European Electronic VAT Invoicing A Muddle, Says Systems Firm

by Amanda Banks, Tax-News.com, London

23 May 2006

According to Accountis Europe Ltd, an international provider of secure financial document exchange and payment systems, companies who send electronic invoices in Europe are finding it difficult to keep track of local VAT legislation, risking e-invoices being classed as non-compliant, and leading to possible penalties, such as fines and in some countries even imprisonment.

E-invoices were first accepted as legal VAT documents by all EU Member States in 2004. While all member states accept e-invoicing, the detail of legislation varies from country to country, with some being far stricter than others.

For companies in the UK, there are no penalties for non-compliance, but infringers may lose the ability to deduct VAT. On the other hand, organisations in Ireland can be fined €1,520 for each non-compliant e-invoice, plus an additional personal penalty of €950. Organisations in Sweden face some of the harshest penalties with non-compliant e-invoicing or storage incurring a criminal penalty of up to two years in prison depending on the circumstances.

“Trying to keep track of the different country regulations can be a major headache for companies who trade internationally,” said Rhys Jones, managing director of Accountis. “All e-invoices must comply with VAT rules stipulated in the place of supply. This means that an e-invoice generated for goods sent out from an office in Spain, for example, must comply with Spanish law, even if the organisation is registered in Germany. As a result, a company needs to be fully conversant with legislation in all the countries from which they supply.”

To ensure that e-invoices are compliant throughout Europe, companies can use a pan-European e-invoicing service such as that provided by Accountis, which operates a proven European transaction network. Electronic invoice presentment and payment (EIPP) systems have the expertise and local knowledge to make sure all e-invoices are VAT compliant. This eliminates the risk of being penalised for exchanging non compliant e-invoices. Additional features such as multicurrency and multlingual support facilitate smooth international trading.

In the UK, a new set of guidelines has recently been released in the form of Tax Notice 700/63 (UK Notice on E-Invoicing 2004/2005). This document details the latest laws on issuing, receiving and storing VAT e-invoices in the UK.

Accountis provides secure financial document exchange and payment systems to companies globally. The highly secure Accountis system offers all the features of an EIPP and can manage, present and receive financial documents such as quotes, purchase orders, invoices, statements and the payments associated with these documents. The system complies with relevant legislation world-wide for smooth cross-border trading. Processing over one million transactions every day, Accountis is used by many of the world's largest corporations.

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