EU Public Administrations

Guidance Paper for Public Administrations – The adoption of e-invoicing in public procurement

Under European Directive 2014/55/EU, public contracting authorities engaged in public procurement will be obliged to support e-invoicing by 2019, or up to 12 months later for smaller authorities based on the adoption of a new e-invoice standard.

The Commission requested that CEN- the European standards organisation through CEN/TC 434- draft a European standard for the semantic data model of the core elements of an electronic invoice.

A ‘semantic data model’ means a structured and logically interrelated set of terms and their meanings that specify the core elements of an electronic invoice.

The Directive does not itself create a mandatory requirement for the parties, contracting authorities and their suppliers, to move to e-invoicing exclusively based on the European standard. Member States may retain e-invoicing based on existing national standards and indeed are not forced to move away from traditional invoicing.

But the arrival of a European standard creates an opportunity for wide harmonization and a concerted process of adoption across national public sectors and the EU as a whole.

There are various ways in which the public sector at national level may wish to implement or further expand the usage of electronic invoicing e.g.:

  • Build on already achieved successes in e-invoicing adoption
  • Establish a national strategy and policy framework whether centralised or decentralised
  • Consider a mandating process to make e-invoicing compulsory to achieve the necessary scale
  • Investigate the use of shared services and integration with the whole e-procurement chain.
  • Aim high for maximal automation rather than just minimum compliance

‘The benefits of electronic invoicing are maximised when the generation, sending, transmission, reception and processing of an invoice can be fully automated. For this reason, only machine-readable invoices which can be processed automatically and digitally by the recipient should be considered to be compliant with the European standard on electronic invoicing. A mere image file should not be considered to be an electronic invoice for the purpose of this Directive’ – Reference  Directive 2014/55/EU

 

Scope of the Directive 2014/55/EU

The e-Invoice Directive shall apply to electronic invoices issued as a result of the performance of contracts to which Directive 2009/81/EC, Directive 2014/23/EU, Directive 2014/24/EU or Directive 2014/25/EU applies. These govern public procurement.

This Directive does not apply to electronic invoices issued as a result of the performance of contracts falling within the scope of Directive 2009/81/EC, where the procurement and performance of the contract are declared to be secret or must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in a Member State, and provided that the Member State has determined that the essential interests concerned cannot be guaranteed by less intrusive measures.

The interpretation of this article is that only contracts signed as a result of a tendering process, which was above the EU threshold for inclusion in the Official Journal, are covered by Directive 2014/55/EU.

Requirements

A public administration is obliged to accept and process electronic invoices, which comply with the European standard for e-invoicing, whose reference has been published pursuant to Article 3(2) and with any of the syntaxes on the list published pursuant to Article 3(2), from these suppliers.  These invoices must have been issued, transmitted and received in a structured electronic format which allows for its automatic and electronic processing.

Public administration accepting such electronic invoices, and processing the electronic invoice in whatever manner they decide, will be compliant with the provisions of Directive 2014/55 /EU.

Therefore, they cannot refuse electronic invoices which meet the above conditions solely on the grounds of non-compliance with requirements (for example national or sector-specific requirements, or additional technical requirements of any kind) other than those specifically provided for in this Directive.

Timescale

The Directive 2014/55/EU states that Member States shall adopt, publish and apply the laws, regulations and administrative provisions necessary to comply with this Directive at the latest by 27 November 2018.

By way of derogation from paragraph 1, Member States shall, not later than 18 months after the publication of the reference of the European standard on electronic invoicing in the Official Journal of the European Union, adopt, publish and apply the provisions necessary to comply with the obligation contained in Article 7 to receive and process electronic invoices.

Member States may postpone the application referred to in the first subparagraph with regard to their sub-central contracting authorities and contracting entities until 30 months after publication of the reference of the European standard on electronic invoicing in the Official Journal of the European Union at the latest.

Upon publication of the reference to the European standard on electronic invoicing, the Commission shall publish in the Official Journal of the European Union the final date for the bringing into force of the measures referred to in the first subparagraph.

Key features of the new CEN e-invoice standard EN 16931

The new standards consists of the Semantic Model for the core information elements of an electronic invoice, the listed Syntaxes and Methodology, the Syntax Bindings, the Extension Methodology and Transmission Guidelines.   During 2017, users will be able to start work on implementation. The standard is also designed for use in B2B standards. The CEN Technical Committee based its work on a Standardization Request issued by the European Commission and has brought together standards experts over a two year period.

It is based on pre-existing standards, such as CEN BII used in PEPPOL, UBL, UN/CEFACT and EDIFACT rather then re-inventing the wheel. It supports a large number of business processes and use cases. It can be mapped into and out of other common standards and the data models embedded in most service provider platforms.

It has an elegant architecture as it contains a semantic model for the core information elements of an e-invoice i.e. the terms and business meanings used in an invoice. The data model is independent of the technical language in which it is expressed. Given the range of options for information elements provided in the Semantic Model, trading papers may agree on a Core Invoice Usage Specification to specify the exact content of the required information elements, such as transaction/PO references codes and means of payments accepted.

The two nominated syntaxes for which syntax bindings will be provided are UBL and UN/CEFACT. Syntax bindings will also be provided for EDIFACT. There will continue to be a flourishing format conversion requirement, albeit based on consistent semantic terms.

The EN supports fully the EU VAT regime in all its aspects: various VAT rates, exempt and zero-rate transactions. It even can be adapted for certain VAT-like taxes in Member States. The invoice will support the various recognized methods for demonstrating authenticity and integrity such as digital signatures, EDI and Business Controls.

It will be possible to create Extensions to the core invoice to meet specific industry or country needs. Whilst this is a requirement for justified needs, there is a danger of proliferation. A registration and monitoring process is under review.

Given the variety of information elements available, the Core Invoice Usage Specification has been developed allowing buyers to indicate how they wish suppliers to use the information elements and any restrictions on their use. The classic usage here will be for purchase order, contract and other procurement references.

The e-Invoice is designed to be fully integrated into the financial supply chain with backwards compatibility to procurement and forward compatibility with the payment process. A separate industry group is working on a family of Invoice Response and Status messages.

Validation tools are being created, although many service providers will wish to develop their own versions.

A note on visual presentations

The use of the European standard requires the transmission or delivery of a structured invoice compliant with the semantic data model and the syntax bindings. However, it is perfectly possible to present invoice data in a structured electronic format in a human readable representation, such as a PDF or through an automated interface or as a ‘hybrid’ invoice containing both a structured XML element and a PDF, for visualisation and convenience and as a complement to the structured invoice.”