In the e-invoicing industry, compliance is a word that certainly carries some weight but why is compliance so important and why should any business think about it before heading down the path of e-invoicing?
The importance of e-invoicing
For clients, e-invoicing complains seems to be two words that do not sit well with them. This is down to the fact that they need to think about the correct taxes so that they are not hit with fines or penalties.
Before starting with e-invoicing
Prior to using electronic invoicing, businesses have to meet specific requirements. They might have to report the fact that they are making the change from paper to e-invoices so that they remain within the law. In fact, some businesses might also have to get permission from the recipient before they make the switch because many countries are still slightly behind the times when it comes to e-invoicing and so, they do not have the capacity or understanding to deal with electronic documents.
At this stage, the business will have to consider the requirements when it comes to format and other requirements that are linked to the authenticity of the document as well as its integrity. This can differ between countries where one country might only have a single way of fulfilling these requirements while other countries might have a number of different options. Some countries might also have invoicing regimes to consider and that is extremely important.
Businesses must also pay attention to the content of the invoice because there are minimum requirements that are stipulated by the regulator in order for the invoice to remain valid for tax reasons.
There are archiving requirements that have to be considered because they have to be stored in a certain way and for a certain period of time. Considerations should also be made for audit purposes with some countries expecting businesses to archive locally with some countries allowing the archiving of e-invoices abroad. Of course, if the e-invoices will be stored somewhere else, then the relevant tax authorities will have to be informed.
The client is responsible
Often, there is a misunderstanding over who is responsible for the e-invoice and whether it falls with the supplier or the client. When some of the operations are outsourced by a tax subject to a third party such as an e-invoicing provider, it does not mean that the responsibility falls to the tax authorities. The provider simply offers a solution, giving the tax subject the responsibility of assessing and understanding whether it can fulfil any accounting and tax obligations in order to remain compliant.
Should a disagreement arise between the client and the provider concerning the regulations and how they are interpreted or implements, the opinion of the client should always be considered first. The provider will not incur any taxes or fines, only the company.
Certification does not exist
Even though there is a need to remain compliant, there is no certificate to prove it. However, it is important to consult with external compliance advisors in order to ensure that you meet the required legal requirements.