, instead of deducting it all at once in the year of purchase.

Bookkeeping

Keeping accounting records in software rather than on paper, increasingly required by law together with digital submission to the tax authority.

E-invoicing

An invoice issued, sent and received in a structured electronic format that software can process automatically. A PDF is not an e-invoice under EU law.

VAT

A periodic report of sales to VAT-registered customers in other EU countries, listing each customer's VAT ID and the total value.

Documents

Data attached to an electronic document that identifies the signatory and shows agreement. Regulated EU-wide by the eIDAS regulation in three levels.

Documents

A trust service that proves a document existed in a given form at a given time. Qualified timestamps carry a legal presumption of accuracy.

E-invoicing

The European standard that defines the data model of an electronic invoice. Every EU e-invoicing format is built on it or maps to it.

Payments and banking

A QR code standardised by the European Payments Council that holds the data of a SEPA transfer so the payer can pay an invoice by scanning it.

E-invoicing

The Italian national e-invoice format that must pass through the SdI exchange system. Italy has run mandatory B2B e-invoicing since 2019.

Bookkeeping

The twelve-month period for which a business prepares accounts and tax returns. Usually the calendar year, but many countries allow a different year end.

National regimes

The Czech flat tax for sole traders: one monthly payment that covers income tax, pension and health insurance, in three bands by revenue.

VAT

A simplified tax regime where tax is calculated as a percentage of turnover or a fixed amount, instead of from actual profit or VAT records.

Digital and data

The EU regulation on personal data that applies to every business processing data of individuals, including the names and contact details on invoices.

Payments and banking

The international bank account number used for all SEPA payments. Country code, check digits and the national account identifier in one string.

VAT

A sale of goods transported from one EU member state to a VAT-registered customer in another. Exempt at origin, taxed as an acquisition at destination.

VAT

The import variant of OSS for goods worth up to EUR 150 sold to EU consumers from outside the EU.

National regimes

The German and Austrian small business VAT exemption. Businesses under the national turnover limit issue invoices without VAT and file no VAT returns.

National regimes

The Dutch kleineondernemersregeling: a VAT exemption for businesses with turnover under the national limit, applied for with the tax authority.

E-invoicing

Poland's national e-invoicing system. Structured invoices are issued through the platform and receive an official number that makes them legally delivered.

Legal forms

A separate legal entity whose owners are liable only up to their contribution. GmbH, SARL, s.r.o., BV, Sp. z o.o. and similar forms across the EU.

Bookkeeping

The smallest company category under EU accounting rules, entitled to very simplified annual accounts and reduced filing.

Bookkeeping

A fixed amount per kilometre that compensates the use of a private vehicle for business trips, usually tax free up to a national rate.

E-invoicing

The Greek digital bookkeeping platform of the tax authority AADE, where invoices and accounting entries are reported electronically.

Digital and data

Technology that turns a photo or scan of a receipt or invoice into text, so the amounts, dates and parties can be extracted and booked without retyping.

Payments and banking

The EU rules that oblige banks to let licensed third parties access account data and initiate payments with the customer's consent.

VAT

An EU portal that lets a business declare and pay VAT on cross-border B2C sales in one member state instead of registering in each country.

Taxes

Interest charged by the tax authority on tax paid late, and the statutory interest a business may claim from a customer who pays an invoice late.

E-invoicing

An open network for exchanging e-invoices and other business documents between registered participants through certified access points.

Bookkeeping

A fixed daily amount that covers meals and incidental costs on business trips, tax free up to national rates that depend on the destination and duration.

Taxes

The tax individuals, including sole traders, pay on their income. Business profit is taxed together with other income under national progressive or flat rates.

Documents

A preliminary document that states what will be invoiced. It is not a tax document and does not create a VAT liability.

Documents

The highest eIDAS level of electronic signature, legally equivalent to a handwritten signature in every EU country.

National regimes

The Italian flat-rate regime for individuals with revenue up to a fixed ceiling: a substitute tax on a percentage of turnover, no VAT and simplified bookkeeping.

Bookkeeping

Spending on hospitality, gifts and entertainment of business partners. Deductibility is limited or excluded in most EU countries.

VAT

A VAT mechanism where the customer, not the supplier, accounts for the tax. Used for cross-border B2B services and some domestic sectors.

National regimes

The Polish lump-sum tax on recorded revenue: income tax as a percentage of turnover, with rates depending on the activity, instead of tax on profit.

E-invoicing

An OECD-defined XML file of accounting data that tax authorities in several EU countries require for audits or as a periodic filing.

Documents

An arrangement where the customer issues the invoice on behalf of the supplier. Allowed across the EU if both sides agree in advance and the supplier accepts each invoice.

Payments and banking

The area in which euro transfers and direct debits work under the same rules and at domestic cost, covering all EU countries and several neighbours.

VAT

A simplification that exempts businesses under a turnover limit from charging VAT, filing regular VAT returns and deducting input tax.

Taxes

Mandatory payments for pension, health and other insurance schemes, paid by employers, employees and the self-employed under national rules.

Legal forms

An individual running a business in their own name with unlimited liability. The simplest legal form, taxed under personal income tax.

Taxes

The period during which the tax authority may assess or correct a tax and during which a business must keep its records. Typically three to ten years.

Digital and data

A third party that a processor uses to carry out part of the processing, such as hosting, e-mail delivery or document extraction. Must be disclosed to the controller.

Taxes

The periodic declaration a business files with the tax authority to report its tax base and the tax due. VAT returns are monthly or quarterly; income tax returns are annual.

VAT

A consumption tax charged on most goods and services in every EU country, collected by businesses and paid to the tax authority.

VAT

The number a tax authority assigns to a VAT-registered business. Starts with the country code and is required on invoices and for cross-border trade.

VAT

The annual turnover below which a business may stay outside VAT. Set nationally, so it differs widely across the EU.

E-invoicing

Spain's certified invoicing rules: invoicing software must generate tamper-proof records with hash chains and QR codes and may send them to the tax authority in real time.

E-invoicing

The EU reform package that introduces mandatory e-invoicing and digital reporting for cross-border B2B transactions from 2030.

VAT

The European Commission's system for checking whether an EU VAT ID is valid. Free to use and required evidence for zero-rated cross-border supplies.

Taxes

Tax deducted at source by the payer and remitted to the tax authority on behalf of the recipient, typically on dividends, interest, royalties and some service fees.

E-invoicing

The German national profile of EN 16931, mandatory for invoices to German public bodies and one of the accepted formats for the German B2B mandate.

E-invoicing

A hybrid e-invoice format: a PDF that a person can read with an embedded XML that software can process. Developed jointly by Germany and France.