European e-invoicing policy is written for central government and paid for by local government. When the saving potential in the public sector was broken down using figures from the Danish and Swiss federal administrations, the split came out at roughly 8% for federal administration, 40% for states and regions, and 52% for cities and municipalities. The layer with almost all of the legislative power holds under a tenth of the money.
The European Commission’s own evaluation of the e-invoicing directive supplies the empirical confirmation, and it is stark. In France in 2022, national authorities received 4.3 million electronic invoices. Sub-central authorities received 66.74 million — more than fifteen times as many. The same report concedes that Commission-level verification of sub-central implementation is not possible, because only a few Member States built any mechanism to monitor it.
Why public sector e-invoicing is the market maker
The public sector is not merely a large invoice recipient. It is the one counterparty almost every business in a country has, which is why public sector e-invoicing policy moves national adoption in a way no private buyer can.
By invoice volume it sits in the top three industries with at least 10% of the market. By number of trading parties it leads outright: between 45% and 65% of all companies in a country supply the public sector and send invoices to it, and 100% of enterprises and households receive invoices from it — tax notices, utility bills, waste charges, licence fees. No private buyer has that reach. If public bodies change how invoices are exchanged, a large share of the national business population has to change with them.
That is why the estimate for Europe’s public sector — at least €40 billion a year in savings across inbound and outbound invoices, with under 10% of it captured at the time the figure was published in the mid-2010s — mattered beyond public finance. It was a lever on the whole market, not a line item.
The directive gave the extra year to the wrong layer
Directive 2014/55/EU required contracting authorities to be able to receive and process invoices compliant with the European standard, EN 16931. Central authorities had until 18 April 2019. Sub-central authorities could be granted a further twelve months, to 18 April 2020, where a Member State exercised the option in its transposition law.
Read against the 8/40/52 split, that derogation looks backwards. The layer holding roughly half the savings and the overwhelming majority of the transaction volume was the one given more time and less scrutiny — and, being fragmented across thousands of autonomous entities, it was also the layer least able to act without central coordination.
The second design choice compounds it. The directive obliges the recipient to accept; it explicitly does not oblige the supplier to send. A public body can be fully compliant while receiving almost nothing electronically. Compliance and adoption were decoupled from the start, and the Commission’s evaluation shows exactly where that led.
What the Commission’s own evaluation found
The 2024 report on the effects of the directive is unusually candid for a self-assessment.
- Central capability is essentially done. At the time of the review, receiving capabilities were in place at central level in 25 Member States, with Cyprus and Slovakia still building national platforms.
- Sub-central implementation is unverified. The report states plainly that it cannot be fully checked, because few Member States created monitoring mechanisms. The exceptions are those that mandated supplier sending and therefore have central visibility — France, Italy and Spain.
- Only mandates moved adoption. Seventeen Member States made it compulsory for suppliers to invoice the public sector electronically, fully in thirteen and partially in four. Those report full or near-full uptake. Elsewhere adoption stayed low except in digitally mature countries such as Estonia, Finland and Sweden.
- Practice can substitute for law. Uptake also rose where authorities were administratively permitted to require e-invoicing in tenders — what the report calls a mandate by practice. This is available to a municipality without any change in national legislation.
Broader adoption tracked the same pattern. Eurostat data cited in the report show the share of EU enterprises with more than ten employees sending electronic invoices rising from roughly 10.3% in 2013 to 32.2% in 2020 — real growth, but nowhere near the level a directive covering every public buyer on the continent might have been expected to produce.
The municipal business case, in numbers
Cities are unusual among public bodies in being large on both sides of the ledger. Two rules of thumb built from cross-country data: a city receives on average about one invoice per inhabitant per year, and a city together with its service units — taxes, energy distribution, waste, communications — issues typically two to six bills per inhabitant per year. A city of a million people is therefore handling several million documents annually in both directions.
Estimated minimum annual savings scale accordingly, assuming a mix of 40% unstructured PDF and 60% fully automated structured exchange:
| Population | Comparable cities | Minimum annual saving potential |
|---|---|---|
| 0.5 million | Copenhagen, Dublin, Lisbon, Zurich, Frankfurt | €15 million |
| 1 million | Amsterdam, Brussels, Munich, Prague, Stockholm | €30 million |
| 2 million | Barcelona, Budapest, Hamburg, Paris, Vienna, Warsaw | €55 million |
| 3 million | Berlin, Madrid, Rome | €80 million |
| 7 million | London, New York, Tokyo | €200 million |
Treat the absolute figures as an order of magnitude from the mid-2010s rather than a current quotation. Even discounted heavily, they exceed the annual IT budget of most cities on the list, which is the point: for a mid-sized European city this is not a digitisation project competing for funds. It is a funding source.
The Commission’s own numbers are more conservative and independently derived: around €5.28 saved per electronic invoice issued and €8.40 per electronic invoice received, at an assumed labour cost of €46 per hour. It also puts the benefit of automating the full order-to-pay chain — orders, transport documents, invoices and payment notices — at between €25 and €65 per purchase-to-pay cycle, which is where the larger prize sits for any buyer with a real procurement function.
Set against that, per-transaction costs are small. Suppliers surveyed for the evaluation reported prices between €0.05 and €0.30 per e-invoice depending on the package, though very low-volume users occasionally paid far more. Nine Member States provide a free central system for sending invoices to public bodies.
Reviewing the same municipal data, the analyst Bruno Koch concluded that “Cities are in an excellent position to push e-invoicing/e-billing and to save much money.” A decade later, most still have not.
Why the municipal layer stalls anyway
Three reasons, none of them technical.
Fragmentation. The public sector is not one segment. State administration is one part; regions, cities and municipalities are others, often with high constitutional autonomy. A national programme has to convince thousands of independent budget holders rather than instruct them. Brazil and Mexico demonstrated that country-wide e-invoicing is achievable under a federal structure, so this is a coordination problem rather than a constitutional impossibility — but it is a real one.
Split incentives. Central government has the power to legislate and the smallest share of the benefit. Municipalities have the benefit and no legislative power. Absent a national mandate on suppliers, each municipality faces the classic opt-in problem alone, and a single city has even less leverage over its supplier base than a large corporation does.
Two platforms, two connections. The evaluation flags a specific irritant: where a Member State runs one national platform for B2G and another for B2B, a company has to connect to both. Every additional connection is a reason for a small supplier to keep sending PDFs, and small suppliers are exactly who a municipality buys from.
What changes between now and 2035
Three developments will decide whether the sub-central layer closes the gap.
National B2B mandates are doing what the directive did not. Where suppliers are compelled to issue structured invoices for domestic B2B, they arrive at municipal accounts payable as a side effect. The evaluation already observed this spillover in Italy, Slovenia and Spain, where Eurostat figures for general e-invoicing use jumped in step with the B2G supplier obligations.
The directive itself is being reopened. The Commission has signalled its intention to convert Directive 2014/55/EU into a Regulation as part of the Single Market Strategy, which would remove national transposition variation — including, presumably, the discretion that produced the sub-central derogation in the first place. Anyone with a stake in this should follow the consultation rather than wait for the text.
ViDA sets the floor. Under Council Directive (EU) 2025/516, digital reporting for cross-border B2B applies from 1 July 2030, and Member States running domestic real-time transaction reporting must align with the EU model by 1 January 2035. Municipalities are buyers subject to the same invoice rules as everyone else, and the systems they are procuring now will still be running when those dates arrive.
The single most effective lever remains the cheapest one. Denmark’s approach, cited approvingly in the evaluation, was to require e-invoicing capability through the Bookkeeping Act so that the functionality arrives inside the accounting software businesses already use. Small suppliers responding to the Commission’s consultation said the same thing they had said in 2013: the decisive factor is whether their existing system can already do it.
What to do with this
If you sell to the public sector: size the opportunity by entity count and invoice volume, not by headline procurement spend. Ministries are visible and small; the municipal layer is where the documents are. Check whether the Member State runs separate B2G and B2B platforms before assuming one connection covers both.
If you are a municipality: the mandate-by-practice route is available now. Requiring electronic invoicing in tender conditions needs no change in national law in many Member States, and it is the intervention the Commission’s evidence associates with actual uptake. Sizing the case on both sides — payables and the bills your service units issue — usually doubles it.
If you are drafting national policy: the monitoring gap is the finding to act on first. Member States that mandated supplier sending got central visibility as a byproduct and can answer questions about their own uptake. The rest cannot, which means they cannot target support at the layer holding half the benefit.
Frequently asked questions
Does Directive 2014/55/EU require suppliers to send electronic invoices?
No. It obliges contracting authorities and contracting entities to receive and process invoices compliant with the European standard. The sender retains the choice of format, including paper, unless a Member State separately mandates electronic submission — which seventeen have done, fully or partially.
Why do municipalities hold more of the saving potential than central government?
Because they run the services that generate documents. Central administration sets policy and makes comparatively few purchases; local government buys goods and services continuously and bills residents for taxes, utilities and waste. In the breakdown derived from Danish and Swiss data, cities and municipalities accounted for roughly 52% of public sector saving potential against about 8% for federal administration.
Is there evidence for the split beyond that estimate?
Yes, from France. The Commission’s 2024 evaluation records 4.3 million electronic invoices received by national authorities in 2022 against 66.74 million received by sub-central authorities. Different data source, same conclusion.
Can a single city mandate e-invoicing on its own?
Often, in effect. Where national rules permit contracting authorities to set electronic invoicing as a condition in tender documents, a city can require it without any legislative change. The Commission’s evaluation identifies this administrative route as producing uptake comparable to a statutory mandate.
What does a municipality actually save per invoice?
The Commission’s evaluation puts automation benefits at roughly €5.28 per invoice issued and €8.40 per invoice received, at €46 per hour of labour. Those figures rise substantially — to a range of €25 to €65 per purchase-to-pay cycle — when orders, delivery documents and payment notices are automated alongside the invoice rather than in isolation.