The European Commission on 28 January 2009 adopted a proposal to change the VAT Directive 2006/112/EC (from 28 November 2006) with respect to invoicing rules. The main objectives are to reduce burden on business, increase the use of e-Invoicing, support small and medium sized enterprises (SMEs) and help member states tackle fraud.
Regulatory requirements for Electronic Invoicing will change with the advent of the measures aimed at further simplifying, modernising and harmonising the VAT invoicing rules. The foundation of the proposal is based on “equal treatment of paper and electronic invoices” in a technologically neutral way by removing the conditions for an Advanced Electronic Signature (AES) and Electronic Data Interchange (EDI).
While in the world of electronic agreements and contracts the need for electronic signatures is apparent the reasoning is that e-Invoicing is part of a larger process where every process step contributes to authenticity and integrity of the trade transaction. Nevertheless many Member States will continue to believe these guarantees can only be provided by electronically signed e-invoices.
Therefore removing the requirement to guarantee the authenticity of origin and integrity of content by means of pre-defined technological solutions, such as EDI and Electronic Signatures, is the most challenging from a political and governmental perspective. It requires a “paradigm shift” in thinking about audit management processes and strategies by Tax Authorities.
Apart from that increasing the use of e-Invoicing requires more than simplification of VAT invoicing rules. Although standardisation efforts in Europe are huge the progress of standards bodies is slow with respect to data exchange standards. In response new initiatives emerge from humble beginnings, underpinned by new technologies, with potential to grow into creatures of substance and significance. The a priori standard for e-Invoicing, UN/CEFACT, starts loosing ground due to the growing need for inclusion of all types of companies, the rigidity and slowness of development, and the increased adoption of the Universal Business Language (UBL) as the European data exchange standard.
Although everyone is entitled to their own opinion creating the next wave of e-Invoicing requires re-alignment of views and goals. Hence there are two fundamental questions to answer:
- What is understood by the term “Compliant e-Invoicing”?
- What do SME’s and large companies need to jump on the bandwagon of e-Invoicing?
What is Compliant e-Invoicing ?
