22 June 2006 | Paul Snell
Buyers are putting their firms and company secretaries at risk of fines or jail terms if they don't ensure e-invoices from foreign suppliers meet the vendor's local authentication regulations.
Research from Accountis, a financial document exchange provider, found that while many companies know that e-invoices are accepted VAT documents, few know that the authentication checks required to make them legal varies between the EU member states.
Rhys Jones, managing director at Accountis, told SM: "All e-invoices must comply with VAT rules stipulated in the place of supply. As a result, a firm needs to be fully conversant with legislation in all the countries from which they source."
Some countries are far more strict about what constitutes authenticity. For example, all invoices in Germany must be digitally "signed" by a piece of hardware such as a smart card. The UK's regulation is more lenient, only requiring a software certificate to authenticate the invoice.
Punishments for non-compliance vary across the EU. In the Republic of Ireland there is a fine of ?1,520 for each unauthenticated invoice and a personal penalty for the company secretary of ?950. In Sweden, punishments include a jail sentence.
Unauthenticated documents can also prevent firms reclaiming input tax.
Jones added that the biggest risk is if businesses are found to be negligent, rather than ignorant of the regulations. He recommended using a pan-European invoicing system, which ensures each invoice is authenticated appropriately.