R e a c t i o n s t o t h e e - I n v o i c i n g r e p o r t o f t h e EU- E x p e r t g r o u p

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1 Seite 1 von 6 Re: R e a c t i o n s t o t h e e - I n v o i c i n g r e p o r t o f t h e EU- E x p e r t g r o u p General assessment 1. Do you agree with the report s assessment, conclusions and recommendations? No. Especially we do not agree with the suggested legal and regulatory changes as described within the report (chapter 4). The suggested legal and regulatory changes (especially substituting electronic signatures by unspecified internal controls ) will increase individual national regulations, contradicting EU s commitment of reducing the burden of bureaucracy and avoiding European-wide standardized e-invoicing process implementations. The suggested legal and regulatory changes will result in increased bureaucracy, more complex EU wide implementations, higher risks and substantially increased costs for companies, using electronic invoicing. This applies especially for SMEs. Substituting existing proof of authenticity & integrity by electronic signatures through (unspecified, national) internal controls will result in following disadvantages: a. Substitution of proven standards with individual internal controls. Today s existing, proven, reliable and standardized framework around for e-invoicing processing would be replaced by a set of intransparent, national and rather not harmonized regulations. Effectively, this will result in a step back for everyone except auditor firms, who would be more than happy to define and audit individually thousands of companies following to new internal controls company by company, nation by nation. b. Increased e-invoicing costs; especially for SMEs. Internal controls, as proposed by the Expert Group, will cause numerous different e-invoicing process policies, guidelines and regulations. Companies and organizations would be forced to install different e-invoicing processes to comply with each national subset of internal controls in each EU-country. c. Increased investment risks. If there would be no EU-wide standardized, proven, reliable and compliant proof of authenticity and integrity for e-

2 Seite 2 von 6 Invoicing processes, i.e. the electronic signature, companies may run again into the risk, that their electronic invoices will not be compliant or accepted in specific European countries. d. Complexity re-opens window for increased VAT tax fraud. The electronic signature is a reliable, proven technology to provide a legal proof of integrity and authenticity of any electronic data. The complexity of national variations of internal controls throughout EU may open the window again for a substantial increase in misuse and VAT tax fraud. e. Relatively higher disadvantage for SME. The resulting increase in costs, complexity and uncertainty will have a higher impact on SMEs, as SME typically have substantially less resources available to support different national variations of internal control requirements than larger or global corporations. f. Increased risk and effort for external service providers. Today, e- Invoicing processing may be easily outsourced or processed by external service providers. Suggested implementation of internal controls would increase substantially operating costs and risk of service providers. This will result in higher costs for service provider clients and therefore rather delay further market penetration of electronic invoicing. g. Loosing trust regarding EU wide regulations. All companies benefiting today from e-invoicing will be extremely disappointed about EU regulations and their sustainability. This would not help in further harmonising business processes throughout EU. 2. What other suggestions/recommendations would you have? We suggest harmonising the proof of authenticity and integrity on electronic invoices using proven, reliable and secure electronic signatures, which had been standardised globally for years. In Austria advanced electronic signatures are used for many years to secure electronic invoice processes. Many companies (large corporations as well as SMEs) are using this technology day after day for millions of electronic invoices. Same technology is used for international e-invoicing processing. Today s major advantage for companies regardless of its size is that the electronic signature for e-invoicing stands up legally throughout EU and many other countries beyond. Today companies rely on standardized e-invoicing tools. There are only minor white spaces enabling high trustworthiness any reduced operating risks. E-Invoices with electronic signatures are accepted for VAT deductions, without a new and complex set of internal controls. We suggest reducing complexity of EU wide e-invoicing processes by a secure, standardised, globally proven and simple approach. Electronic signatures have been proven to satisfy all requirements and are accepted today in many European countries. Harmonising the electronic signature for all EU member

3 Seite 3 von 6 countries will provide a secure, reliable and globally accepted proof of the authenticity and integrity of e-invoices. Business requirements 3. Is there an important aspect for the successful uptake on e-invoicing missing in the list of defined business requirements, especially to facilitate mass adoption by SMEs? Yes - as listed in our answer regarding question 1. SMEs require an accepted, proven, standardized and easy to use tool to implement secure and legally compliant e-invoicing processes. Individual, national variations of internal controls throughout the EU would be a substantial inhibitor for mass adoption of e-invoicing at SME. A reliable, proven tool, i.e. the electronic signature has been proven as an internationally standardized technology and will help to accelerate mass adoption of e-invoicing at SMEs. Legal and regulatory aspects 4. Is the Code of Practice proposed by the Expert Group suited to complement future VAT legislation? If not, how could it be improved? The code of practice, as proposed by the Expert Group, is not suited to complement future VAT legislation. The code of practice would be a step backward regarding e-invoicing EU wide standardization and harmonization. Vague, individual national variations of internal controls are not suited to complement future VAT-legislation. Only a clear defined and international standardized tool (i.e. electronic signature) will be suitable for mass implementation throughout EU. Therefore the electronic signature will be the perfect tool for secure e-invoicing processing. The Code of Practice, proposed by the Expert Group, do not contain a clear defined, internationally accepted and standardized tool-set. This will result in companies would have to take the risk, that their electronic invoices may will not be accepted in each EU-country. Additionally, these companies will have to

4 Seite 4 von 6 comply to many potential variations of internal controls This would cause substantial additional costs and increase complexity of international e-invoicing processing. 5. Do you agree with the 11 core principles set out in the Code of Practice in Annex 3 of the report? Is any important element missing? No, we do not agree with the 11 core principles. A European-wide standardized e-invoicing process, suitable for mass roll-out and all companies, regardless of their size may only be achieved using a clear defined, reliable, internationally accepted set of tools and definitions. Defining only principles, while avoiding clear definitions of the tools to be used to ensure international standardization and compatibility, will slow down mass roll-out, legal acceptance and increase the risk of EU wide practicability. 6. Beyond VAT legislation are there any other significant regulatory barriers which prevent the uptake of e-invoicing? VAT is currently regarded as the most significant barrier preventing the uptake of e-invoicing. Aside from legal barriers, there are issues about international standardized e- Invoicing data formats. The daily complexity of thousands of different data formats regarding electronic purchase orders, electronic invoices and other structured communication among companies slows down significantly any mass roll out of e-invoicing processes. Interoperability 7. Is the eco-system described in the report a valid target environment? Does it reflect all requirements for an open and interoperable level playing field? This depends on the design and implementation of the eco-system. First, defining and implementing an EU wide eco-system, containing each and every definition of interoperability requirements, will take a very, very long time to set up and will bear the risk that a common set of rules and requirements may never be agreed on in each and every EU member country preventing to provide an open and interoperable level playing field.

5 Seite 5 von 6 Secondly, the effort of maintaining various national interpretations of the eco-system requirements and their internal-controls will put an additional burden on European companies, resulting in more bureaucracy and substantial disadvantages in comparison to other areas outside of EU. Content standards 8. Is the proposed target data model (UN/CEFACT CII v.2) meeting user requirement? N.A. / No feedback regarding this item. Implementation of the Framework 9. Do you agree with the proposed implementation bodies and the tasks assigned to them in the report? No, we suggest adding further implementation bodies to the report. While using electronic signatures to provide an international accepted proof of authenticity and integrity trustworthy certificate service providers are required to provide trustworthy digital certificates for generating digital signatures. Trustworthiness of the certificate providers will be guaranteed through existing national supervising bodies, supervising certificate service providers in each EU member state. 10. Do you see other implementation tasks which can not be entirely left to the market alone? The most important implementation tasks which can not be entirely left to the market alone are. 1. International trustworthiness of the total e-invoicing process. 2. Guaranteed legal acceptance of electronic invoices in all EU countries if companies have fulfilled predefined regulations. 3. Ease of use and fast implementation of the required solution (tools) to be used within the e-invoicing process throughout all EU countries.

6 Seite 6 von Do you see other bodies or organizations which could play an important role in implementing the framework? Yes, the following organizations shall be included: Governmentally accredited or supervised certification service providers, issuing digital certificates, used for generating digital signatures National governmental supervising bodies, responsible for accreditation and supervising certificate service providers Specific aspects for SMEs and e-invoicing 12. Do you believe that SMEs needs are sufficiently covered in the report? Are there any other means to promote the adoption of e-invoicing by SMEs? No, SMEs are not sufficiently covered in the report. With reference to question 3, SMEs do require a standardized, pre-defined, well proven and accepted tool for secure and legally compliant e-invoicing processing. The electronic signature has been proven as an internationally standardized tool, perfectly suitable for any company, regardless of its size or geography. 13. Are the guidelines for SMEs in Annex 3 comprehensive enough? Would you suggest any additional content? Yes, we suggest further, more detailed content in the means of clear, precise definitions of tools which can be used throughout EU member states. SMEs need reliable, precise definitions and methods, which will be accepted for electronic invoices in each EU-member states same way and without any room for (mis-)interpretation.