We frequently talk about the challenges inherent in Brazil’s e-invoicing mandate, often in terms of its effect on shipping, logistics and the risk of operational shut downs. But there are separate concerns facing service vendors and procurement.
In many ways, service invoices (NFSe) are simpler for both parties than those for goods (NFe) since shipping, logistics and inbound receiving are not an issue. But, because tax calculations are assessed at the city level – and can vary from municipality to municipality – these invoices present a very different challenge from goods invoices.
Below are the key considerations for service invoices:
- Unlike goods invoices, services can be delivered before the invoice arrives.
- There can be multiple line items on a given invoice, but they must include only one type of service.
- Taxes are assessed by cities – not at the state or federal level – so integrations between your ERP and the government servers must be at the city level – requiring multiple integrations if your company does business in multiple jurisdictions.
- NFS numbers and return codes are provided by each individual city, again making it critical that connections are in place for each jurisdiction in which a company does business.
- The city takes most of the tax calculation burden for service invoices. In most cases, the city:
- Calculates the tax; then companies make accounting adjustments if needed.
- Handles validation. The buyer only has to manage withholdings, when applicable.
The good news? Standardization among cities is coming. While there are currently more than 400 cities in Brazil with varying degrees of difference, 50 have joined forces under ABRASF to develop a national NFSe model, and there is currently a pilot program among 8 cities to standardize NFSe throughout the country. However, no dates have been released indicating when this standardization might become a reality.