The business has a lot to gain from electronic invoicing
It is beyond doubt better and more efficient to issue invoices in the form of no-contact electronic documents directly to the electronic processing system of the buyer than to print them out, fold them and forward them by mail service. This often represents delivery confirmed by costly return receipt, courier service or, under extreme circumstances, by taxi to a destination where the further time-consuming manual processes are added to the process by the opening of the envelope, registration of the consignment and computer data recording.
With the evolution and expected further extension of the Hungarian Tax Authority online invoice data reporting system we are slowly getting closer to a good-bye to paper invoices, manually filled-out invoice forms and, with a good chance, to paper-based computer-generated invoices as well. However, it is the joint liability of the sides issuing and accepting the invoice that the switch to electronic invoicing represents an apparent administrative relief and increase in efficiency for both of them. In this regard, the balance, unfortunately, tends to tilt to the side of the issuer of the e-invoice.
Increasing technological independence regarding electronic invoices
Since 2018, the tax authority has taken steps to make electronic invoicing solutions easier and the Hungarian Tax Authority also publishes electronically invoicing related information public from time to time. It is the clear intention of the Hungarian Tax Authority to make the spreading of various solutions and practices making electronic invoicing easier at the same time ensuring the aspects required in the case of paper-based invoices. These fairly easy-to-understand principles were and still remain important aspects of the requirements relating to electronic invoicing.
After issuing of the electronic invoice, the invoice must be kept until the end of the term of keeping (8 years) making sure
- that it remains authentic with the origin (the identity of the issuer) of the invoice being identifiable beyond doubt;
- that the data content of the invoice does not change over time, i.e. the invoice is not damaged, lost or deleted;
- that it remains readable and accessible as it is a statutory requirement that, if required, the electronic invoice must be presented within 3 days.
While the above requirements can be fulfilled fairly easily by the proper filing and physical storage of invoices printed out, in the case of electronic invoices, these guarantees must be ensured on the technology side as electronic invoices may only be archived electronically also. The selection and ensuring of the right technological solution is an obligation of the company on the side of both the issuing and the accepting party. These aspects must be kept in mind before the company decides to accept electronic invoices.
Things to consider when accepting electronic invoices
Our team of technology tax advisors gathered the following aspects for cases in which you have to decide whether to accept electronic invoices or not.
- E-invoices may be received in basically any electronic form but you have to make sure that the invoices are readable until the end of the term of limitation. This requirement may clearly determine the scope of files that may be acceptable for the organization.
- As to the data content of electronic invoices, the same requirements apply as for paper-based invoices. Compulsory content elements must be checked.
- You have to examine how you will be able to certify the authenticity of the issuer of the invoice and the integrity of the data content of the invoice until the end of the term of limitation. In the case of a PDF invoice, you may do so most easily by way of enhanced security or accredited electronic signature and time seal. You have to check whether the issuer of the invoiced provided authorization in this regard on the e-invoice! If not, you will have to ensure this element, which will, by all means, generate additional tasks and costs. If you received the online invoice HASH code from your partner, you may check the validity of the code in the online invoice system of the Hungarian Tax Authority.
- You should consider whether you are able to process invoices exclusively in electronic form. Electronic invoices may, for example, not be registered as paper-based documents.
- You have to make sure that you are able to store electronic invoices in a manner that they are protected from loss or accidental destruction. Storage on the hard drive of only one computer or on a USB instrument does not, in itself, guarantee this. However, if the file is saved in multiple places and the saving technique is properly documented, this requirement can be fulfilled.
- It can be checked easily in the Online Invoice system of the Hungarian Tax Authority whether your partner reported the invoices properly (if there is a data reporting obligation, this is not an option) and you can also check here whether the invoice was originally issued as an electronic or a paper-based invoice.
- Your supplier may only issue electronic invoices to your company if your consent in this regard is available. Take note that this content may not only be provided formally but also implicitly, for example, by payment of the price shown on an invoice received. You have to make a clear statement to your partner, if you reject the acceptance of an invoice.
- The tax authority's audit may also be aimed at the management process of electronic invoices. In this regard, you should have a process description and policy in place providing a clear answer in case of any doubt as to the technology applied for implementation in a closed system also providing a guarantee for compliance with the archiving requirements of e-invoices.
Should you have concerns regarding electronic invoicing...
If you are uncertain whether you should accept the electronic invoice of a partner or should insist on traditional, paper-based processes, you must let your concerns clearly known to your partner. As the relating regulations do not tie the hands of either of the parties anymore as to the technology applied in order to comply with the above-mentioned principles, the road is open to any special agreement solution.
If necessary, do not hesitate to technology experts for help in order to avoid pitfalls and to make sure that you too are in fact able to profit if your suppliers switch to electronic invoicing.