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ZUGFeRD e-Invoicing in Germany B ased on European S tandards

ZUGFeRD e-Invoicing in Germany B ased on European S tandards. Stefan Engel-Flechsig Chairman FeRD UN/CEFACT 08-04-2014. What you can expect …. Brief update on E-Invoicing in Germany Current work German Forum on Electronic Invoices ( FeRD ) What is “ ZUGFeRD ”?

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ZUGFeRD e-Invoicing in Germany B ased on European S tandards

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  1. ZUGFeRDe-Invoicing in GermanyBased on European Standards Stefan Engel-Flechsig Chairman FeRD UN/CEFACT 08-04-2014

  2. Whatyoucanexpect … • Brief update on E-Invoicing in Germany • Current work German Forum on Electronic Invoices (FeRD) • What is “ZUGFeRD”? • Outlook “Europe”: Where are we heading to and how we can join forces FeRD

  3. Status on E-Invoicing in Germany Classic EDI well established in private sector, e.g. Consumer Goods, Automotive etc. According to German Federal Statistical Office in 2011 only 27% of German companies (more than 9 employees ) are using electronic invoices, 7% are using structured formats. Signature was hindering broad adoption in the past, especially with SME involvement. Eeasy-to-use standards are necessary to foster structured invoicing,.

  4. New opportunities due tothenewlegislation in Europe Twomainelements: Signature was skipped, Paper = ElectronicInternal Controls are relevant forpaperinvoicesaswell, so nobig deal whenchangingto E-Invoices IdenticalRepresentationsof an invoiceareallowedTwoormoreinvoiceswiththe same VAT-relevant contentcanbetransmitted. This meansinvoicescanbesent in different formatswithoutmarkingoneofthemascopy.

  5. FeRD (Forum elektronische Rechnung Deutschland) isthenational E-Invoicingplatformin Germany (founded in 2004). • Itisthe German representation in theEuropean Multi-Stakeholderforumwithmembersfromministriesandothergovernmentalbodiesand all importantindustryassociations. • Aimistofoster electronic invoicingin thepublicand private sector.

  6. FeRD - Organisation • Project based • AWV – Coordination • Basic budget: AWV • Shared website • Open for all organisations • Kick off: March 2010 • 8 task groups • Plenary every quarter • No membership fees

  7. Public Procurment Raising awareness & Implementation International & Compliance Processes & Best Practices Technical Standards & ZUGFeRD Implementation FeRD – Organisation 7 1 FeRD Plenary Vision & Coordination 6 2 Marketing 3 5 4

  8. FeRD - Results • Description of efficient processes (2012) • eInvoice processes in private and public area • „HandlungsempfehlungenzurUmsetzung des elektronischenRechnungsaustauschsmit der öffentlichenVerwaltung“ • Task-Force “Invoice Volume” (2012) • Basis for German evaluation • Coordination with EuroStat • Input in EU MSF • Compliance (2011- 2013) • Support to national tax authorities • DG Taxud Explanatory Notes • Identification legal aspects for EU MSF • Activity 3 EU MSF

  9. FeRD Vision for electronic invoicing in Germany • In future, it should be just as easy to send and receive electronic invoices as paper invoices • Everyone involved should be able to exchange electronic invoices without prior consultation or agreement. • Business process optimization by using structured data • To enable the invoice recipient to exercise this option, the sender should include structured data even if they are not used by the sender itself. • The invoice recipient may select the option to optimise its business process by using structured data. • Particular consideration should be given to the needs of SMEs • Many SMEs outsource their bookkeeping to tax consultants. • In these cases, the tax consultant is responsible for archiving in compliance with German law (especially GdPDU – Principles of Data Access and Verifiability of Digital Documents). • Tax consultants could act as multipliers for SMEs.

  10. The Opportunity • Important Players are on boardthroughFeRD: • Industry: e.g. GS1, VDA (Automotive) • ERP-Providers: BITKOM (SAP upto SAGE) • Invoicing-Service-Providers: VeR (eInvoice Alliance) • Public Sector: Ministries of Economy, Internal Affairs, Finance, State of Hesse (States), City of Cologne (municipalities) • Tax consultants: Datev (IT serviceprovider of themajority of tax consultants in Germany) • Banks: BdB (Associationof German Banks) – Value-addservices • Possibleenhancement in electronic invoicingtoconnect non-EDI partners

  11. Estimated adoption of eInvoicing formats

  12. ZUGFeRD – bridging the gap … Paper Image file (e.g. plain PDF) ZUGFeRDPDF/A-3 incl. XML Web EDI EDI • Free touse • Nostructuredinformation • OCR possible • In thefutureprobablyheavilyused due tonew VAT law. • Joint approach • Cross Sectoralignment • No bilateral agreements • Simplystart! • Nochange • Still growing • Sector-specificsolutionsfordefinedprocesses Business processes automation - + + Ease of adoption -

  13. … with an hybrid approach The ZUGFeRD standard is based on a hybrid approach, using • a document complying with PDF/A-3 for the visual representation of the invoice data and • an embedded XML file containing the invoice data

  14. Whatdoesthispracticallymean? MANY waystoworkwithit No prerequisites – just mail. manuell processing semi-automaticprocessing Full-featured EDI processing capabilities automaticprocessing ONE outputformat

  15. Benefits • Nobody must change, but everyone can take advantage • - Simply start! - • PDF/A is an established archiving format (ISO 19005) • Easy to integrate into existing business processes (e.g. printing) • Easy to use in terms of further processing and archiving • Inexpensive tools available • The sender does not need to care about receivers’ capabilities to handle the electronic formar • Small SMEs may print them for their established internal process • bigger companies process XML-file full or semi-automatically

  16. PDF/A-3 as a container format PDF • PDF/A-3 (ISO 19005-3) • Released in October 2012 • Based on ISO 32000/PDF 1.7 • Any file format can be embedded • PDF/A-2 (ISO 19005-2) • Based on ISO 32000/PDF 1.7 • PDF/A-1 and PDF/A-2 can be embedded • Transparency allowed • PDF/A-1 (ISO 19005-1) • Based on PDF 1.4 • No external references, esp. • Fonts • images • color schemes • No active scripting • No encryption • No transparency PDF/A-3 PDF/A-2 PDF/A-1

  17. PDF/A-3 inside PDF/A-3 Document Logical structure Content Visual part non-visual part /Root /Pages /Names /AcroForm /Metadata /OutputIntents /AF

  18. ZUGFeRD requirements for PDF/A-3 The resulting PDF/A-3 document must contain the following elements to ensure conformity: • a structure compliant to PDF/A-3, i.e. the PDF document itself (without the embedded data) must be conformant to PDF/A-3. The level of conformity (i.e. 3a, 3b or 3u) is of no importance. • an XML file named “ZUGFeRD-invoice.xml” which is embedded using the “Alternative” relationship and which is related to the complete document. • the presence of a specific XMP extension schema which describes the document as a ZUGFeRD-conformant invoice and which contains the respective XMP metadata

  19. Design decisions for building the ZUGFeRD invoice data model It should … • be a subset of the Core Cross-Industry Invoice semantic data model (Core CII) as defined in the Reference Library by UNCEFACT to ensure semantic interoperability • focus on SMEs and their particular requirements • have a compact and easy-to-understand syntax (XML) to make adapting it easy, especially for small software companies • be freely available with no license costs attached • Allow everyone to participate in the evolution of the standard based on an open and transparent governance model

  20. ZUGFeRD XML Semantics CEN MUG Core Component Library (CCL) ZUGFeRD (subset) ZUGFeRD Codelists (CL, subset) UN/EDIFACT Codelists (CL) Syntax rules XML Naming and Design Rules (NDR) Syntax XML Schema ZUGFeRD

  21. Sample invoice

  22. Sample invoice

  23. Sample invoice

  24. Invoice data profiles UNCEFACT Cross Industry Invoice CEN CWA 16356 (MUG) ZUGFeRDExtended • Basic Focuses on legal requirements + broad adaptation of the standard • Comfort Focuses on fully-automated invoice processing in regards to invoice verification, payment, and booking • Extended Focus on broad coverage of cross-industry requirements • Industry Focus on extensibility for industry specific requirements without loosing the capability for cross-industry invoice processing ZUGFeRDComfort ZUGFeRD Basic

  25. Status & Next Steps • ZUGFeRD Comfort Release Candidate published in June 2013 • for real-life pilots • first implementation already live • High awareness from service providers • Publication of ZUGFeRD 1.0 in May 2014 after Review Period • Included “extended profile” • With all inputs from the 1st review phase and live implementations included • Development of governance model within German Standards Institute (DIN)as DIN Specification

  26. ZUGFeRDadoptionin Germany Demand for ZUGFeRD constantly increases Supply forZUGFeRDconstantlyincreases • ImportantstandardsoftwareproviderssupportZUGFeRD, e.g. Sage, DATEV, … /Add-onsfor SAP and Microsoft Navision available • Free Tools availableforbroadadoptionat SMEs • Create ZUGFeRD out of Microsoft Office document • Free Open Source invoicingsoftwaresupportsZUGFeRD • Certain parts of public administration in Germany already require ZUGFeRD-compliant invoices • First live implementations, e.g. at GS.1, Storck, …

  27. ZUGFeRD and Europe What we achieved • 100% Compliance with CII data model as recommended by the Expert Group on E-Invoicing of the EU Commission • ~ 90% Compliance with recommendations of CEN MUG CWAs • Active participation in EU Multistakeholder Forum and contacts to other national fora What we want to achieve • Usage of UN/CEFACT Data Model as common basis of industry and public sector in Europe • Having the ZUGFeRD Approach in line with future European Recommendations with a focus on SMEs • Working on practical solutions and interoperability models • Define relationship with CEN MUG or similar platforms • Join CEN TC and second phase of EU MSF • 100 % compliance with future European data model based on UN/CEFACT CII and CEN MUG

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