0
Overview on compliance of
electronic invoice solutions

WG 2 & WG3
Joost Kuipers
Netherlands/Belastingdienst
CEN Task Groups 2 & 3:
cooperation towards a common goal




             TG2 SG2: remove regulatory inhibitors




      ...
Members:


                     Guidelines                                                          Inhibitors

TG 2 (sub ...
Outline scope of CWA 2 and 3


Compliance of electronic invoice
implementations with Council Directive
2006/112/EC and the...
The perception of complexity and
unclear (VAT-)regulation. UNCERTAINTY

Corporate e-invoicing users and solution providers...
VAT Invoicing Rules


28 January 2009. EC proposal to change the
VAT-directive 2006/112/EC
              http://ec.europa....
What’s so special about the invoice, anyway?




                                             VAT >35% EU public
         ...
What’s on the EU table


“Equal treatment” of paper and
e-invoices
“Technologically neutral”
Consistent Business Control
F...
FISCALIS: Activity “audit of e-invoicing”


Audit process facilitation:
   Producing of audit standards (guidance paper) f...
The co-regulation model




             Tax            Quick, cost-                    Businesses
             authoritie...
Background & positioning


 Based on strong similarity between Fiscalis
 audit project and CEN TG2 en TG3 (Cost
 effective...
Deliverables




   http://www.e-invoice-gateway.net/
                             +
       Commentary                    ...
DRAFT CWA E-INVOICING
COMPLIANCE GUIDELINES vs 0.90

Commentary: background, definitions,
descriptions
   READ THIS FIRST
...
The Guidelines offer:


Clarification of basic expectations for a compliant e-invoicing
process underlying most EU Member ...
The Guidelines are addressed to:


All companies engaged in e-invoicing
Large, medium small, micro enterprises
- maybe it’...
Preplanning



                SOX-audit




                                             External
                       ...
Process overview: life cycle




                      4th CEN Industry Conference on Electronic invoicing and compliance....
Archiving and auditability




  Storage in compliant archive
  during mandatory period
  Issues: time, venue,
  segregati...
Trading partner off-boarding




 Discontinuation of trading
 partner or service provider
 relationship
 Issues: hand-over...
Summary recommendations at this stage

Much positive feedback
   One set of comments yet to be incorporated
The e-Invoicin...
Misunderstandings


For professionals, not SMEs
  Tools for different target groups can be created
     Phase II will crea...
Questions?

  Joost Kuipers :
  jhb.kuipers@belastingdienst.nl
  (chair)

  Mounir El Khoury : mk@scarlet.be
  (editor)


...
eInvoicing Public Meeting
Brussels, 18 June 2009



  TG 3: Cost effective means to
  guarantee authenticity & integrity

...
CEN Task Groups 2 & 3:
cooperation towards a common goal




             TG2 SG2: remove regulatory inhibitors




      ...
Terms of Reference

   “Cost-effective authenticity and integrity of
   electronic invoices and related business
   docume...
CEN eInvoicing WG 3: Terms of
Reference
   “Cost-effective authenticity and integrity of
   electronic invoices and relate...
CEN eInvoicing WG 3: Terms of
Reference
   “Cost-effective authenticity and integrity of
   electronic invoices and relate...
CEN eInvoicing WG 3: Terms of
Reference
   “Cost-effective authenticity and integrity of
   electronic invoices and relate...
TG2 Good Practice vs
TG3 Requirements & Controls


                     WG2                                  WG3
      eIn...
Class of Business Implementation

   Wide range of business solutions to
   e-Invoicing in existence across EU
   VAT Dire...
Classes Identified to date
A)   Business solutions exclusively relying on the transparency of individual trading
     part...
Class A - internal business controls

   Relying on the transparency of individual trading
   partners’ internal business ...
Class B - controlled data exchanges

e.g. EDI

  Every leg must have controls in place
     Processing
     Transmission
 ...
Class C – Data level controls

e.g. Advanced Electronic Signatures

   May be used to protect invoice
     When sending/ma...
Class D – “SafeKeeping”

  Revolves around outsourcing to a trusted
  party (trading partner e.g. supplier portal or
  ser...
Conclusion

  Authenticity and integrity integral with other
  aspects of e-invoicing
  In guidelines considered as part o...
Questions?

  Johan Borendal:
  johan.borendal@trustweaver.com
  (chair)
  Nick Pope:
  nick.pope@thales-eSecurity.com
  (...
Good use of the Compliance
  Guidelines



Isabelle Desmeytere
Christiaan van 4der ValkConference on Electronic invoicing
...
Too detailed or maybe not detailed enough?


Example:
   Step 4 of the invoicing process: Send or make
   available




  ...
The classes in practice


Categorization is conceptual only – not a
straightjacket
   Framework to assist trading partners...
Class A scenario #1

                  Transparent (micro-)enterprise
Prima facie auditability: few trading partners, low ...
Class A scenario #2

 Large corporate with high degree of internal
                    control
    Auditability inherent i...
Class B scenario

      Emphasis of controls/auditability in exchange
 mechanism: secure transmission, automated syntax
  ...
Class C scenario

   Emphasis of controls/auditability on
      the data level (sign/validate)
   No changes/conversions o...
Class D scenario

                    Invoices created for trading partner never
                     leave single secure ...
Taxable persons can leverage service providers to outsource tax-
   relevant processes. Tax-wise this does not change anyt...
COMPANY A self-assessment


Connecting PO and non-PO suppliers
40+ countries in scope
  40+ supplier VAT jurisdictions
  3...
4th CEN Industry Conference on Electronic invoicing and compliance.
Brussels, June 2009                                   ...
Ensure buyer acceptance




Ensure supplier agreement



Ensure supplier training


Ensure coordinated use of security mec...
4th CEN Industry Conference on Electronic invoicing and compliance.
Brussels, June 2009                                   ...
Ensure SP issues complete invoice



Ensure SP issues all supplier’s invoices



Ensure supplier has all data of issued in...
eInvoicing Public Meeting
Brussels, 19 June 2008



Legal and regulatory inhibitors to the
 acceptance of Electronic Invoi...
CEN Task Groups 2 & 3:
cooperation towards a common goal




             TG2 SG2: remove regulatory inhibitors




      ...
Classes Identified to date
A)   Business solutions exclusively relying on the transparency of individual trading
     part...
Mapping to current legislation
A)   UNAVAILABLE IN AT LEAST 2/3 OF EU MEMBER STATES
B)   Business solutions relying on bas...
Legal & regulatory inhibitors to the
acceptance of Electronic Invoicing
  Background
  Objectives
  Proceedings
  Selectio...
Background
EU and national VAT legislation

  Are not in synch. So >>

    Many alternative possibilities for
    implemen...
Objectives
CEN/ISSS Electronic Invoicing Workshop Phase 2
Compliance Group – WG2/Task Group (TG) 2

Tasks
  Monitoring the...
Proceedings
Could have
  Enumerated all electronic invoicing issues in all
  Member States
  Issued Lengthy questionnaire ...
Original Extensive “Special Challenges” - Categories


   Buyer acceptance of e-invoicing                Outsourced issue ...
Final “Special Challenge” List – Issue Groups


Buyer Requirements
Electronic Signatures & Qualified Certificates
Other Me...
Issue Evaluation Templates
Common Feature of Sub Groups 1 and 2
  multi line spreadsheet – control list of issues
Each lin...
Sample Issue Evaluation Template




              4th CEN Industry Conference on Electronic invoicing and compliance.
   ...
Issues are posted on Electronic Invoicing Portal
   42 Issue Evaluation Templates
      Work Group 1 developed e-Invoicing...
How do current Commission Proposal and other
pertinent documents help with the issues?

      WG supports attempts to remo...
Questions?

  Tony Nisbett: tony.nisbett@uk.ibm.com
  (chair)

  Mounir El Khoury : mk@scarlet.be
  (editor)




         ...
General questions?

  Joost Kuipers, TG2 Chair




                4th CEN Industry Conference on Electronic invoicing and...
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Overview on Compliance of Electronic Invoices - Joost Kuipers

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Overview on Compliance of Electronic Invoices.

Presentation from Joost Kuipers, given on the 4th CEN Conference on e-invoicing from 18 June 2009 in Brussel.

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Transcript of "Overview on Compliance of Electronic Invoices - Joost Kuipers"

  1. 1. Overview on compliance of electronic invoice solutions WG 2 & WG3 Joost Kuipers Netherlands/Belastingdienst
  2. 2. CEN Task Groups 2 & 3: cooperation towards a common goal TG2 SG2: remove regulatory inhibitors One EUTG2 SG1 and SG3: Compliance Guidelines 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -2- ©2005 CEN – all rights reserved 2 © 2008 CEN – all rights reserved 22.06.2009
  3. 3. Members: Guidelines Inhibitors TG 2 (sub group 1) TG3 TG2 (sub group 2) Joost Kuipers (chair) Tony Nisbett Johan Borendal (chair) Dave Chambers Dave Chambers Adrian Mueller Eloy Ruiz Madueño Olaf Schrader Andrea Caccia Greg Gosling Kevin Thornton Eloy Ruiz Madueño Olaf Schrader Danny Kuijper Marc Straat Franco Ruggieri Isabelle Desmeytere Paul Hojka Fabio Cavraro Christiaan van der Valk Christiaan van der Valk Wolfgang Matt Jacqueline Wijnands Joerg Walther Nick Pope Patrick Frijns (technical editor) Marina Ferraro Sören Lennartson René de Waard Alexandra Sladek Tony Nisbett Mounir El-Khoury Mounir El-Khoury (technical editor) (technical editor) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -3- ©2005 CEN – all rights reserved
  4. 4. Outline scope of CWA 2 and 3 Compliance of electronic invoice implementations with Council Directive 2006/112/EC and the national legislation as regards electronic invoices TG 2 (SG1): Criteria for certification of service providers and e-invoice solutions; TG 2 (SG1): A framework for tax authorities to audit VAT invoice solutions; TG 3: Cost effective authenticity and integrity 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -4- ©2005 CEN – all rights reserved
  5. 5. The perception of complexity and unclear (VAT-)regulation. UNCERTAINTY Corporate e-invoicing users and solution providers feel insecure about their e-invoicing solutions. They want to be (VAT-) compliant Today, most tax administrations do not provide accreditation services or self-assessment programmes to assist e-invoicing users or their service providers to ascertain that e-invoicing systems are VAT-compliant. Tax administrations seek guidance how to audit e- invoicing solutions. They feel insecure. 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -5- ©2005 CEN – all rights reserved
  6. 6. VAT Invoicing Rules 28 January 2009. EC proposal to change the VAT-directive 2006/112/EC http://ec.europa.eutaxation_customs/taxation/v at/traders/invoicing_rules/index_en Existing Legislation in the Member States https://globalvatonline.pwc.com/uk/tls/gvol2/gvol2.n sf/AllByCode/RJAI-7CHKU5/$File/PwCLegislation 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -6- ©2005 CEN – all rights reserved
  7. 7. What’s so special about the invoice, anyway? VAT >35% EU public revenue Invoice is common denominator across business models, the ultimate concentrate of transaction information 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -7- ©2005 CEN – all rights reserved 7 © 2008 CEN – all rights reserved 22.06.2009
  8. 8. What’s on the EU table “Equal treatment” of paper and e-invoices “Technologically neutral” Consistent Business Control Framework/Tax Control Framework So auditability for external auditors, as tax auditors, must be guaranteed (“authenticity of origin” and “integrity of content”) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -8- ©2005 CEN – all rights reserved
  9. 9. FISCALIS: Activity “audit of e-invoicing” Audit process facilitation: Producing of audit standards (guidance paper) for tax auditors. Including verification of the authenticity and integrity of invoice transmissions Produce training standards (requirements) for different target groups Central point (network) for questions. 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 -9- ©2005 CEN – all rights reserved
  10. 10. The co-regulation model Tax Quick, cost- Businesses authorities effective audit 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 10 - ©2005 CEN – all rights reserved 10 © 2008 CEN – all rights reserved 22.06.2009
  11. 11. Background & positioning Based on strong similarity between Fiscalis audit project and CEN TG2 en TG3 (Cost effective authenticity and integrity) tasks for guidelines Desire to avoid overlap Exploit synergies Joint promotion & implementation opportunities 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 11 - ©2005 CEN – all rights reserved
  12. 12. Deliverables http://www.e-invoice-gateway.net/ + Commentary Guidelines (Matrix) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 12 - ©2005 CEN – all rights reserved
  13. 13. DRAFT CWA E-INVOICING COMPLIANCE GUIDELINES vs 0.90 Commentary: background, definitions, descriptions READ THIS FIRST Guidelines matrix: ~100 process steps are mapped to: Risks (why), requirements (what), controls (how) Process filters allow viewing specific end-to-end process configurations 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 13 - ©2005 CEN – all rights reserved
  14. 14. The Guidelines offer: Clarification of basic expectations for a compliant e-invoicing process underlying most EU Member States’ laws in this area Solid basis for meeting tax requirements across the EU Solid basis for a tax audit Overview of the end-to-end process for e-invoices using commonly available “classes” of compliance approaches Check-list to ensure controls are in place where needed, but leaving choice as to implementation (listing examples) For solution vendors to demonstrate adherence to good practices 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 14 - ©2005 CEN – all rights reserved
  15. 15. The Guidelines are addressed to: All companies engaged in e-invoicing Large, medium small, micro enterprises - maybe it’s not one size fits all - Service and solution providers offering e- invoicing functionality Internal and external auditors VAT auditors in tax administrations 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 15 - ©2005 CEN – all rights reserved
  16. 16. Preplanning SOX-audit External audit Tax audit Business Other audit techniques Internal control in control statement (SOX) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 16 - ©2005 CEN – all rights reserved
  17. 17. Process overview: life cycle 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 17 - ©2005 CEN – all rights reserved
  18. 18. Archiving and auditability Storage in compliant archive during mandatory period Issues: time, venue, segregation of duties, access, search criteria, readability, audit trail…. 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 18 - ©2005 CEN – all rights reserved
  19. 19. Trading partner off-boarding Discontinuation of trading partner or service provider relationship Issues: hand-over of originals (for outsourced storage), termination of processes and contracts etc 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 19 - ©2005 CEN – all rights reserved
  20. 20. Summary recommendations at this stage Much positive feedback One set of comments yet to be incorporated The e-Invoicing Compliance Guidelines are endorsed by the Expert Group on e-Invoicing More than 10 solution providers and end users have shared initial self-assessments using the Guidelines The invitation still stands We invite companies, service providers and developers of e- invoicing solutions to assess the applicability We invite all auditors specialising in e-invoicing applications and VAT administrations to review the Guidelines 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 20 - ©2005 CEN – all rights reserved
  21. 21. Misunderstandings For professionals, not SMEs Tools for different target groups can be created Phase II will create SME version Read Commentary first Describes all available methods Not simply a guide for 2001 Directive implementation Addresses entire spectrum of adequate business control frameworks, no favorites between process- or data-level controls etc 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 21 - ©2005 CEN – all rights reserved
  22. 22. Questions? Joost Kuipers : jhb.kuipers@belastingdienst.nl (chair) Mounir El Khoury : mk@scarlet.be (editor) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 22 - ©2005 CEN – all rights reserved
  23. 23. eInvoicing Public Meeting Brussels, 18 June 2009 TG 3: Cost effective means to guarantee authenticity & integrity Johan Borendal – TrustWeaver (Chair) Nick Pope – Thales e-Security (Technical Editor) 4 th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 23 - ©2005 CEN – all rights reserved
  24. 24. CEN Task Groups 2 & 3: cooperation towards a common goal TG2 SG2: remove regulatory inhibitors One EUTG2 SG1 and TG3: Compliance Guidelines 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 24 - ©2005 CEN – all rights reserved
  25. 25. Terms of Reference “Cost-effective authenticity and integrity of electronic invoices and related business documents regardless of formats and technologies” Minimise unnecessary costs to businesses Ensure that major risks identified by Tax Authorities are addressed 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 25 - ©2005 CEN – all rights reserved
  26. 26. CEN eInvoicing WG 3: Terms of Reference “Cost-effective authenticity and integrity of electronic invoices and related business documents regardless of formats and technologies” Can include: Authenticity & integrity in transfer Maintain authenticity & integrity over period of storage 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 26 - ©2005 CEN – all rights reserved
  27. 27. CEN eInvoicing WG 3: Terms of Reference “Cost-effective authenticity and integrity of electronic invoices and related business documents regardless of formats and technologies” eInvoicing main legal pressure point for business Applicable to other aspects of eBusiness & eGovernment 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 27 - ©2005 CEN – all rights reserved
  28. 28. CEN eInvoicing WG 3: Terms of Reference “Cost-effective authenticity and integrity of electronic invoices and related business documents regardless of formats and technologies” Addressing authenticity & integrity by a range of methods including those from current Directive 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 28 - ©2005 CEN – all rights reserved
  29. 29. TG2 Good Practice vs TG3 Requirements & Controls WG2 WG3 eInvoice Requirements A&I Mechanisms Preparation Archiving eInvoice & audit EDI Translation Controls Signatures Self Protocols Billing 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 29 - ©2005 CEN – all rights reserved
  30. 30. Class of Business Implementation Wide range of business solutions to e-Invoicing in existence across EU VAT Directive 2006/112 Identifies for Authenticity & Integrity: EDI Advanced Electronic Signature Other accepted by Member State Guidelines: Recognise that authenticity & integrity only one aspect of business operations Generalise Directive classifications to incorporate other aspects of business operations Basic options of process- or data-level controls 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 30 - ©2005 CEN – all rights reserved
  31. 31. Classes Identified to date A) Business solutions exclusively relying on the transparency of individual trading partners’ internal business controls to prove sales transactions to tax administrations. B) Business solutions relying on basic business controls augmented by controlled data exchanges (e.g. EDI) to ensure that real and unchanged invoices exist between trading partners and can be made available to tax auditors. C) Business solutions relying on basic business controls augmented by data level controls (e.g. advanced electronic signatures) to ensure that real and unchanged invoice data exists between trading partners and can be made available to tax auditors. D) Business solutions relying on basic business controls augmented by central "safe-keeping" of invoice data to ensure that real and unchanged invoice data exists between trading partners and can be made available to tax auditors. 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 31 - ©2005 CEN – all rights reserved
  32. 32. Class A - internal business controls Relying on the transparency of individual trading partners’ internal business controls Not explicitly referenced in the Compliance Matrix Method for ensuring compliance and auditability depends largely on the type of organization and the way in which certain processes and controls are naturally implemented 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 32 - ©2005 CEN – all rights reserved
  33. 33. Class B - controlled data exchanges e.g. EDI Every leg must have controls in place Processing Transmission Storage 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 33 - ©2005 CEN – all rights reserved
  34. 34. Class C – Data level controls e.g. Advanced Electronic Signatures May be used to protect invoice When sending/making available and depending on form of signature In storage 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 34 - ©2005 CEN – all rights reserved
  35. 35. Class D – “SafeKeeping” Revolves around outsourcing to a trusted party (trading partner e.g. supplier portal or service provider) Trusted to keep e-invoices safe throughout life-cycle including storage 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 35 - ©2005 CEN – all rights reserved
  36. 36. Conclusion Authenticity and integrity integral with other aspects of e-invoicing In guidelines considered as part of overall business processes 4 classes of business implementation currently identified building on but not limited to classifications for authenticity & integrity in Directive 2006/112 In compliance matrix can select requirements relating to a particular implementation class 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 36 - ©2005 CEN – all rights reserved
  37. 37. Questions? Johan Borendal: johan.borendal@trustweaver.com (chair) Nick Pope: nick.pope@thales-eSecurity.com (editor) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 37 - ©2005 CEN – all rights reserved
  38. 38. Good use of the Compliance Guidelines Isabelle Desmeytere Christiaan van 4der ValkConference on Electronic invoicing th CEN Industry and compliance. Brussels, June 2009 - 38 - ©2005 CEN – all rights reserved
  39. 39. Too detailed or maybe not detailed enough? Example: Step 4 of the invoicing process: Send or make available 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 39 - ©2005 CEN – all rights reserved
  40. 40. The classes in practice Categorization is conceptual only – not a straightjacket Framework to assist trading partners in optimizing controls for specific risks in every step of their process Objective: offer different models that can fit maximum of trading scenarios Many implementation examples per control in each class Businesses to decide freely which are most beneficial in which circumstances 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 40 - ©2005 CEN – all rights reserved
  41. 41. Class A scenario #1 Transparent (micro-)enterprise Prima facie auditability: few trading partners, low staff turnover and change rate Exchange e.g. PDF via email, signed or unsigned Storage on e.g. DVD or online through ISP 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 41 - ©2005 CEN – all rights reserved 41
  42. 42. Class A scenario #2 Large corporate with high degree of internal control Auditability inherent in matching being reproducible / strong audit trails Well-documented processes, frequent internal and external audits Strong archiving solution Takes two to tango: trading partner compliance position must be considered (Class A-D ) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 42 - ©2005 CEN – all rights reserved 42
  43. 43. Class B scenario Emphasis of controls/auditability in exchange mechanism: secure transmission, automated syntax checking Always structured data; normally no conversion of the invoice as issued – strong audit trail if conversions Strong archiving solution 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 43 - ©2005 CEN – all rights reserved 43
  44. 44. Class C scenario Emphasis of controls/auditability on the data level (sign/validate) No changes/conversions of original invoice (dual feed + audit trail possbile) 4 CEN Industry Conference on Electronic invoicing and compliance. th Brussels, June 2009 - 44 - ©2005 CEN – all rights reserved 44
  45. 45. Class D scenario Invoices created for trading partner never leave single secure environment: web consultation/audit possible, as well as download of copy « data » Party offering secure safe-keeping has strong internal controls No changes/conversions of original invoice If larger trading partner offers the service, it will usually use Class A Strong archiving solution 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 45 - ©2005 CEN – all rights reserved 45
  46. 46. Taxable persons can leverage service providers to outsource tax- relevant processes. Tax-wise this does not change anything. Supplier’s service provider can issue « in his name and on behalf » Attention points: On- and off-boarding controls First and last mile Conversions in multi-corner models and compliance. 4th CEN Industry Conference on Electronic invoicing Brussels, June 2009 - 46 - ©2005 CEN – all rights reserved
  47. 47. COMPANY A self-assessment Connecting PO and non-PO suppliers 40+ countries in scope 40+ supplier VAT jurisdictions 33 COMPANY A subsidiary VAT jurisdictions One-stop service provider Also responsible for interoperability with suppliers’ own solutions (including other SPs) Storage offered to suppliers, COMPANY A performs own storage 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 47 - ©2005 CEN – all rights reserved
  48. 48. 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 48 - ©2005 CEN – all rights reserved
  49. 49. Ensure buyer acceptance Ensure supplier agreement Ensure supplier training Ensure coordinated use of security mechanisms Ensure sufficient testing prior to production 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 49 - ©2005 CEN – all rights reserved
  50. 50. 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 50 - ©2005 CEN – all rights reserved
  51. 51. Ensure SP issues complete invoice Ensure SP issues all supplier’s invoices Ensure supplier has all data of issued invoice 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 51 - ©2005 CEN – all rights reserved
  52. 52. eInvoicing Public Meeting Brussels, 19 June 2008 Legal and regulatory inhibitors to the acceptance of Electronic Invoicing Tony Nisbett, IBM & EDIFICE 4 th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 52 - ©2005 CEN – all rights reserved
  53. 53. CEN Task Groups 2 & 3: cooperation towards a common goal TG2 SG2: remove regulatory inhibitors One EUTG2 SG1 and TG3: Compliance Guidelines 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 53 - ©2005 CEN – all rights reserved
  54. 54. Classes Identified to date A) Business solutions exclusively relying on the transparency of individual trading partners’ internal business controls to prove sales transactions to tax administrations. B) Business solutions relying on basic business controls augmented by controlled data exchanges (e.g. EDI) to ensure that real and unchanged invoices exist between trading partners and can be made available to tax auditors. C) Business solutions relying on basic business controls augmented by data level controls (e.g. advanced electronic signatures) to ensure that real and unchanged invoice data exists between trading partners and can be made available to tax auditors. D) Business solutions relying on basic business controls augmented by central "safe-keeping" of invoice data to ensure that real and unchanged invoice data exists between trading partners and can be made available to tax auditors. 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 54 - ©2005 CEN – all rights reserved
  55. 55. Mapping to current legislation A) UNAVAILABLE IN AT LEAST 2/3 OF EU MEMBER STATES B) Business solutions relying on basic business controls augmented by controlled data exchanges (e.g. EDI) to ensure that real and unchanged invoices exist between trading partners and can be made available to tax auditors. C) Business solutions relying on basic business controls augmented by data level controls (e.g. advanced electronic signatures) to ensure that real and unchanged invoice data exists between trading partners and can be made available to tax auditors. D) UNAVAILABLE IN AT LEAST 2/3 OF EU MEMBER STATES 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 55 - ©2005 CEN – all rights reserved
  56. 56. Legal & regulatory inhibitors to the acceptance of Electronic Invoicing Background Objectives Proceedings Selection of Main Areas of Interest Issue Groups Issue Evaluation Templates Issues on the CEN/e-invoicing Portal Do current proposals help? 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 56 - ©2005 CEN – all rights reserved
  57. 57. Background EU and national VAT legislation Are not in synch. So >> Many alternative possibilities for implementation offered to Member States 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 57 - ©2005 CEN – all rights reserved
  58. 58. Objectives CEN/ISSS Electronic Invoicing Workshop Phase 2 Compliance Group – WG2/Task Group (TG) 2 Tasks Monitoring the legal requirements in member states as regards cross border exchange of electronic invoices Recommendation of changes in the legal environment for electronic invoicing 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 58 - ©2005 CEN – all rights reserved
  59. 59. Proceedings Could have Enumerated all electronic invoicing issues in all Member States Issued Lengthy questionnaire to stakeholders Deliberated for years without achieving anything Instead Direct approach Real issues and challenges analysed by people who are actually dong this as their day-job 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 59 - ©2005 CEN – all rights reserved
  60. 60. Original Extensive “Special Challenges” - Categories Buyer acceptance of e-invoicing Outsourced issue authorisation Special issues concerning Outsourcing buyer functions e-invoicing Outsourcing Buyer's authorization EDI definition Invoice process requirements EDI Interchange agreement Invoice content EDI Security and audit trail Credit Note EDI Summary statement Self-billing General EDI Other requirements Self-billing Supplier acceptance of Electronic signatures and invoice Certificates Self-billing agreement Other methods Self-billing Hybrid forms Outsourcing e-invoicing Self-billing E-signature issues processes General Archiving General Outsourcing of Invoice issue Archiving Outsourcing of archival Outsourcing E-signature issues Archiving Outsourcing agreement 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 60 - ©2005 CEN – all rights reserved
  61. 61. Final “Special Challenge” List – Issue Groups Buyer Requirements Electronic Signatures & Qualified Certificates Other Methods to ensure Authenticity & Integrity Invoice Process Requirements Cross Border EDI Self Billing Outsourcing Invoice Issue Buyer Functions Archiving Storage Period Form/Format Location 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 61 - ©2005 CEN – all rights reserved
  62. 62. Issue Evaluation Templates Common Feature of Sub Groups 1 and 2 multi line spreadsheet – control list of issues Each line has an Issue Evaluation Template Problem Statement Issue Category Problem Description Countries where problem evident Appropriate EU Member States All 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 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 62 - ©2005 CEN – all rights reserved
  63. 63. Sample Issue Evaluation Template 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 63 - ©2005 CEN – all rights reserved
  64. 64. Issues are posted on Electronic Invoicing Portal 42 Issue Evaluation Templates Work Group 1 developed e-Invoicing Portal http://www.e-invoice-gateway.net. Open issues for discussion to: Industry trade sector other interested parties Invitation to comment on and submit further issues to portal in next month for WG2 SG2 review to be made available for discussion on portal must be: business justified Practical Resolvable in reasonable time scale within WG2/SG2 scope 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 64 - ©2005 CEN – all rights reserved
  65. 65. How do current Commission Proposal and other pertinent documents help with the issues? WG supports attempts to remove barriers to eInvoicing, especially cross border. Reduction in options available Standardise use of signatures Clearer definition of storage requirements Conversion of paper to electronic Location of Storage/Archives Open issues for discussion: Equal Treatment Acceptance and general legal frameworks Converting electronic to paper Harmonising Tax, Accounting and other laws EDI Summary Reports 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 65 - ©2005 CEN – all rights reserved
  66. 66. Questions? Tony Nisbett: tony.nisbett@uk.ibm.com (chair) Mounir El Khoury : mk@scarlet.be (editor) 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 66 - ©2005 CEN – all rights reserved
  67. 67. General questions? Joost Kuipers, TG2 Chair 4th CEN Industry Conference on Electronic invoicing and compliance. Brussels, June 2009 - 67 - ©2005 CEN – all rights reserved
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