Overview: e-Invoicing and compliance

Electronic invoicing (e-Invoicing) allows you to eliminate the paper trail that companies must maintain to comply with Value Added Tax (VAT) laws. In 2001 the European Commission established a directive to enable businesses to automate invoice processes and use electronic representations of invoices to fulfill their VAT reporting and audit needs. This directive was originally referred to as Council Directive 2001/115/EC (aka, EU115). This has since been updated and is called Directive 2006/112/EC.

The goal of the directive is to simplify, modernize and harmonize the conditions laid down for invoicing with respect to value added tax within the EU. In 2004, the e-Invoicing directive came into full effect and required every member state to accept electronic invoices (e-Invoices). For all jurisdictions with e-invoicing requirements, there are two concepts that are fundamental to compliance: the authenticity of the invoice (that is, the invoice is from whom it purports to be from) and its integrity (that is, the content of the invoice has not been altered).

There are three main approaches to compliance defined in the original directive:
  • Advanced Electronic Signatures
  • EDI
  • Other Electronic Means (subject to acceptance by the Member States concerned).

Sterling eInvoicing uses the e-signature method of compliance. This is a digital signature approach in which the invoices are digitally signed by the seller using keys approved by the government of that country, and then the signature is verified by the buyer. Future audits can easily verify their authenticity and integrity by re-verifying the signatures on the archived invoices. The e-signature method of compliance is the preferred option of the tax authorities. It is a technical solution and it provides an unequivocal technical guarantee of the authenticity and integrity of the invoice.

Sterling eInvoicing has partnered with TrustWeaver AB to provide e-invoice signing and validation through the on-demand service provided by TrustWeaver. TrustWeaver supports all of the necessary hardware and Certificate Authorities. Sterling eInvoicing also indirectly interoperates with providers of non-TrustWeaver e-Invoice solutions. Suppliers or buyers can use these other service provider or software solutions.

Sterling eInvoicing provides the following features:

  • A supplier process, supporting invoice signing.
  • A buyer process, supporting signature verification and invoice validation.
  • An online archive of the invoice that enables a customer or a tax auditor to search, view, and report on invoices and also to revalidate those invoices in the event of an audit.
  • Timestamping for invoices to and from Italy, providing an additional level of integrity and authenticity protection beyond the already strong protection applied during initial signing and validation.
Note: Customer Support cannot validate or certify VAT compliance or recommend how to maintain compliance. Contact Sales and Professional Services for information on maintaining compliance. Customer Support is a technical resource, not a business resource.