Belgian tax authority guidelines paper invoices

17 July 2008

Patrick Michielsen

Since 2004 Belgian companies have been able to invoice their customers electronically. However, many companies have considered the costs of adopting this type of invoicing prohibitive. Many companies also express concern about the legal uncertainties as to which conversion technology will be acceptable. To encourage more use of electronic invoicing, the Belgian tax authority has issued guidelines as to how to convert and archive paper invoices.

Since 1 January 2004 Belgian companies have been able to use electronic invoices in their transactions. This is due to Belgian legislation (an Act and Royal Decree) which transposed an EU Directive on the simplification and modernisation of VAT rules (17 December 2001).

Two conditions must be fulfilled for e-invoicing transactions to be valid:

  • the customer must have voluntarily accepted the option of receiving e-invoices from the supplier; and
  • security measures (an “advanced e-signature”; a secured form of EDI-technology; or “other electronic means”) have to be in place to guarantee the authenticity of the origin and the integrity of data transmitted.

Although the types of security measures permitted, the “other electronic means”, can be set out in a Ministerial decree, to date no such decree has been issued. In the absence of any practical guidelines as to what security measures would be acceptable, it will be for the tax payer to prove that the legislation has been complied with. Many companies, especially SMEs, have not changed to electronic invoicing, choosing to work with paper invoices only. Many companies fear that there are greater regulatory and practical risks with electronic forms of invoicing. Additionally, many companies feel that the implementation and archiving costs are prohibitive.

In order to encourage electronic processing and archiving of paper invoices, on 13 May 2008, the Belgian Ministry of Taxation issued a set of detailed guidelines on the electronic conversion of existing paper invoices.

The Guidelines cover the electronic conversion of copies of any paper invoices sent by a merchant, where the transmission or acceptance documents relating to these invoices must be archived in the original format. According to the Guidelines, “paper invoices” should be strictly defined to cover invoices drafted in writing or by typewriting. As soon as the writing or typewriting takes place with the help of a digital device containing a hard disk, such as a PC or other electronic device, the tax authorities will consider it to be a “digitally drafted invoice”. A merchant can choose whether to archive digitally drafted invoices sent in paper format, digitally or a paper format. Acceptable digital formats include use of a WORM (write once, read many) environment, of an advanced electronic signature or of an algorithmic sealing key.

The Guidelines reiterate the general principle that tax-subjects in Belgium must store a copy of the original incoming invoices they receive. If it is an electronic invoice, these have to be stored electronically without any modifications to the format or content. If it is a paper invoice, from now on these may be converted into electronic invoices by using secure conversion (scanning) technologies. These scanned copies need to be secured with an advanced electronic signature or with an algorithmic sealing key (using specific technologic standards set out in the Guidelines). Unsecured conversions to PDF or tiff formats will not be sufficient of themselves.

If a paper invoice has been converted into a different format, the tax authority is entitled to ask for it to be returned to its original intelligible format. The tax subject will need to demonstrate the reliability of electronic data, including if requested, the identity of any outsourcing partner who undertook the conversion, and the brand, type and technical characteristics of any equipment and software used.

The Guidelines confirm that a Belgian tax subject can electronically store electronic invoices outside Belgium (but within the EU territory) provided that certain conditions are met. For the entire duration of the storage:

  • the Belgian tax authority must be entitled to access/download the data;
  • both the authenticity of the origin and the integrity of the data must be guaranteed; and
  • the corresponding security data (e.g. electronic signature) must also be stored.

Belgian law also requires tax payers to notify the tax authorities of the location of the electronic storage.

By contrast, paper invoices should be archived in Belgian territories only. Therefore any scanning of paper invoices outside Belgium should be undertaken without any delay, since keeping invoices abroad for an undetermined period is not permitted.

The Guidelines will enter into force on 1 December 2008 and will replace any prior arrangements with tax payers using, or service providers offering, invoice conversion technologies. Although the electronic conversion strategy presented in the Guidelines does not lead to a fully automated and paperless process, the Guidelines will create more legal certainty regarding the approach of tax authorities and it is likely also to contribute to the wider use of electronic invoices.