Introduction of electronic invoicing can save a lot of money for Dutch trade and industry. But it requires the Ministry of Economic Affairs to make the rules regarding the electronic signature and VAT more clear, and at the same time more simple and practical.
Michel Schrauwen en Tom van der Veldt
Recently the State Secretary of Economic Affairs presented an ' action plan' for electronic invoice. According to the State Secretary the introduction of electronic invoicing can save Dutch companies approximately 600 million Euros . The government is willing to lead by example and aims at receiving 10% of all the invoices electronically by 2010, and is going to study the types of electronic invoicing.
A serious plan at first sight, but it illustrates 2 widespread misunderstandings. First of all the benefits for trade and industry are underestimated. The European Commission estimates that the yearly savings due to electronic invoicing for European companies can be as high as 243 billion Euros. Estimated is that every year 30 billion invoices are sent in Europe, 1 billion of which in the Netherlands. Annual savings in the Netherlands can end up being approximately 8 billion Euros.
Secondly it becomes clear from practice that it is not the technical aspects that are the main obstacle for successful introduction of electronic invoices, but the VAT-rules. Dutch VAT-rules require, as it happens, that an electronic invoice is provided with an advanced electronic signature, or that they are sent based on EDI-standard, or that another type of security policy is used. As a consequence, companies will have to introduce expensive technical processes to make electronic invoicing possible.
An entrepreneur in the Netherlands cannot claim VAT on the base of an invoice in simple pdf format. European VAT-rules however gives Member States the possibility to interpret a pdf-document as a valid invoice. Neither The Netherlands nor any other Member State makes use of this possibility because of fear that it will lead to more fraud. The practice in Australia and Canada learns that this is not the case. These countries permit pdf-files (without electronic signature or sending protocols), however, as an invoice.
Good news for entrepreneurs is that Economic Affairs wants to simplify the rules regarding the electronic signature and VAT. Moreover we would like to see the government make the rules more simple and practical. It would show great ambition when the Netherlands adapt its legislation in such a way that a simple pdf file will be a valid invoice.
Michel Schrauwen and Tom van der Veldt are respectively partner and tax assistant at PricewaterhouseCoopers Tax Advisors.