Download pdf - CEN ISSS Public Workshop D Chambers Presentation Mk[1]

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



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



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



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



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



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



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



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



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



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



“Other Electronic Means” to ensure Authenticity & Integrity

No common definition for Advanced Electronic SignaturesNon Signature, Non EDI Other Means

Facilitative, but lackscertaintydefinitive requirements



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



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.



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



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



Outsourcing

Tax Payer responsibility clearService Provider’s not

Issue of invoice outsourcedEnd to End controlFirst and Last Mile conditions

Outsourcing of Archiving



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?



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



Sample Issue Evaluation Template



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

http://www.e-invoice-gateway.net/



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



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]