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CEN ISSS workshop e-invoicing presentation June 19th, 2008 in Brussels
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Legal and regulatory inhibitors to the acceptance of Electronic Invoicing
Dave ChambersHM Revenue and Customs
eInvoicing Public Meeting Brussels, 19 June 2008
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Legal & regulatory inhibitors to the acceptance of Electronic Invoicing
BackgroundGroup Composition ObjectivesProceedingsSelection of Main Areas of InterestIssue GroupsIssue Evaluation TemplatesIssues on the CEN/e-invoicing PortalInterim FindingsFuture WG2/SG2 tasks
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Background (1)Aim of Electronic Business since 1970’s
SimplificationEnhancing efficiency
National TradeInternational Trade
E-Invoicing Benefits not realised to expected extent:
National LevelCross Border/Intra EU level
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Background (2)EU and national VAT legislation
Perceived as most significant to E-invoicingCouncil Directive 2001/115/EC (Invoicing Directive)Simplifying, modernising & harmonising VAT invoicingDirective on the Common System of Value Added Tax (2006/112/EC)
Many alternative possibilities for implementation offered to Member States
Detail of guarantees of authenticity and integrity
Regulatory and Procedural Differences
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
WG2/SG2 Member Organisation
Dave Chambers H.M. Revenue & Customs
Eloy Ruiz Madueño Spanish Tax Administration
Marina Ferraro Italian Tax Administration
Alexandra Sladek Austria Pro
Daniella Cross IBM
Tony Nisbett IBM
Greg Gosling DataCert
Olaf Schrader Ariba
Franco Ruggieri FIR DIG Consultants
Fabio Cavraro InfoCert
Wolfgang Matt Hilti Corporation
Mounir El-Khoury Technical Editor WG2, MKE
Group Composition
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
ObjectivesCEN/ISSS Electronic Invoicing Workshop Phase 2Compliance Group – WG2/Task Group (TG) 2
Tasks3. Monitoring the legal requirements in member states as
regards cross border exchange of electronic invoices4. Recommendation of changes in the legal environment
for electronic invoicing
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
ProceedingsCould have
Enumerated all electronic invoicing issues in all Member StatesIssued Lengthy questionnaire to stakeholdersDeliberated for years without achieving anything
InsteadDirect approach
Real Issues and challengesRecommendations for business justified
ChangesClarifications
Member State Tax Administration(s)Responsible European Commission Directorates
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Original Extensive “Special Challenges” - Categories
Buyer acceptance of e-invoicingSpecial issues concerning e-invoicingEDI definitionEDI Interchange agreementEDI Security and audit trailEDI Summary statementEDI Other requirementsElectronic signatures and Certificates Other methodsOutsourcing e-invoicing processes GeneralOutsourcing of Invoice issueOutsourcing E-signature issues
Outsourced issue authorisationOutsourcing buyer functionsOutsourcing Buyer's authorizationInvoice process requirements Invoice contentCredit NoteSelf-billing GeneralSelf-billing Supplier acceptance of invoiceSelf-billing agreement Self-billing Hybrid forms Self-billing E-signature issuesArchiving GeneralArchiving Outsourcing of archivalArchiving Outsourcing agreement
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Current “Special Challenge” List – Issue GroupsBuyer RequirementsElectronic Signatures & Qualified CertificatesOther Methods to ensure Authenticity & IntegrityInvoice Process RequirementsCross BorderEDISelf BillingOutsourcing
Invoice IssueBuyer Functions
ArchivingStorage PeriodForm/FormatLocation
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Buyer RequirementsPaper invoicing
No acceptance required (“Natural”)Electronic Invoicing
EU legislation requires buyer acceptance of Electronic Invoicing
EU legislation Member State legislation
imprecise as to details
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Electronic Signatures & Qualified Certificates
EU Legislation permits Member States to:Insist on Qualified Electronic Signaturebased on Qualified CertificateCreated using Secure Signature Creation DeviceLinked to Natural, not Legal Person
EU Member StatesImpose additional requirements:
Non national certificates impracticableMNE’s use two certificatesOther businesses don’t invoice electronically
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
“Other Electronic Means” to ensure Authenticity & Integrity
No common definition for Advanced Electronic SignaturesNon Signature, Non EDI Other Means
Facilitative, but lackscertaintydefinitive requirements
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Invoice Process Requirements
Process related issuesInvoice Rejection issuesInvoice cancellation (before making available to customer)Voucher numberingSeparate notification of portal available invoice
Invoice ContentEU and Member State VAT Legislation required data elementsRounding rulesStatements required on invoices
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Intra EU Cross BorderInconsistencies
Which jurisdiction’s rules on guarantees of authenticity and integrity apply to a cross Intra EU border invoice?In a cross Intra EU border supply of goods, is an invoice required for the second taxable event?In a cross Intra EU border supply of services, which Member State’s tax rules (and rules on guarantees of authenticity and integrity) apply varies.
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Electronic Data Interchange (EDI)
EU Legislation accepts EDI partner agreement
EU Commission Recommendation 1994/820/EC of 19 October 1994
to Guarantee Authenticity and IntegrityBut permits Member States to insist on periodic paper summary of EDI invoices exchanged
Hamper use of Electronic invoicing using Electronic Data Interchange
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Self BillingGenerated by Customer on behalf of supplier
VAT Administration ConcernsSupplier issuers invoice as well as customer
Customer deducts input tax VAT twiceSupplier fails to account for output tax against self billed invoice and/or treats the output tax on the self billed invoice as input tax
Inconsistencies between Member StatesExplicit Self Billing invoice acceptance requirement“Hybrid invoicing”
Some Self BillingSome “conventional” invoicing
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Outsourcing
Tax Payer responsibility clearService Provider’s not
Issue of invoice outsourcedEnd to End controlFirst and Last Mile conditions
Outsourcing of Archiving
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
ArchivingMandatory Storage Period
Period Member States require varies in VAT legislationOther legislation requires different periods
Accounting LawCompany LawCompetition Law
Archiving format inconsistenciesCan electronic invoice be stored as hard copy?Can hard copy invoice be stored electronically?
Permitted location of archivingOnly in Member State?In another Member State?Outside the EU?
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Issue Evaluation TemplatesCommon Feature of Sub Groups 1 and 2
multi line spreadsheet – control list of issuesEach line has an Issue Evaluation Template
Problem StatementIssue CategoryProblem Description
Countries where problem evidentAppropriate EU Member StatesAll EU Member States
Suggested resolution (or evidence of good practice)Process of Implementing the resolution
Group’s suggestion(s)Time period for implementing the resolution
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Sample Issue Evaluation Template
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Issues to be posted on Electronic Invoicing Portal
42 Issue Evaluation Templates ready forWork Group 1 developed e-Invoicing Portalhttp://www.e-invoice-gateway.net.Open issues for discussion to:
Industrytrade sectorother interested parties
Invitation to submit further issues to portalfor WG2 SG2 review to be made available for discussion on portalmust be:
business justifiedPracticalResolvable in reasonable time scalewithin WG2/SG2 scope
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Interim FindingsEDI - No additional requirements
No digital signatureNo summary list
Issue of Electronic CertificatesEU Member States to list
approved/supervised Certification AuthoritiesOther Member States with recognised Trust-service Status Lists
Acceptance of Electronic InvoicesNo requirement for explicit E-invoicing agreementIf explicit agreement requiredspecific terms / electronic retentionAgreement with service provider covers all its users
©2005 CEN – all rights reserved
eInvoicing Public MeetingBrussels, 19 June 2008
Future Work Group 2/Sub Group 2 Tasks
Analysis and Documentation of issuesAlready identified
40 additional issues on E-invoicing portal?Received from E-invoicing portal
Presentation of issuesEU Directorates
Tax and Customs Union (DG/TAXUD)Enterprise and Industry (DG/ENTR)Internal Market (DG/MARKT)Information Society (DG/INFOSOC)
Member State Tax Administrationsvia FISCALIS E-Audit Group
THANK YOU FOR YOUR ATTENTION
Any Questions?
Dave ChambersH M Revenue & CustomsUnited Kingdom+44(0)118 908 [email protected]