Russian Roulette With Digital Invoices

Russian Roulette With Digital Invoices
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May 24, 2013 – Russian Roulette With Digital Invoices

Over 90% of all digital invoices sent in the world are NOT in accordance to invoice/tax laws. The result: VAT may not be refunded, since the law says “VAT can be refunded based on an invoice”.

I hope that you are aware of the risks now. How big is the chance that your tax inspector will notice this? Well… the old dusty paper invoice archives were not very appealing to review for the correctness of the invoices by tax inspectors, but the digital invoices are rather easy and much faster to review!

In contrast with what a lot of digital invoice senders tell you … you are at great risk! Playing with digital invoices without exactly knowing what you are doing is like business Russian roulette. Unless you like a bit of risk, I suggest you take the following things into careful consideration when you decide to use digital invoices:

  1. Since January 1, 2013, a new European Union Directive is in place regarding invoicing rules that expects from both the sender and the receiver that they are in control of the entire process, from sending to receiving including storage. Either you install a compliance officer or you hire a platform that guarantees and proves to be in control of the entire process.
  2. When you do not like VAT risks, make sure your digital invoice provider or supplier guarantees VAT compliance, or exactly informs you about what controls are in place and which checks are done. But more importantly, what the checks that are not done!
  3. Any provider of digital invoices that tells you they are fully compliant with invoice/VAT regulations in X countries …. does not tell you the truth. A number of checks can be done in a true-false way (like: is the VAT number of both the sender and the receiver is stated on the invoice), but a significant number of checks need more information than the invoice provides. So be sure of what the invoice/VAT compliance promise exactly means and ask for certified proof in a SOC1/ISAE3402 report way.

The lesson learned: digital invoices are a great help to any business to optimize invoice processes and lower cost. However, digital invoices are not something to experiment with. The Russian roulette bullet will be shot at some point, you only do not know when…

Drs Jeroen Volk RA


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