Invoicing and Archiving

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Invoicingand Archiving
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Overview

• The issuing of invoices (including self-billing)
• Electronic invoicing
• Archiving of invoices

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The issuing of invoices
Sixth Directive

• Obligation to issue an invoice
• Supplies of goods and services to and
  payments on account by
• taxable persons and non-taxable legal persons
• Supplies (to a.o. non-taxable private
  individuals)
• distance sales
• intra-Community supply of a new means of
  transport
• intra-Community supply of an excise product
• limitative list

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The issuing of invoices
Sixth Directive

• OPTIONS FOR MEMBER STATES
• For transactions situated within their territory
• Obligation to issue an invoice for other
  transactions
• No obligation to issue an invoice for exempt
  transactions
• Time of issuance of invoices

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The issuing of invoices

• REGULAR INVOICING invoice issued by the
  supplier
• SELF-BILLING invoicing done by the customer
• Prior agreement between parties
• Procedure for the acceptance of each invoice by
  the supplier/service provider
• OUTSOURCING invoice issued by a third party in
  name and for the account of one of the parties of
  a transaction

Sixth Directive
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The issuing of invoices

• Every person registered under art. 10 who makes a
  supply, other than an exempt without credit
  supply, to another person who identifies himself
  for the purpose of that supply by means of a
  value added tax identification number shall
  provide that other person a tax invoice within
  thirty-one days from the earlier of
• the date when the goods are delivered or the
  services are performed
• the date on which a payment for that supply is
  received.

Art. 50 (1) VAT Act
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The issuing of invoices

• When there is an application, disposal, transport
  or use of goods for which no consideration is
  charged or paid but which is deemed in terms of
  the Second Schedule to be a supply made by a
  person for consideration, that person shall, if
  he is a person registered under article 10, issue
  a tax invoice in which he indicates himself both
  as the person who made the supply and as the
  person to whom the supply is made.
• Every taxable person shall issue a tax invoice
  within the time stated in sub-article (1) in
  respect of every distance sale made by him.

Art. 50 (2) VAT Act
Art. 50 (3) VAT Act
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The issuing of invoices

• Any taxable person or non-taxable legal person
  who makes any supply, other than a supply in
  respect of which a tax invoice is required to be
  issued in terms of article 50, shall provide to
  the person to whom the supply is made an invoice,
  receipt or other document which shall be issued
  in the form and in the manner and shall contain
  the particulars set out in the Thirteenth
  Schedule.

Art. 51 VAT Act
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The issuing of invoices (self-billing)

• Whereas, based on art. 50 (4) VAT Act, one could
  conclude that in Malta self-billing is only
  allowed if the supplier is registered under art.
  10 VAT Act, it appears according to us that,
  based on item 10 Twelfth Schedule, self-billing
  could be more widely allowed as the condition
  that the supplier must be registered under art.
  10 VAT Act is not mentioned
• In our opinion, this could mean a.o. that under
  the future Maltese VAT legislation cross-border
  self-billing (i.e. supplier and customer are not
  established in the same Member State) is allowed
  even if the supplier is not registered under art.
  10 VAT Act

Maltese VAT legislation
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The issuing of invoices (self-billing)

• The use of self-billing is subject to a (prior)
  approval by the Commissioner, except when the
  customer is the person liable for the tax on the
  supply concerned
• The future Maltese VAT legislation does not yet
  determine the conditions of the prior agreement
  and the acceptance procedure of the self-bills

Maltese VAT legislation
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Electronic invoicing

• If accepted by the customer
• Invoices sent/made available by electronic means
  shall be accepted by all Member States
  (conditions on authenticity of origin and
  integrity of content)
• Advanced electronic signature
• qualified certificate
• secure-signature creation device
• EDI (Electronic Data Interchange) supported by an
  agreement (sufficient procedures)
• ! creation of summary statement on paper
• Other electronic invoicing methods
• Until the end of 2005 prior notification may be
  imposed (no license requirement)

Sixth Directive
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Electronic invoicing (AES)

• An electronic signature means data in electronic
  format which are attached to or logically
  associated with other electronic data and which
  serve as a method of authentication (of the
  message)
• An advanced electronic signature is an electronic
  signature that meets all of the four following
  requirements
• The signature is uniquely linked to the signatory
• The signature is capable of identifying the
  signatory
• The signature is created using means that the
  signatory can maintain under his sole control
• The signature is linked to the data to which it
  relates in such a manner that any subsequent
  change of those data is detectable

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Electronic invoicing (AES)

• A qualified certificate is an electronic
  attestation, meeting specific requirements, which
  links signature-verification-data (such as codes
  or public cryptographic keys) to a person and
  confirms the identity of that person and which is
  issued by a certification-service-provider (who
  meets specific requirements)
• A secure signature-creation device is software or
  hardware, meeting specific requirements, used to
  implement unique data, such as codes or private
  cryptographic keys, which are used by the
  signatory to create an electronic signature

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Electronic invoicing (AES)
Original
Message
Priv key
Original Message
Certificate
One-way hash
Certificate
Hash algorithm
Signed Message
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Electronic invoicing (AES)
2. Generate hash
Original
Original Message
Message
One-way hash
Hash algorithm
4. Compare
Certificate
Pub key
Signed Message
One-way hash
3. Apply public key
1. Inspect certificate(s)
Certificate
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Electronic invoicing (EDI)

• Electronic data interchange is the electronic
  transfer, from computer to computer, of
  commercial and administrative data using an
  agreed standard to structure an EDI message. An
  EDI message consists of a set of segments,
  structured using an agreed standard, prepared in
  a computer readable format and capable of being
  automatically and unambiguously processed. EDI
  message standards are essential to EDI.
• In the case where parties wish to use any of
  these other standards they have to reach an
  agreement on these and have to determine also all
  appropriate details and specifications.
• In practice EDI is often used for the bulk
  transfer of data (e.g. files, often containing
  hundreds of individual invoices) between trading
  partners who are known to each other.

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Electronic invoicing (EDI)
EDI
(Closed) Network
Seller
Buyer
Price Quote
Purchase Order
Order Acknowledgment
Invoice
Payment
Payment
Advice
Instruction
Payment
Network
Payment
Processing Settlement
Originating Bank
Receiving Bank
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Electronic invoicing (EDI)
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Electronic invoicing (other methods)

• Examples
• Outsourcing of the invoicing process to a
  e-billing platform
• The putting at the disposal of the invoice on a
  secure website, whereby the customer can view
  (e.g. by using a PIN code) or download the
  invoice in an unalterable format
• The use of secured electronic statements of
  credit cards or corporate purchase cards issued
  by a credit or bankcard company (containing
  sufficient data to be considered as a sales
  invoice of the supplier)
• Sending invoices by e-mail (e.g. with an invoice
  in PDF-format as attachment)
• Inter-company invoicing by means of inter-company
  postings made in the accounts of the separate
  companies using the same ERP system (?)

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Electronic invoicing (other methods)

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Electronic invoicing (other methods)

• The following remark could be made invoices are
  not to be considered as stand-alone documents.
  They are only one (be it important) element for
  determining the authenticity of a transaction
• In the frame of a transaction other elements
  support this authenticity (e.g. order forms,
  contracts, transport documents, payments, )
• Therefore (even in the case of electronic
  invoicing without using technical means for
  guaranteeing security), authenticity of origin
  and the integrity of the content of an electronic
  invoicing can be proved by means of an audit
  trail consisting of various documents pointing
  into the same direction (i.e. using methods that
  are already used by internal and external
  auditors performing controls on the
  administration of transactions)

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Electronic invoicing (other methods)
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Electronic invoicing

• Invoices containing the details specified in item
  2 (i.e. the obligatory contents of an invoice),
  and subject to the acceptance by the customer,
  may be sent by electronic means, provided that
  the authenticity of the origin and the integrity
  of the contents are guaranteed
• as may be provided for by national legislation
  with regard to the use of electronic signatures,
  or
• as may be required and approved by the
  Commissioner.

Item 11 Twelfth Schedule
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Archiving of invoices

• Principle archiving possible at any place and
  on any medium
• Member States can impose conditions regarding
• Place of storage
• Format of storage
• Member States can impose different rules for
  storage outside EU
• Member States can determine the storage period

Sixth Directive
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Archiving of invoices

• OPTIONS FOR MEMBER STATES
• Format of storage of incoming invoices (taxpayers
  established on their territory) and outgoing
  invoices (transactions situated on their
  territory)
• Storage in the original format in which
  information is transmitted
• - paper cannot be digitised
• - electronic invoices to be archived
  electronically
• Electronic invoices storage of data that
  guarantee the authenticity of the origin and the
  integrity of the content of the invoices
• Storage of invoices received by non-taxable
  persons established on their territory

Sixth Directive
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Archiving of invoices

• OPTIONS FOR MEMBER STATES
• Place of storage for taxpayers established on
  their territory
• Place of storage of invoices outside the Member
  State requirement to communicate the place of
  storage
• Place of storage within the Member State
  invoices not stored by electronic means that
  guarantee full on line access
• Storage period determined by the Member State
  No harmonisation
• Outgoing invoice transactions located within
  their territory
• Incoming invoice taxpayers established on their
  territory

Sixth Directive
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Archiving of invoices

• Every taxable person established in Malta shall
  keep full and proper records of all transactions
  carried out in the course or furtherance of his
  economic activity
• Every person who is liable to tax on any
  transaction or who identifies himself as a person
  registered under this Act for the purpose of any
  transaction shall keep full and proper records of
  any such transaction
• Every taxable person and every non-taxable legal
  person shall keep full and proper records of all
  intra-community acquisitions made by him

Art. 48 (1) VAT Act
Art. 48 (2) VAT Act
Art. 48 (3) VAT Act
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Archiving of invoices

• The records referred to in sub-articles (1), (2)
  and (3) shall be kept and stored in such manner,
  contain such details and be supported by such
  information, documents and accounts as set out in
  the Eleventh Schedule and such records,
  information, documents and accounts shall be
  retained for a period of at least six years from
  the end of the year to which they relate, or such
  other period or periods as the Minister may, in
  special cases, by regulations prescribe
• The Commissioner may at any time within the
  period specified in sub-article (4) of this
  article request any person to produce the
  records, documents and accounts required to be
  kept by him in virtue of this article

Art. 48 (4) VAT Act
Art. 48 (5) VAT Act
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Archiving of invoices

• Every person registered under article 10 shall
  keep the following records and documents
• proper accounts and records of his economic
  activity
• a value added tax account
• an annual value added tax account
• copies of all tax invoices issued by him
• all tax invoices received by him
• documentation relating to customs and, where
  applicable, excise procedures with respect to
  importation and exportation of goods by him

Item 1 Eleventh Schedule
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Archiving of invoices
Item 1 Eleventh Schedule

• Every person registered under article 10 shall
  keep the following records and documents
• copies of all fiscal receipts issued by him in
  terms of the Thirteenth Schedule to this Act
• all credit notes, debit notes and other documents
  issued by him or received by him which evidence
  an increase or a decrease in the consideration
  for any supplies, intra-community acquisitions or
  importations
• a register of non-transfers
• a record of movable tangible goods transported to
  him from another Member State by or on behalf of
  a taxable person identified for purposes of value
  added tax in that other State for the purpose of
  the valuation of or works on those goods

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Communication of information

• A person to whom any tax invoice or other
  invoice, receipt or document is provided as
  required by article 50 or 51 shall, if so
  requested in accordance with the other provisions
  of this Act, produce the said invoice, receipt or
  other document to the Commissioner or to any
  officer authorised by the Commissioner

Art. 52 VAT Act
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Communication of information

• Every person to whom a fiscal receipt is issued
  shall retain the receipt in his possession for a
  period of twenty-four hours and shall, upon a
  request made during the said time by the
  Commissioner or any officer authorised by the
  Commissioner, produce the said receipt to the
  Commissioner or such authorised officer

Item 12 Thirteenth Schedule
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Archiving of invoices

• Point of attention
• New Maltese VAT legislation does not yet provide
• for specific rules on
• Place of storage of invoices
• Paper or electronic storage of invoices