Revised regulatory requirements for e-invoicing starting 28 January 2009


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Overview of the changes resulting from the commission for simplification and harmonization of the VAT invoicing rules.

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  • Revised regulatory requirements for e-invoicing starting 28 January 2009

    1. 1. Legal and fiscal regulations Impact of the recent proposal Utrecht, April 2009
    2. 2. How is life of electronic invoicing after the advanced digital signature ? <ul><li>How shall we guarantee the authenticity of origin and the integrity of content of an invoice ? </li></ul><ul><ul><li>Internal business controls, if properly implemented, should be a sufficient reassurance to tax. Although an electronic signature is a method to prove authenticity of origin and integrity of content, the issuance of e-invoices should not trigger the obligation of an electronic signature if authenticity of origin and integrity of content can also be proved by other means </li></ul></ul><ul><ul><li>Current checks and balances (e.g. two-ways check, e.g the check with a PO (purchase order) and the actual receipt of the goods/service) for paper invoices should be a sufficient control mechanism for e-invoices, too. </li></ul></ul>
    3. 3. Evolution of regulatory requirements Invoicing Directive 2001/115/EC from 20 December 2001 Common EU rules on VAT invoices VAT Directive 2006/112/EC from 28 November 2006 VAT invoicing rules COM (2009) 21 from 28/1/2009 Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC on the common system of value added tax as regards the rules on invoicing COM (2009) 20 from 28/1/2009 COMMUNICATION FROM THE COMMISSION TO THE COUNCIL The technological developments in the field of e-invoicing and measures aimed at further simplifying, modernising and harmonising the VAT invoicing rules 1 January 2013
    4. 4. Regulatory requirements for electronic invoicing in Europe are developed iterative <ul><li>European Council Directive 2001/115/EC </li></ul><ul><li>Supplier must ensure that an invoice is issued, either by himself or by his customer or, in his name and on his behalf, by a third party. </li></ul><ul><li>Acceptance (of the e-invoice) by the customer </li></ul><ul><li>Ensure Authenticity of origin (sender is the true source) and Integrity of content (no alteration of data) of the invoice is guaranteed by: </li></ul><ul><ul><li>Electronic Data Interchange (EDI) with contracted security processes </li></ul></ul><ul><ul><li>Advanced Electronic Signature (with or without a qualified signatures) </li></ul></ul><ul><ul><li>Other means to be accepted by Tax Authorities </li></ul></ul><ul><li>Place of storage and time period for secure storage of electronic invoices. </li></ul><ul><li>Ten mandatory items of information with the possibility of an additional four items in specific circumstances </li></ul>DanGa Source: Stefan Engel-Flechsig Different countries mean different regulations. To ensure a internationally compliant solution it is imperative to understand the differences in order to overcome these differences. Electronic Invoice Authenticity of invoice VAT Refund Readability Controllability by Tax Authorities Technical Interoperability Integrity of data Storage Acceptance in other European jurisdictions EDI Agreement or Advanced Electronic Signature EDI plus authenticity or Electronic Signature EDI Agreement or Advanced Electronic Signature Audit requirements 7 – 11 years 7 – 11 years
    5. 5. Adoption and interpretation of regulatory requirements on EDI, Customer acceptance and notification of Tax Authorities by European countries DanGa Commission Recommendation 1994/820/EC (on the legal aspects of Electronic Data Interchange) - No mandatory message standard, - Use of procedures for guaranteeing authenticity and integrity such as network security (VAN) plus a summary statement paper Source: CompTIA Source: CompTIA Notification and acceptance of electronic invoicing by Tax authorities and/or Customers depends on Country legislation. Supplier and customer need to address these issues properly.
    6. 6. European adoption and interpretation of the Advanced Electronic Signature (AES) <ul><li>Definition of the Advanced Electronic Signature (European e-Signature Directives 1999/93/EC): </li></ul><ul><li>- Connected to the signer in a unique way with the possibility to identify the signer and to trace every change afterwards, and realized under the exclusive control of the signer. </li></ul><ul><li>Additional requirements may include: </li></ul><ul><li>- Based on a Qualified Certificate (QC) and </li></ul><ul><li>- Created with a Secure Signature Creation Device (SSCD) </li></ul>DanGa European Initiatives for 2009: STORK, the Secure idenTity acrOss boRders linKed project moves the European Union one step closer to a borderless Single European Market DIGIT Electronic Signature Services Infrastructure (ESSI) Resulting into: - Trust(ed) Lists of Supervised Qualified Certification Service Providers (QCSPs) at European level. - Interoperable AdES (QES) formats Source: CompTIA Communication becomes easier with
    7. 7. Adoption and interpretation of Place of storage / format of storage by European countries <ul><li>Place of Storage </li></ul><ul><ul><li>Any EU member state, if there is online access to the data. </li></ul></ul><ul><ul><li>Outside the EU, if there is online access to the data and the country where invoices are stored respects European Data Protection principles. Even then Member States can exclude this if there is no mutual assistance Agreement with the latter country. Some Member States do not permit storage outside the EU. </li></ul></ul><ul><li>The period of storage: </li></ul><ul><ul><li>The storage period is defined by the individual member state. </li></ul></ul><ul><li>The format of storage: </li></ul><ul><ul><li>Member States have the option to require storage in ‘original’ format: e.g. invoices sent or received electronically, must be stored electronically in most Member States. </li></ul></ul>DanGa Source: CompTIA Source: CompTIA
    8. 8. Good news, regulatory requirements are changing on short notice! <ul><li>Tackle fraud </li></ul><ul><ul><li>Date of supply of an Intra-community transaction = date of chargeability of tax, date when the tax is due to Treasury. </li></ul></ul><ul><ul><li>The invoice has to be issued before the 15th of the month following the date of supply. </li></ul></ul><ul><li>Remove legal barriers </li></ul><ul><ul><li>Treat the transmission of paper and electronic invoices equally by removing the conditions for advanced electronic signatures (AES) and electronic data interchange (EDI). </li></ul></ul><ul><ul><li>Notification and acceptance by the receiver of the invoice and Tax Authorities is no longer required instead normal commercial practice will apply. </li></ul></ul><ul><li>Storage of invoices </li></ul><ul><ul><li>Period of storage: Common storage period of 6 years within Europe for VAT invoices. </li></ul></ul><ul><ul><li>Format of storage : Paper invoices may be converted into electronic form for storage purposes. Storage of invoices in original format is no longer required. </li></ul></ul><ul><ul><li>Place of storage: No conditions for the place of storage other than that the invoice must be available without undue delay. The invoice should no longer be online available when held outside the Member State of the supplier or customer. </li></ul></ul><ul><ul><li>Notification of the place of storage is no longer required. </li></ul></ul><ul><ul><li>Storage by non-taxable persons no longer required for B2C </li></ul></ul><ul><li>Translation of invoices </li></ul><ul><ul><li>Translation of invoices may still be requested but for particular invoices only. </li></ul></ul>DanGa Reduce burdens on business, increase the use of e-invoicing, support small and medium sized enterprises (SMEs) and help Member states tackle fraud The proposal COM/2009/21 simplifies, modernises and harmonises the VAT invoicing rules.
    9. 9. Changes that affect the conditions for issuing an invoice <ul><li>Self-billing : Customers may issue invoices but the requirement to have a prior agreement with an acceptance procedure is replaced by the term ‘Self-billed invoice’ on the invoice. </li></ul><ul><li>Summary invoices : All business may use summary invoices provided that all the required details are included and the period of the invoice is no longer than 1 calendar month. </li></ul><ul><li>Exempt supplies (typically related to exports) </li></ul><ul><ul><li>A full VAT invoice is required for exempt supplies with a right of deduction at the preceding stage (when a supplier has a right to deduct VAT on his purchases) </li></ul></ul><ul><ul><li>A simplified invoice is required for exempt supplies without a right of deduction at the preceding stage (when a supplier has no right to deduct VAT on his purchases) </li></ul></ul><ul><li>Time limit for issuing an invoice : All businesses must issue the invoice by the 15th day of the month following the date of supply. </li></ul><ul><li>Outsourcing of invoicing to third parties outside the EU: Member States may no longer impose conditions. </li></ul><ul><li>Simplified invoices: For B2B transactions simplified invoices are allowed: when the invoice amount is less than EUR 200 , and for credit notes and exempt supplies without a right of deduction at the preceding stage, except when cross-border (when the customer is in another Member State). </li></ul><ul><li>Full VAT invoices : Required for all B2B supplies except for those allowed as simplified invoices. </li></ul><ul><li>Distance Sales: Requirement to issue an invoice for distance sales in all cases is removed. A simplified invoice may be required in a Member State if an established business in that Member State is required to issue an invoice for a similar supply </li></ul><ul><li>A payment on account preceding a supply (pre-payment): An invoice should only be issued after the. supply is made thus removing any ambiguities in invoicing for an intra-Community supply that has not been made. (Currently an invoice is required for a future intra-community supply of goods. The invoice creates a chargeability to tax.) </li></ul>
    10. 10. Changes that affect the contents of an invoice <ul><li>Amendment to an invoice (credit notes, debit notes) </li></ul><ul><ul><li>Harmonisation of content and details required are those of a simplified invoice provided that reference is made to the original invoice. </li></ul></ul><ul><li>Currency of the VAT amount </li></ul><ul><ul><li>Remains in the currency of Member State where the tax is due. </li></ul></ul><ul><li>Simplified invoices must contain all the following details: </li></ul><ul><ul><li>The date of issue </li></ul></ul><ul><ul><li>VAT identification number of the taxable person making the supply </li></ul></ul><ul><ul><li>Identification of the type of goods or services and their value </li></ul></ul><ul><ul><li>The VAT amount to be payable or to be credited, or the information needed to calculate it </li></ul></ul><ul><li>Full VAT invoice </li></ul><ul><ul><li>The date of issue </li></ul></ul><ul><ul><li>A sequential number that uniquely identifies the invoice </li></ul></ul><ul><ul><li>The supplier’s VAT identification number </li></ul></ul><ul><ul><li>The customer’s VAT identification number  now required in all cases, before only obligatory for intra-Community supplies of goods or where the customer was liable for payment of the VAT, and was an optional obligation for Member States to apply in respect of domestic transaction) </li></ul></ul><ul><ul><li>The supplier’s full name and address </li></ul></ul><ul><ul><li>The customer’s full name and address </li></ul></ul><ul><ul><li>A description of the quantity and nature of the goods supplied or services rendered </li></ul></ul><ul><ul><li>The date the tax becomes chargeable (due to the Treasury)  replaces the date of supply </li></ul></ul><ul><ul><li>The VAT rate applied </li></ul></ul><ul><ul><li>The VAT amount payable </li></ul></ul><ul><ul><li>A break-down of the VAT amount payable per VAT rate or exemption </li></ul></ul><ul><ul><li>The unit price of the goods or services exclusive of tax, discounts or rebates (unless included in the unit price) </li></ul></ul>
    11. 11. References <ul><li>Council Directive 2001/115/EC of 20 December 2001 amending Directive 77/388/EEC with a view to simplifying, modernising and harmonising the conditions laid down for invoicing in respect of value added tax </li></ul><ul><ul><li> </li></ul></ul><ul><li>Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax </li></ul><ul><ul><li> =OJ:L:2006:347:SOM:en:HTML </li></ul></ul><ul><li>VAT: Commission proposes a review of the VAT rules on invoicing with a view to reduce burdens on business and to help Member States tackle fraud </li></ul><ul><ul><li> </li></ul></ul><ul><li>Communication from the Commission to the Council - The technological developments in the field of e-invoicing and measures aimed at further simplifying, modernising and harmonising the VAT invoicing rules (COM/2009/0020 final) </li></ul><ul><ul><li> </li></ul></ul><ul><li>Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax as regards the rules on invoicing (COM/2009/0021 final - CNS 2009/0009) </li></ul><ul><ul><li> =CELEX:52009PC0021:EN:NOT </li></ul></ul>
    12. 12. For more information please contact: Danny Gaethofs m +31 (0)6 51 54 02 55 [email_address] Project Manager / Business Consultant