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By | OUT-LAW.COM 8th December 2010 10:04

EU will change e-signatures laws to boost electronic invoice usage

Commission says Europe-wide standard will save time and cash

The European Commission will revise the E-Signatures Directive in 2011 in a bid to encourage businesses to make more use of electronic invoices.

The Directive will be changed to make it easier for electronic signatures from different EU member states to be read, recognised and accepted.

The change is one of a number planned by the Commission in its attempts to encourage the adoption of electronic invoicing. It said that it wanted e-invoices to be the predominant way in which companies across Europe bill each other, including small- and medium-sized enterprises (SMEs).

"Existing rules governing e-invoicing in Europe are not uniform. As such the potential benefits of e-invoicing still remain to a large extent unexploited," the Commission said in a statement.

"The European Commission is focusing its efforts on removing barriers to the broad-scale adoption of electronic invoicing in Europe.

The Commission said that its biggest hurdles would be making sure the legal environment for using e-invoices was consistent; convincing SMEs to use them; and standardising them so that invoices worked together.

"The Commission will propose in 2011 a revision of the Directive on e-signatures with a view to providing a legal framework for cross-border recognition and interoperability of secure e-authentication systems," said a Commission communication (13-page / 65KB PDF) outlining its plans.

"Some e-invoicing solutions make use of electronic signatures (e-signatures). However, the diversity of legal requirements among Member States for e-signatures have led to cross-border interoperability problems which contributed to slow down the uptake of cross-border e-invoicing solutions in so far as they make use of e-signatures," said the communication.

"Despite the positive impact of existing legal provisions on the use of e-signatures and the political commitments taken by the Member States and the Commission, a more coordinated and comprehensive approach is needed to facilitate the EU-wide cross-border interoperability of e-signatures," it said.

The current plans are based on a report published a year ago by an expert group commissioned to find ways to increase the use of e-signatures.

"E-invoicing has the potential to make a big difference, for businesses, consumers, and European trade as a whole," said Michel Barnier, Commissioner for the Internal Market and Services. "The benefits in terms of saving time and money are fully in line with our Europe 2020 strategy and with the Digital Agenda for Europe in particular."

Standards and technical specifications body the European Committee for Standardization (CEN) will work towards standardising the formats used in invoices to make sure that systems work together. The Commission said that a lack of standardisation is a major barrier to e-invoicing uptake.

"In the current environment, there is no globally used standard for e-invoicing. The diversity of data and usage requirements, and very different approaches to their implementation, have led to market fragmentation," said the communication. "None of the existing formats has so far achieved dominance."

"Electronic Data Interchange, which is still used by many multinational companies, is often impractical for the mass of SMEs," it said. "Likewise many proprietary formats are only used by one multinational company and its suppliers. As a consequence, market players, such as enterprises, software companies and financial service providers nowadays need to support multiple formats."

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OUT-LAW.COM is part of international law firm Pinsent Masons.

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