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EU Plans Harmonized E-Invoicing

by Ulrike Lomas,, Brussels

10 September 2007

A European Commission report says that an EU-wide electronic invoicing system could save Euros 243 bn; but there are legal and operational issues, particularly for VAT invoices.

Europe will implement the Single Euro Payments Area (SEPA) by 1st of January 2008. The report proposes an acceleration of the move towards European Electronic Invoicing (EEI)

At present EEI penetration and adoption in Europe is limited, says the report. Technical complexity, legal uncertainty and operational constraints hamper a common European approach. The report proposes the formation of a EEI Steering Committee and an umbrella EEI Framework, which would set out a conceptual structure that supports the provision of the e-Invoicing services in an open and interoperable manner across Europe.

The report identifies three barriers to the widespread adoption of electronic invoicing:

  • E- Invoicing lies at the crossroads of several areas of legislation – mainly VAT, accounting, payment, authentication, company transparency and data retention. This adds complexity to the implementation of any e-Invoicing solution for both the supplier and buyer, as well as for the vendor or the service provider.
  • Differences in applying operational controls and in managing commercial and tax law implications are adding significant complexity and cost to the process. The key issue with the regulations on e-Invoicing however is that they do not adequately provide legal certainty for businesses; the implementation and application of the regulation, in practice, are not always clear in their operational implications; are not always available in foreign languages and, furthermore, they differ substantially across Europe.
  • Standardisation of the e-Invoice is currently fragmented; there are many specifications in use both in Europe and indeed globally. This presents a significant barrier to the adoption of a harmonised EEI Framework and prevents the widespread commercial support of e- Invoice services. Further standardisation work is therefore deemed necessary to decrease the need for costly integration and improve interoperability between existing European standards and solutions. An international e-Invoice standard should be developed; building upon existing commonly used business practices, which will help consolidate the number of specifications in use, while establishing a solid well-respected semantic basis upon which the EEI Framework can be launched.

The report recommends that the EU:

  • Proceed with the creation of the EEI Framework on the basis of the report’s findings, in particular the apparent, positive commercial case for European e- Invoicing and willingness of key stakeholders to engage in the process;
  • Address within a period of 18 months the current ‘barriers’ to e-Invoicing to reduce or eliminate their detrimental effect on market acceptance. In addition this effort needs to integrate with other significant market developments occurring in 2008 across Europe;
  • Establish the EEI Framework rapidly. Key stakeholders are eager to use this framework as a basis for service their offerings within the 2008 timeframe, particularly to assist with the commercial leverage of the Single Euro Payments Area (SEPA).

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