POSITION ON A EUROPEAN CONSULTATION ON EXPERT GROUP FINAL REPORT ON E-INVOICING. General assessment

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1 POSITION ON A EUROPEAN CONSULTATION ON EXPERT GROUP FINAL REPORT ON E-INVOICING ASIMELEC, the Spanish Association for ICT and Consumer Electronics Sector, welcomes the European Commission s initiative for the development of a workshop on e-invoicing and the Conference: Electronic invoicing in Europe in Madrid, and also for the public consultation on these matters. We also support and share the approach taken by the Commission, in order to lay de foundation of an e-invoicing Single Market with the aim of achieving a future Single Euro Payments Area. We appreciate the opportunity to contribute to this consultation. With regard to the specific questions proposed in the consultation, you will find below our comments, inputs and issued that, in our opinion, need to be better addressed. General assessment 1. Do you agree with the report's assessment, conclusions and recommendations? In our point of view the report can be improved in the following aspects: 1. About the equal treatment of paper and electronic In its most basic and low-brow interpretation says that since paper invoices are not signed, electronic invoices shouldn t be either. In our opinion should take into account: o Different media require different methods to achieve the same goal. The paper offers more guarantees of integrity and authenticity that the electronic world. o The CWA 15579:2006 tells: Only the purpose of guaranteeing the invoices authenticity and integrity can be assigned to qualified electronic signatures in this domain. The signature of a einvocie cannot be given the meaning of commitment to the content, like a handwritten signature has. Page 1 of 10

2 2. Is the digital signature the major obstacle?. Considering digital signature a barrier for further development, in our opinion it is excessive. We neither agree with the fact that some of the members of the Expert Group consider the digital signature as superfluous. Despite not sharing all the conclusions of the Expert Group, we recognize the strength of their arguments. In our view, the original problem arises in the wording of the Directive 2001/115/EC, when it confuses the digital signature technology that can ensure the "authenticity of origin" and "the integrity of content" with the electronic signature concept of Directive 1999/93/EC, as a legal device to get equivalence with handwritten signatures. This problem has already been discussed adequately in the CEN einvoicing WorkShop. Now the problem is not in digital signature technology. The technology is mature enough and implanted in multiple services. Does anyone have problems in using HTTPS-SSL, VPNs or signed code and components? These systems make use of digital signature, but most users do not even know. In fact, they do not need to know. Electronic signatures are included in all electronic invoices interchanges in Spain and have never been identified as a barrier that limit the adoption of electronic invoicing. 3. Internal controls of corporates guarantee Authenticity and Integrity of the document? In many cases, the invoice is the only document that justifies a business transaction. The assumption that most corporate will implement adequate document control systems to guarantee authenticity and integrity of e-invoices is naive and far from reality. Eliminate the digital signature of e-invoices means giving up the e- invoice is electronic evidence in itself. A serious trouble when the invoice is the only document that justifies a commercial transaction. In our opinion, electronic documents need ways to reinforce security to allow telling apart fake documents from authentic documents. This is generally true even for informative documents with less impact on companies results. Page 2 of 10

3 Internal controls are not enough, but this can be reinforced with trusted third parties services. In particular, the payment evidence as reflected by the bank statements, can act as an additional electronic evidence. 4. Rate of growth in the adoption. We agree that some technical and legal uncertainty (and European harmonization) had a negative impact on the rate of growth in the adoption of electronic billing. In any case, despite the economic crisis, the rate of adoption is growing significantly. However, we believe that the final report has generated more uncertainty and the Draft of a new Directive which significantly changes the rules of the game and discourage investments in the e-invoicing adoption. This kind of messages have a negative influence in the companies that are deciding about the adoption of electronic invoicing, because maybe they prefer to wait until the legal environment stabilizes. We shouldn t transmit the message that the game rules are changing continuously. 5. Interoperability is achieved only with high level principles? In our view, interoperability requires specify the needs in sufficient detail, maintaining technological neutrality whenever possible. It would have been possible interoperability in the mobile phones, only with high level principles, and without the commitment to GSM? High level principles are against interoperability. Clear rules are better than loose rules. Even more, clear rules are still better when it is possible to test implementations each other. This has been the case with ETSI Plugtests, helping to refine implementations of electronic signature formats or message interchange protocols. Page 3 of 10

4 2. What other suggestions/recommendations would you have? Our suggestions / recommendations are 1. Art 233 should not be eliminated but modified. It clearly states the importance of guaranteeing end to end authenticity and integrity of e-invoices. In order to be technologically neutral it would no longer prescribe the three methods for issuing e-invoices according to the Directive, leave free choice of methods generally accepted European technical standards and best practices as defined by European Standards Organizations and recommended or enforced by the European Comission. The use of digital signatures may be indicated as an example of success. European Standards Organizations will take care of interoperability. 2. Strengthen support of the European Commission for European Standards Organizations Following guidelines for E-signature Interoperability published in CAST June 2008 Technical Report, much progress has been done by European Standards Organizations with the European Commission support. But if technical specifications developed by European Standards Organizations must become the standards of reference for the market, as it should be, an additional effort is required. The existing CEN and ETSI deliverables should be updated to reach the EN Status Level and fill the holes in the array of standards available, in the framework of the Action Plan 2008, Mandate M/ 460 EN, STF 364 PAdES, new work on associated signature (TS ), STF-318 Registered Electronic Mail (TS ), etc. The information about European Standards Organizations standards, best practices and guidelines together with specific local regulations, should be published and kept up to date on an official EU web site, where national communities are given responsibility for upkeep of their sections. Page 4 of 10

5 3. Agreement of e-invoicing communities to changes in the new Directive Tax administrations and operators, on the basis of the experience gained with e-invoicing and e-signature since 2001 are ready to simplify and drop unnecessary national requirements and agree on a common set of changes to be enacted by the new Directive. Representatives of the major e-invoicing communities using e-signature have been consulting each other over the last year or so and are ready to confront their national proposals in order to come up with a document for commonly agreed changes in the Directive. The appropriate context could be a European Workshop. Legal and regulatory aspects (Section 4 of the report) 4. Is the Code of Practice proposed by the Expert Group suited to complement future VAT legislation? If not, how could it be improved? No, see previous answer 5. Do you agree with the 11 core principles set out in the Code of Practice in Annex 3 of the report? Is any important element missing? As discussed above, we do not share some of the principles as we believe that stem from incorrect assumptions. In particular we do not share: Equality of treatment Business controls Maximum choice 6. Beyond VAT legislation are there any other significant regulatory barriers which prevent the uptake of e- Invoicing? No Page 5 of 10

6 Interoperability (Section 5 of the report) 7. Is the 'eco-system' described in the report a valid target environment? Does it reflect all requirements for an open and interoperable level playing field? In general, we believe it adequately reflects the environment in which we are. Content standards (Section 6 of the report) 8. Is the proposed target data model (UN/CEFACT CII v.2) meeting user requirement? In our opinion it does not meet the user requirement in the following aspects: UN/CEFACT CII is still in an embryonic state, late in development, considered by most experts and end-users as inferior in XML design and versatility to UBL 2.0, which instead, is already widely used in the real world by corporates and Public Administrations. In any case, in our opinion, European Commission should consider in particular the result of work done by CEN BII and Peppol Project, establishing the semantic model of business documents (and in particular of the invoices), business rules and mappings to specific syntax, instead of opting for a particular syntax. Attempts to implement CII have reached the point in which missing pieces have to be supplemented with resort to other standards, such as OASIS UBL (Universal Business Language). Page 6 of 10

7 In Spain facturae XML format is being broadly adopted, and CII is not ready to substitute it. Selected XML formats for the electronic invoices should comply with the requirements that EDI messages have complying for years, and those include a seamless integration with other messages such as orders. For this reason UN/CEFACT messages (including CII) are still far of what is needed to support supply chain management. Only OASIS UBL can fulfill the needs of the companies and government agencies at this time. Additionally, CII v2.0 doesn t exist. The UN/CEFACT published schema (approved in September 2009) relates to CII v1.0. Previous CII v1.0 was published only as a draft and never became a specification final status. Implementation of the Framework (Section 7 of the report) 9. Do you agree with the proposed implementation bodies and the tasks assigned to them in the report? We agree that recommended two-levels are necessary (National e-invoicing bodies; Pan- European e-invoicing Forum): Regarding the National level, each country has already or can easily designate an Organization that represents all stakeholders active in e-invoicing and has transparent and democratic governance. Regarding the European level, member states select representatives that come from the ranks of experts and practitioners. We feel that every member state should be encouraged to send two representatives, one of which is from the Tax Agency. In addition the 10 additional seats should include representatives from the European Standards Organizations Of course, since we do not agree with all the recommendations of the Expert Group, we don t think they should implement them but wait until the New Directive is approved by the European Council. Page 7 of 10

8 10. Do you see other implementation tasks which can not be entirely left to the market alone? The European Commission and European Standards Organizations should play a major role. 11. Do you see other bodies or organisations which could play an important role in implementing the framework? We see different stakeholders categories like service providers, end- users, tax agencies, business software developers, etc, having their own voluntary organizations at European level which could express positions and name their representatives to the European Forum. Ad-hoc Working Group including experts from Stakeholders organizations could be set up from time to time by the Commission or European Standards Organizations to investigate and verify in the field specific problems and solutions, test new standards, participate in surveys and market studies, etc. Industry representative organizations should be given a new role i.e. the responsibility for defining and maintaining industry extensions of the standard messages. Page 8 of 10

9 Specific aspects for SMEs and e- Invoicing 12. Do you believe that SMEs needs are sufficiently covered in the report? Are there any other means to promote the adoption of e-invoicing by SMEs? SMEs have their stakeholder organizations, both national and European which, up-tonow, have not address enough the issues involved in e-invoicing. The Final Report dedicates enough space to discussing the problems of SMEs, often missing the target, as in the case of the ostracism to e-signature. We believe the problem of SMEs is primarily one of education and communication. The market today offers a variety of cheap and easy-to-use solutions allowing SMEs to issue electronic invoices (including electronic signatures) as for the delivery channel Banks are one possibility but by no means the only or the major one. In our view, the Expert Group would investigate further the solutions available in the market for SMEs. There is no doubt that simplification of European and local legislation would facilitate a direct involvement of SMEs. 13. Are the guidelines for SMEs in Annex 3 comprehensive enough? Would you suggest any additional content? We think that guidelines are comprehensive enough. Page 9 of 10

10 Executive Summary ASIMELEC supports the European Commission towards the definition of an effective approach to constructively improving the Single Euro Payments Area. Nevertheless, as explained, ASIMELEC believes that the digital signature is an important complement to the e-invoicing, and never a barrier to its effective deployment in Europe. Besides, the digital signature may play a central role in terms of the implementation of the e-invoicing, as it provides important advantages in terms of trust and security. This aspect is relevant in a desirable single market and payments environment, but involving different economic and trade customs and regulations. We are confident that the Commission s continuing dialogue with the stakeholders and as a result, this approach will serve as a driving force that increase the future e- Invoicing Single Market. ASIMELEC (Asociación Multisectorial de Empresas de Tecnologías de la Información, Comunicaciones y Electrónica), the Spanish Association for Information Technologies, Communications and Consumer Electronics, was constituted in 1984 as an association of importers of electronic products. At present, ASIMELEC has evolved in parallel with the markets and technologies gathering all the ICT sectors, and becoming the only industrial organization in Spain that groups together manufacturers, traders, distributors and also installers, in the specific case of the telecommunications sector. Our goal and mission is the fostering and promotion of the Information Technologies, Communications and Consumer Electronics industry in Spain, achieved through the defense of the common interests of our membership and the development of the ICT industry. At present, ASIMELEC represents over 2,500 corporations, which account for 300,000 direct employments and an accrued turnover equivalent to 4,5% of the Spanish GDP. More information at Page 10 of 10