The E-invoicing Checklist: Current EU e-invoicing basics [part 3]

June 21, 2012  |  Electronic Invoicing, Publications

As from 1 January 2013 electronic and paper invoices must be treated equally in the European Union. From that moment on the IRS (tax authority) can no longer require additional guarantees with regard to e-invoices. But until then you have to comply with the current EU legislation. Read all the ins and outs of your IRS’s current approach on e-invoicing in part 3 of our E-invoicing Checklist series.

Minimum information on your invoice

E-invoices must contain the same information as paper invoices. You can find an overview of these mandatory data in chapter: CONTENTS - FISCAL REQUIREMENTS.

You must be able to show that the invoice was sent by the sender and has not changed since

The IRS allows you to decide yourself how you protect your invoices. As long as you are able to show that the invoice was actually issued by the sender (the invoice is authentic) and was not altered (integrity of the invoice). See also: ENSURE CONTROLLABILITY.

For small organisations, it is often sufficient to archive documents connected to the invoice. For example: Purchase Order, Order Confirmation, Proof of Payment. Larger organisations will often choose technical solutions. For example, an advanced electronic signature or the use of EDI: Electronic Data Interchange.

It is important that you keep this “proof” connected to your invoices. It creates an audit trail. The IRS can ask for this as evidence when they audit your organisation.

The tax authorities should be able to check your invoices

As with paper invoices, you must be able to hand over your e-invoices upon request of the tax inspector/auditor.

You need to be able to make clear to the tax administration what happened to the invoice: from order to cash and purchase to pay, and of course the archiving of the invoice. Therefore, transmitter and receiver (supplier and customer) should archive all data surrounding and regarding the invoice. Looking at the cost per Gigabyte and the convenience in current archiving solutions that shouldn’t be too hard, right? See also: LET’S ARCHIVE.

Properly storing your invoicing information

  • If (a part of) your administration is performed with a computer, you have to store your financial administration according to the applicable legal provisions in your country. Problems can arise, for example during a tax audit, if you do not fulfil this requirement properly. The tax inspector or auditor will state that you are not enough in control. However, if you follow the instructions of the IRS, any future tax audit can be carried out faster and with less hassle. It also reduces the chance that the burden of further proof is reversed and put on your lap.
  • Save your invoices in the form in which they were received. For instance: Do not print an e-invoice, but rather save it in it’s electronic form.
  • Save any electronic signature you have received. Is the e-signature attached to an e-mail? Just save the entire e-mail.
  • Save invoices as long as legally required in your country.
  • Besides the e-invoice, you should also store related information like the Purchase Order, the Order Confirmation, Proof of Payment and any other relevant financial information.
  • Make sure to regularly back-up and – this is the million dollar tip – try to restore a backup
    once in a while (you won’t be the first to notice that something went horribly wrong
    during the back-up).

Technical measures

The principle for both electronic and paper invoices is that the authenticity of origin, the integrity of the content and legibility of the invoice must be ensured from the moment the invoice is created until the end of the storage period for the invoice.

For this purpose, in some EU Member States business controls are already allowed prior
to the new EU directive coming into force. However, in most EU Member States business
controls are not appropriate or allowed. In those cases, technology (advanced electronic
signatures/EDI) to encapsulate the process of sending an e-invoice is necessary to stay
in control.

Customer approval

Your customer may refuse your invoice, when he or she doesn’t want to receive your invoice in an electronic format.

You can of course just start broadcasting your e-invoices and wait and see what happens. If your customer pays your e-invoice without any comment, you may assume that this particular customer agrees with the content and format of your invoice: tacit approval.

But, what if your customer doesn’t pay? There could be all sorts of reasons. Maybe your customer isn’t able or doesn’t want to receive e-invoices. That is why it is advisable to do a bit of research in advance and ask your customers what conditions need to be met to have them accept your e-invoices. This increases adoption levels. See also: ADOPTION TACTICS.

Previously published articles in this series:
New series: The E-invoicing Checklist [part 1]
The E-invoicing Checklist: Manual [part 2]

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