Indirect Tax Apero


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- International e-invoicing market 2011
- Legal framework
- Evolution towards 2013

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Indirect Tax Apero

  1. 1. Indirect Tax Apero Electronic invoicing and archiving March 2012Ernst & Young | 0
  2. 2. Contents Introduction ► Background ► International e-invoicing market 2011 ► Legal framework ► Evolution towards 2013 Practical questions and sharing of experience ► General questions ► Accounts Payable ► Accounts Receivable ► Intercompany Closing remarksErnst & Young | 1
  3. 3. Section A IntroductionErnst & Young | 2
  4. 4. Background► EU Member States ► Invoicing Directive (2001/115/EC) ► Council Directive (2006/112/EC) ► Council Directive 2010/45/EU of 13 July 2010 ► Implementation due by 1 January 2013 throughout the EU ► Explanatory Note – November 2011► Non-EU countries ► Local rules remain in placeErnst & Young | 3
  5. 5. International e-invoicing market 2011Source: BillentisErnst & Young | 4
  6. 6. Belgian legal frameworkE-invoicing & e-archiving Current DRAFT 2013 E-Invoicing E-Invoicing Article 53octies of the Belgian VAT code Belgian VAT Code ► Authenticity ► Definition electronic invoice ► Integrity ► Acceptance by the customer ► Authenticity, integrity & readability as of Royal Decree no.1 29 December 1992 issuance until end of storage period article 1, ► Taxable person determines how (!) §2 … (acceptance by the customer) ► Definition authenticity §3 … (cancelled as of 1 January 2010) §4 … (cancelled as of 1 January 2010) ► Definition integrity Royal Decree E-Archiving ► Electronic invoicing provisions abolished Article 60, §3 of the Belgian VAT code ► Authenticity, integrity & readability E-Archiving ► Location ► Location ► Format (circular letter 2008/16) ► Format (tolerance) ► Period ► PeriodErnst & Young | 5
  7. 7. EU legal frameworkElectronic invoicing (replacement art. 232) Current Directive 2010/45/EU Invoices issued pursuant to Section 2 may The use of an electronic invoice shall be be sent on paper or, subject to acceptance subject to acceptance by the recipient by the recipient, they may be sent or made available by electronic meansErnst & Young | 6
  8. 8. EU legal frameworkElectronic invoicing (replacement art. 233) Current Directive 2010/45/EU Invoices sent or made available by The authenticity of the origin, the electronic means shall be accepted by integrity of the content and the legibility Member States provided that the of an invoice, whether on paper or in authenticity of the origin and the integrity electronic form, shall be ensured from the of their content are guaranteed by means point in time of issue until the end of the of: period for storage of the invoice ► Advanced electronic signature … Each taxable person shall determine the ► Electronic data interchange (EDI) … way to ensure the authenticity of the origin, the integrity of the content and the ► [If accepted by member state] other legibility of the invoice. This may be electronic means achieved by any business controls which create a reliable audit trail between an invoice and a supply of goods or servicesErnst & Young | 7
  9. 9. EU legal frameworkElectronic invoicing (replacement art. 233) [CONT’D] Directive 2010/45/EU “Authenticity of the origin” means the assurance of the identity of the supplier or the issuer of the invoice “Integrity of the content” means that the content required according to this Directive has not been altered Other than by way of the type of business controls …, the following are examples of technologies …: ► An advanced electronic signature … ► Electronic Data Interchange (EDI) …Ernst & Young | 8
  10. 10. EU legal frameworkElectronic archiving (replacement art. 247) Current Directive 2010/45/EU [Optional, TBD by Member State] 1. Each Member State shall determine 1. Limitations as to the place of storage the period throughout which taxable 2. Limitations as to the original format persons must ensure the storage of invoices … 3. Storage: non- harmonized period 2. Member State may require that invoices be stored in the original form in which they were sent or made available, whether paper or electronic … 3. The Member State may lay down specific conditions prohibiting or restricting the storage of invoices in a country with which no legal instrument exists relating to mutual assistance …Ernst & Young | 9
  11. 11. Evolution towards 2013? How to audit authenticity and integrity? ESP (optional) Archive invoice Prepare Create Send DeliverySeller invoice invoice invoice Prepare Validation Receive Technical Order Reception for and invoice validation processing processing ArchiveBuyer invoice Scope current legislation Scope new legislation Ernst & Young | 10
  12. 12. Section B Practical questions and sharing of experienceErnst & Young | 11
  13. 13. General questions
  14. 14. When invoicing cross-border, in which Member States do the e-invoicing rules apply?Ernst & Young | 13
  15. 15. Ernst & Young | 14
  16. 16. Ernst & Young | 15
  17. 17. Which formats can be considered as VAT compliant electronic invoices?Ernst & Young | 16
  18. 18. <cac:PaymentMeans> <cbc:PaymentMeansCode>46</cbc:PaymentMeansCode> </cac:PaymentMeans> <cac:TaxTotal> <cbc:TaxAmount currencyID="AUD">1.68</cbc:TaxAmount> </cac:TaxTotal> <cac:LegalMonetaryTotal> XML <cbc:LineExtensionAmount currencyID="AUD">18.61</cbc:LineExtensionAmount> <cbc:TaxInclusiveAmount currencyID="AUD">18.61</cbc:TaxInclusiveAmount> <cbc:PayableAmount currencyID="AUD">18.61</cbc:PayableAmount> </cac:LegalMonetaryTotal> <cac:InvoiceLine> <cbc:ID>1</cbc:ID> <cbc:InvoicedQuantity>1</cbc:InvoicedQuantity> <cbc:LineExtensionAmount currencyID="AUD">3.61</cbc:LineExtensionAmount> <cac:Item> <cbc:Description>Mouse Trap</cbc:Description> Pdf </cac:Item> <cac:Price> <cbc:PriceAmount currencyID="AUD">3.61</cbc:PriceAmount> <cbc:BaseQuantity>1</cbc:BaseQuantity> </cac:Price> </cac:InvoiceLine> <cac:InvoiceLine> <cbc:ID>2</cbc:ID> <cbc:InvoicedQuantity>1</cbc:InvoicedQuantity> <cbc:LineExtensionAmount currencyID="AUD">7.50</cbc:LineExtensionAmount> <cac:Item> <cbc:Description>Light globe</cbc:Description> </cac:Item> <cac:Price> <cbc:PriceAmount currencyID="AUD">7.50</cbc:PriceAmount> <cbc:BaseQuantity>1</cbc:BaseQuantity> </cac:Price> </cac:InvoiceLine> <cac:InvoiceLine> <cbc:ID>3</cbc:ID> <cbc:InvoicedQuantity>1</cbc:InvoicedQuantity> <cbc:LineExtensionAmount currencyID="AUD">7.50</cbc:LineExtensionAmount> <cac:Item> <cbc:Description>Light globe</cbc:Description> </cac:Item> <cac:Price> <cbc:PriceAmount currencyID="AUD">7.50</cbc:PriceAmount> <cbc:BaseQuantity>1</cbc:BaseQuantity> </cac:Price> </cac:InvoiceLine> </Invoice> <cac:Contact> <cac:OtherCommunication> <cbc:Channel></cbc:Channel> <cbc:Value></cbc:Value> </cac:OtherCommunication> </cac:Contact>Ernst & Young | 17 </cac:Party>
  19. 19. If an e-invoicing service provider shows me a VAT compliance report from a third party, I can be confident that the solution will be VAT compliant?Ernst & Young | 18
  20. 20. Ernst & Young | 19
  21. 21. Accounts payable
  22. 22. Example Scanners RS Interprete Ebydos SAP Online cockpit core 2 6 Verification + post invoice Data capturing 7 Start workflow via templates (background) 3 4 S 1 RS transfer + Online SAP A connector plug-In Archive Online On site Link P Pdf SAP Outlook Outlook Outlook Content Server 8 Collector XML Workflow in 5 Invoice outlook with hyperlinks to Image storage sFTP SAP HQErnst & Young | 21
  23. 23. Can I accept a PDF invoice attached to an e-mail from my supplier?Ernst & Young | 22
  24. 24. If we receive a PDF invoice attached to an e-mail, can we print the attachment and delete the original e-mail?Ernst & Young | 23
  25. 25. If we receive a PDF invoice, can we export the data to another format (e.g. XML) for automatic processing?Ernst & Young | 24
  26. 26. If the electronic invoices have been signed with an electronic signature, I can accept them because it is a commonly accepted method?Ernst & Young | 25
  27. 27. Is it allowed to scan paper purchase invoices and to destroy the original paper invoices afterwards?Ernst & Young | 26
  28. 28. Accounts receivable
  29. 29. ExampleErnst & Young | 28
  30. 30. Do we need the upfront written agreement of the customer?Ernst & Young | 29
  31. 31. Can I issue a PDF invoice attached to an e-mail to my customer?Ernst & Young | 30
  32. 32. Can I post the data of the invoice on a web portal?Ernst & Young | 31
  33. 33. Can I accept electronic self- bills issued by my customer?Ernst & Young | 32
  34. 34. Intercompany
  35. 35. Example P.O. P.O. 1 IC 5 3 invoice 1 Order Procurement Sales Opco Company Company Order Invoice 2 confirm. Order Invoice Invoice confirm. Production Company 2 5 6 4 3Vendor 4 Customer Third party order process Cross company sales process Electronic invoicesErnst & Young | 34
  36. 36. Can we consider the files exchanged by our ERP (e.g. iDoc in SAP) as VAT compliant e-invoices?Ernst & Young | 35
  37. 37. Section C Closing remarksErnst & Young | 36
  38. 38. No or little specific rules and guidelines on auditability. Therefore, business is responsible for being in control. You should: ► Document ► Identify ► Validate & Test ► (Obtain Ruling)Ernst & Young | 37
  39. 39. How can you show you’re in control Document Identify the Validate & Test your process risks & controls your controls A P A ccountant HC A ccounting FPS Cash Purchase Invoice approver and Bank order creator A /P Receive invoiceA /P Order ofgoods/services(receipt inSA P ) A /P Invoice f ulf ills legal NoA /P requirem ents?Receive Y esinvoice A /P Send invoice back to vendor A /P No A /P Invoice Hydrocarbons to be invoice? A /P HC scanned? Invoice identif ied A /P Execptions No Y es (m anual postings & approval) A /P Payment A /P Does No invoice m ention a PO? Y es A /P MM Queue A /P FI Queue & ERS advise A /P Scan, I nterpret A /P Scan, I nterpret and V erif y and V erif y A /P Does vendor exist? No Y es A /P Create vendor A /P Price Y es and quantity ok? A /P Final posting in A /P Payment Y es SA P No Y es A /P P rice A /P Blocked and/or posting in SA P & quantity start w orkf low to delta PO creator approved? No A /P Wrong Y es posting by accounting? A /P Correction A /P Payment No A /P Contact supplier f or new invoice or credit note A /P Enter PO num ber Y es A /P No A /P Park docum ent A /P ERS Does P O in SA P & start advise? num ber w orkf low exist? Y es No A /P Link image to A /P Payment A /P ERS invoice Price/quantity ok? A ccounting alloc. correct? Y es No A /P Payment A /P Final posting in SA P A /P Change A /P Y es accounting Wrong allocation accounting allocation? No A /P Final posting in A /P Payment A /P Contact SA P supplier f or credit note/new invoice ▶ Document your process ▶ Clearly document the risks ▶ Audit your documentation and (people, process, technology) and the controls within the process (or have it audited) ▶ Use of flowcharts to improve process ▶ The more independent the understanding ▶ What could go wrong testing, the more credibility it ▶ Documentation provides a questions may help will have towards VAT basis for communicating a ▶ Do not forget the IT General administration process (under control) to Controls (in particular access those responsible for management) monitoring (e.g. VAT admin.) Is your process is (partly) outsourced? Obtain an ISAE 3402 (former SAS 70) or similar with the right scope from your supplierErnst & Young | 38
  40. 40. How can I convince the various stakeholders that my solution is VAT compliant?Ernst & Young | 39
  41. 41. ApproachPhase 1 – Drafting of the solution description Objective Deliverable ► Validation whether the design of your ► Following our review, we will provide you with electronic invoicing and archiving solution a complete and clear solution description which would lead to VAT compliant electronic will be used as the basis for our VAT invoicing and archiving. compliance assessment. Approach ► Following the receipt of a solution description of the in-house e-invoicing and archiving solution of your company with regard to its electronic invoices, EYwill validate the completeness of the solution description. A B You provide EY with a Ernst & Young reviews You provide solution description initial description and comments and Ernst & (based on EY template identifies areas that Young provides final with example require additional input solution description description)Ernst & Young | 40
  42. 42. ApproachPhase 2 – VAT review of the solution description Objective Deliverable ► On the basis of the final solution description, ► Following our validation, we will provide you with a perform a validation of the electronic invoicing and VAT compliance report on the solution. This VAT archiving solution and confirm whether it is compliance report will contain the solution compliant with the VAT legislation. description provided by you, the country’s VAT requirements and our validation/comments. Approach ► You send us a request to perform a validation for one or more countries. ► If it would appear that the solution description is in line with the country’s VAT legislation, Ernst & Young will draft a confirmation letter. ► However, if it would appear that the solution description is not in line with the country’s VAT legislation, we will draft a VAT compliance report and list the shortcomings, as well as recommendations. C D EErnst & Young Ernst & Young Ernst & Young You decide to Ernst & Young provides a proceed invalidates the solution provides you with an inventarises the confirmation letter or making thedescription against e-mail containing the VAT legislation draft VAT compliance solution VATthe VAT legislation main findings report compliantErnst & Young | 41
  43. 43. More info? Our e-invoicing flyer Our article in Indirect Tax Briefing Available in the room Issue April 2011, available via EY Insights app Ask for it in Apple and Android app storesErnst & Young | 42
  44. 44. Let’s talk individually If you have an e-invoicing project or are moving towards such a project, we would be pleased to act as your sounding board in a one-hour meeting free of charge. If you are interested, we have foreseen time slots to meet with you in our offices in Ghent, Antwerp and Brussels. Please note your preference down on the evaluation forms. Enjoy the “Apero”Ernst & Young | 43
  45. 45. Our EY EMEIA Center of Excellence Engagement partner ► We use a multidisciplinary team, i.e. with representatives from both Tax and Advisory, led by Marc Joostens, partner Indirect Taxes. Marc Joostens Quality Assurance ► Within VAT, Marc has specialized in electronic invoicing and archiving. Giving his experience and expertise, Marc leads an E-invoicing Center of Excellence, a central hub of e-invoicing subject matter resources from both VAT Andy Deprez and Advisory that support EY teams globally.Project Manager + VAT fieldwork ► Marc has advised a large number of Belgian and international clients in validating the VAT compliance of their e-invoicing and e-archiving solutions. Next to this, Matthias Penninck Marc has played a leading role in advising policy makers in this matter, both on a European and Belgian level. In this respect, Marc has facilitated and lead the study that has been performed for the European Commission with regard to the European rules on e-invoicing and e- Business Process Fieldwork archiving. ► In order to guarantee a smooth execution of the project, Marc will from a VAT side, be assisted by Matthias Tim Wulgaert Penninck, Senior Manager VAT, and one or more (senior) consultants. Over the past decade, Matthias also has advised a large number of Belgian and international clients in validating the VAT compliance of their e- invoicing and e-archiving solutions. ► From the advisory side, Tim Wulgaert, Director, and Andy Deprez, Partner, are both part of the E-invoicing Center of Excellence and have extended experience in supporting clients with their IT (security), project and process issues with regard to e-invoicing.Ernst & Young | 44 44
  46. 46. Ernst & Young Marc Joostens Tel.:Assurance | Tax | Transactions | Advisory Email: +32 2 774 91 11 marc.joostens@be.ey.com2012 Ernst & Young Transaction Advisory ServicesAll rights reserved.About Ernst & YoungErnst & Young is a global leader in assurance, tax,transaction and advisory services. Worldwide, our152,000 people are united by our shared valuesand an unwavering commitment to quality. Wemake a difference by helping our people, ourclients and our wider communities achieve theirpotential.Ernst & Young refers to the global organization ofmember firms of Ernst & Young Global Limited,each of which is a separate legal entity.Ernst & Young Global Limited, a UK companylimited by guarantee, does not provide services toclients.For more information about our organization,please visit Follow us: & Young | 45
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