Did you happen to miss our webinar on the standardization of e-invoicing across Europe?
Curious to learn what’s going on in this area, specially in Italy, country that has been taking the lead in adopting e-invoicing for VAT purposes?
Find below the full transcript for this webinar, which you can download to read at your own leisure.
A huge thank you to Benedetto de Francesco of Studio De Francesco – Business & Leadership Consultants for taking the time to talk to us about e-invoicing in his country and the many problems professionals have faced with its implementation.
For now, here are some of the event’s main highlights!
What are some of the main benefits of e-invoicing in general? Likewise, what are some of the main benefits of standardizing e-invoicing across the EU?
Benedetto de Francesco: “If we are speaking about exchanging information and operations between governments, there are probably many benefits, mainly those referring to the speed of exchanging and processing this information, because you don’t have to allocate or classify costs to handle VAT in each operation. You just separate the cost from the VAT amount and that’s all.”
Is e-invoicing a way to reduce administrative costs? In which circumstances and after how much time? If you have software that will help, but the software will also cost money too, right?
Benedetto: “For the time being, this is the third month since the introduction of e-invoicing in Italy, and we cannot see any improvement in the administrative process. Many times we have to print the invoices as well because—the invoice, of course, can be produced in PDF and be printable—many times in order to be sure that your customer will pay you, you have to send him the courtesy copy at least in PDF form. But some also send the PDF to be paid and do not send the XML file, so the evasion, avoidance, fraud can be avoided but after a certain amount of time. If I am a fraudulent operator or an operator opening a VAT number to partake in fraud, I have a lot of ways of doing that without getting caught up until the end of the process.”
Plenty of concerns have arisen with regards to data protection and cyber security vis-à-vis e-invoicing. What are your thoughts on this specific issue? What kind of concerns should we have regarding cyber security, personal freedom, industrial spying, etc.?
Benedetto: “Everyone can easily imagine what could happen if the safety and access to these databases are not totally secure. If you can access and hack a database, you can change the information there. From the perspective of the EU, all that information is very important for administrative and governmental purposes, and if that information is not secured and can be changed, destroyed or stolen, the functioning of the EU administration is under threat.”
“For B2C operations, the e-invoices in Italy include the company name, the address of the company, the VAT number and the fiscal code, which most of the times both coincide also with the company registration number.”
“For private individuals, we have first name, surname, fiscal code, and a special code with some letters of the name and surname, year of birth, month of birth, day of birth, and then a code identifying the municipality of birth. It’s a code that can identify you without any mistake. Also, in the invoice, I include all the information that qualifies the operations: if you buy products, the recurrence, the number, the weight, the description of the product, etc. And if you’re a private individual, one includes the products or the services that you have bought from the professional or from the company. This is the information that generally speaking is protected by the GDPR and so on. In this way, they go through electronic systems whose safety is yet to be determined.”
Mexico started the electronic invoice in 2014 and in 2017 changed to a new version, using catalogues of measures, goods and services, forms of payment, etc. Mexico currently uses an electronic payment receipt to identify the cash flow and the platform for issuing payroll receipts. What scope do you intend to give to e-invoicing in the EU besides VAT?
Benedetto: “One of the points that we have reached is that the benefits can only be found if there is a larger scope than VAT. And a larger scope is harmonizing VAT throughout Europe. Here in Italy, we have a very complicated VAT legislation, providing for different deductions, different treatment of VAT in many different cases related to the kind of operator you are, etc. If we make everything deductible, speaking about costs, and everything detractable, speaking about VAT, in all the European countries, of course, we won’t have to worry about the treatment of each item, and we can create codes that identify an item and link that code to any cost or revenue account, and then no one will have to process accounting anymore. Accounting will only be limited to analyzing the accounts and probably making some changes to comply with international accounting principles or standards in order to make the correct representation in the financial statements and comply with the IFRS, etc. So this will be the only situation in which e-invoicing will be largely exploitable and give a concrete benefit to the accounting process.”