In 2008 the European Commission established the Expert Group for Electronic Invoicing.
This group was established with the purpose of extending the use of e-Invoicing in Europe; the Commission recognised that there are substantial savings for European businesses in moving to e-Invoicing and has stated that savings are potentially €238bn (over six years) in the business-to-business marketplace and €30-40bn in the business-to-consumer arena.
The expert group has essentially been looking at three key areas
• The legal environment
• Networks and standards
• Business requirements
The expert group has acknowledged that the legal environment is difficult, there are different and complex rules and regulations surrounding e-Invoicing and these rules vary from country to country. In particular, the legislation is difficult for SME’s. Most (but not all of these rules) are associated with VAT (Value Added Tax).
The body that is responsible for tax is the Taxation and Customs Union Directorate-General or TAXUD, and the Expert Group is working closely with this group.
Earlier this year TAXUD made a proposal to amend the European VAT legislation and there are certain proposed changes relative to e-Invoicing.
The primary (e-Invoicing) changes affect the technology aspects; it is proposed that e-invoices are treated in the same way as paper invoices and that the requirement for electronic signatures is removed.
A greater degree of clarity, guidance and harmonisation is also proposed.
The proposal has been termed ‘the Equal Treatment Proposal”
The current EU legislation surrounding e-Invoices is open to some degree of interpretation and has resulted in many different local legal implementations. These varying local implementations cause (and continue) to cause confusion in the marketplace, particularly with those organisations that trade across borders or operate in multiple territories.
One of the major challenges when considering e-Invoicing is how to satisfy each of these local legal interpretations and implementations.
Background to the Commission proposal
The European Commissionacknowledgement that compliance with VAT requirements hinders the take up of e-Invoicing, with the result that businesses are losing out on potentially large cost savings. They believe that if business is to be encouraged to become more efficient, barriers to using new technologies need to be removed.
In January 2007, the Commission presented an action programme aimed at reducing administrative burdens on business in the EU by 25% by 2012. The action programme was endorsed by the Spring European Council in March 2007. The VAT Directive is among the 42 legal acts in the scope of the action programme. Within this directive the invoicing rules represent a key area where information obligations are imposed on businesses.
In January 2009 TAXUD (The Commission’s Taxation and Customs Union Directorate-General) presented its proposal. The proposal covers a variety of changes to EU VAT legislation covering
• Chargeability to tax for intra-Community supplies
• Right of deduction
• Issuance of an invoice
• Contents of an invoice
• Storage of invoices
and
• e-Invoicing
Summary of proposed changes – e-Invoicing
The Commission believes that the imposition of technical requirements surrounding e-Invoicing are inhibiting growth.
e-Invoicing requirements were initially stated in the Commission Directive 2001/115/EC (‘the Invoicing Directive’), and later incorporated in to Council Directive 2006/112/EC (‘the VAT Directive’).
The specific requirements for e-Invoicing were in Articles 233, 234, 235 and 237
Article 233
1. Invoices sent or made available by electronic means shall be accepted by Member States provided that the authenticity of the origin and the integrity of their content are guaranteed by one of the following methods:
(a) by means of an advanced electronic signature within the meaning of point (2) of Article 2 of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures;
(b) by means of electronic data interchange (EDI), as defined in Article 2 of Commission Recommendation 1994/820/EC of 19 October 1994 relating to the legal aspects of electronic data interchange (2), if the agreement relating to the exchange provides for the use of procedures guaranteeing the authenticity of the origin and integrity of the data.
Invoices may, however, be sent or made available by other electronic means, subject to acceptance by the Member States concerned
Article 234
Member States may not impose on taxable persons supplying goods or services in their territory any other obligations or formalities relating to the sending or making available of invoices by electronic means.
Article 235
Member States may lay down specific conditions for invoices issued by electronic means in respect of goods or services supplied in their territory from a country with which no legal instrument exists relating to mutual assistance similar in scope to that provided for in Directive 76/308/EEC and Regulation (EC) No 1798/2003.
Article 237
The Commission shall present, at the latest on 31 December 2008, a report and, if appropriate, a proposal amending the conditions applicable to electronic invoicing in order to take account of future technological developments in that field
It is proposed that these Articles are removed and that electronic invoices are treated in the same way as paper invoices.
Timing
It should be made clear that the proposal is only a proposal and is subject to the debate and approval of the member states.
The debate will take place during 2009, it is unlikely that (if accepted) the proposal will become EU law before 2010. Even then the new EU Law will have to be transposed in to local laws, the expected timescale would be during 2011.
We must welcome the work of the Commission and the Expert Group, this is helping raise business awareness of the benefits of e-Invoicing as well as promoting it as a huge cost saving opportunity for businesses. Simplification and harmonisation of the rules can only help our sales efforts in the market.
Filed under: e-Invoicing and Tax regulations
