31 May 2011 Electronic Invoicing – relaxation of the rules doesn’t mean “anything goes”
The relaxation in the regulations on electronic invoicing in Europe will allow more organizations to take advantage of the lower business costs and greater control and efficiency that they allow but – as Ernst and Young point out in an insightful piece recently – a relaxation in the rules doesn’t mean than “anything goes”. Indeed, care needs to be taken to ensure that e-invoicing systems, whether managed in-house or out sourced, need to be thoroughly audited to ensure that they comply with the regulations.
Electronic Invoices – pdf may be sufficient – with the right controls in place
In their article in T Magazine, E&Y explain that despite the ruling that electronic invoices should be treated the same as paper invoices, to merely issue or receive pdf invoices without any additional measures, will not necessarily be sufficient, although EU member states will not be able to bar such formats if the appropriate business controls are in place.
It is important in E&Y’s view that “businesses document, not only their invoicing and archiving flows, but also the measures that guarantee integrity and authenticity. In other words, businesses will need to document and assess their processes in an appropriate manner. Potentially, businesses may even wish to apply for a ruling from the competent VAT authorities.”
In practical terms, it makes a great deal of sense to seek approval from the VAT authorities even where it is not a strict requirement. As the use of e-invoicing grows, so the authorities will begin to rely on greater depth of reporting that automated systems allow and business can expect greater scrutiny. Indeed, E&Y make the same point: “tax authorities are also starting to realize that automation brings potential for more in-depth and more efficient audits through data mining. This trend will only increase the need for VAT taxpayers to ensure that their invoicing processes are accurate, well-documented and well-controlled”