Table of Contents

Introduction. 6

1........... Procedural Issues and Consultation of Interested Parties. 7

1.1........ Procedural issues. 7

1.2........ External expertise and consultation of interested parties. 8

1.2.1..... Summary of the public consultation. 8

2........... Policy context, Problem definition and Subsidiarity. 9

2.1........ Background and context 9

2.1.1..... Key concepts. 9

2.1.2..... Benefits of e-invoicing. 12

2.1.3..... Policy context 13

2.1.4..... Nature and size of the public procurement market 15

2.1.5..... Main stakeholders concerned. 17

2.2........ Problem definition. 18

2.2.1..... Problem driver (D0) 20

2.2.2..... Problem (P1) – excessive complexity and legal uncertainty for firms. 22

2.2.3..... Problem (P2) – higher costs for firms. 24

2.2.4..... Consequences (C1, C2) 25

2.3........ Developing a baseline scenario. 27

2.4........ The EU's right to act and justification. 29

2.4.1..... Legal basis. 29

2.4.2..... Subsidiarity and proportionality. 30

2.4.3..... Justification for EU action on e-invoicing in public procurement 31

3........... Objectives. 32

3.1........ General objective. 32

3.2........ Specific objectives. 32

3.3........ Operational objective. 32

4........... Policy Options. 32

4.1........ The choice of coercive or non-coercive instruments. 35

5........... Analysis of Impacts. 35

5.1........ The expected common impacts. 36

5.2........ Primary impacts. 36

5.2.1..... Impacts on firms. 36

5.2.2..... Impacts on contracting authorities. 38

5.3........ Secondary impacts. 40

5.3.1..... Economic, social, and environmental impacts. 40

5.3.2..... Reduction of administrative burden. 41

5.3.3..... The scale of secondary impacts. 41

5.4........ Impacts of defined options. 41

5.4.1..... Option (1): No new EU action. 42

5.4.2..... Option (2): Free-choice approach. 42

5.4.3..... Option (3): Selective conversion to e-invoicing. 43

5.4.4..... Option (4): Obligatory acceptance. 44

5.4.5..... Option (5): Full harmonisation. 45

6........... Comparing the Options. 46

6.1........ Comparing the options against the operational objective. 46

6.2........ Comparison of options across all stakeholder groups. 50

6.2.1..... Member States / contracting authorities. 51

6.2.2..... Firms (including SMEs) 52

6.2.3..... Service providers. 53

6.3........ The preferred option. 53

6.3.1..... Timeframe. 54

6.3.2..... Participation of microenterprises. 55

6.3.3..... Regulatory form.. 56

6.3.4..... Development of the new standard. 56

7........... Overall impacts of the chosen option. 57

7.1........ Primary impacts. 57

7.2........ Secondary impacts. 57

8........... Monitoring and Evaluation. 57

1........... Annexes. 60

1.1........ Modifications following the IAB opinion of 22 March 2013. 60

1.1.1..... Strengthen the problem definition. 60

1.1.2..... Strengthen the subsidiarity and proportionality analysis. 60

1.1.3..... Improve analysis of the impacts. 60

1.1.4..... Better present stakeholder views. 60

1.1.5..... Procedure and presentation. 60

1.2........ Modifications following the IAB opinion of 8 May 2013. 61

1.3........ Benefits and costs of e-invoicing in public procurement 61

1.3.1..... Benefits. 62

1.3.2..... Costs. 65

1.4........ Why start with e-invoicing?. 66

1.5........ Structured e-invoicing - efficiencies of higher levels of automation. 67

1.6........ Overview of e-invoicing uptake in EU Member States. 68

1.7........ Projects to facilitate the roll-out of e-invoicing in the EU.. 73

1.8........ E-invoicing data exchange models. 73

1.9........ Choice of technical solution to ensure interoperability. 75

1.10...... CEN standardisation process. 76

1.10.1... Developing a European Standard. 76

1.11...... Summary of stakeholder views. 77

1.11.1... Conclusions from bilateral meetings with stakeholders. 77

1.11.2... Replies from IPM survey. 78

2........... Glossary. 95

3........... References. 96

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Directive of the European Parliament and of the Council on electronic invoicing in public procurement

Introduction

A shift towards paperless public administration is an important objective for the European Union and the Member States. The Digital Agenda for Europe[1] includes a call to increase the use of e-Government by EU citizens and businesses. The Annual Growth Survey for 2013[2] also calls on Member States to give priority to ensuring that exchanges between administrations and enterprises can be done digitally, with a view to increasing administrative efficiency. In order to stimulate the transition to e-government, the European Union has undertaken a variety of initiatives, one of which aims to make the use of electronic procurement mandatory across the EU.

Another particularly promising area to help achieve these objectives is e-invoicing, which the Commission has called for to become the predominant invoicing mode in the EU by 2020[3]. In addition to its potential contribution to the digitisation of public administration across the EU, e-invoicing holds the promise of significant economic and environmental benefits. Increased use of e-invoicing by Member State governments would make the broadly understood public procurement process more efficient, cheaper, and more transparent for the parties involved as well as for the taxpayer. A preliminary estimate indicates that savings of approximately EUR 1.5 to 2.3 billion per year could potentially be achieved if all public procurement invoices were submitted in electronic format. E-invoicing is also expected to reduce the administrative burden for firms, as well as the use of paper, waste, and CO2 emissions from transport.

The widely-acknowledged benefits of e-invoicing have incited several EU Member States (Denmark, Austria, Sweden, and Finland) to require the submission of e-invoices in public procurement in all or part of the public sector. However, these bottom-up initiatives are for the most part based on national standards, most of which are not interoperable. As such, they lead to an increase in complexity and costs for firms wishing to participate in cross-border procurement, and thereby generate market access barriers. The overall result is that the adoption of e-invoicing in Europe is still very limited, accounting for 4 to 15%[4] of all invoices exchanged. A possible initiative in the area of e-invoicing in public procurement would prevent the further fragmentation of the Internal Market and facilitate the uptake of e-invoicing. Considering the fact that public procurement covered by the Directives represents roughly 3.7% of EU GDP[5], the implementation of an initiative which would eliminate market access barriers in e-invoicing in public procurement would make the public sector a 'lead market' in this area and spearhead its wider use in the economy.

Over the last couple of years, a significant number of actors have called for action at the European level to stimulate the e-invoicing market across the EU, especially with regards to invoices submitted to public bodies. The occasion therefore seems ripe to undertake the proposed initiative on e-invoicing in public procurement and effectively remove the market access barriers caused by insufficient e-invoicing interoperability. As such, action on promoting the uptake of e-invoicing in public procurement is now seen by the Commission as a priority. This is reflected in the inclusion of an initiative on e-invoicing in public procurement in the “Single Market Act II” as one of its Key Actions[6].

A potential proposal in this area would also complement the on-going modernisation of EU public procurement rules[7], a key action under the “Single Market Act I”[8], in particular with regards to the proposal on a full transition to e-procurement.

The current impact assessment therefore looks at the effects of a possible EU initiative which would enhance e-invoicing interoperability in public procurement[9] across the European Union, in order to eliminate the fragmentation of the Internal Market and remove existing obstacles to the broader use of e-invoicing.

1. Procedural Issues and Consultation of Interested Parties

1.1. Procedural issues

The project is led by Directorate C of the Directorate General Internal Market and Services.

Action on promoting the uptake of e-invoicing in public procurement is seen by the Commission as a priority for the near future. This is reflected in the inclusion of an initiative on e-invoicing in public procurement in the recently-published “Single Market Act II” as one of its Key Actions. The initiative has therefore also been included in the “Commission Work Programme for 2013”, which was announced on 23 October 2012[10].

This Impact Assessment was preceded by the publication of a Roadmap, which was published as part of the Commission Work Programme for 2013.

The Steering Group for this Impact Assessment was formed by representatives of a number of services of the European Commission, namely the Directorate General Internal Market and Services, the Secretariat General, the Directorate-General for Economic and Financial Affairs, the Directorate General Regional Policy, the Directorate General for Communications Networks, Content and Technology, the Directorate General Environment, the Directorate General for Employment, Social Affairs and Inclusion the Directorate General for Informatics, the Directorate General for Justice, the Legal Service, the Directorate General for Taxation and Customs Union and the Directorate General Enterprise and Industry.

This Group met four times: on 14 September 2012, 19 December 2012, 6 February 2013 and 18 February 2013.

The first meeting of the Impact Assessment Board (IAB) took place on 20 March 2013. During this meeting, the IAB raised a number of issues which in the board’s opinion would need to be addressed further, and requested a resubmission of the Impact Assessment. The second – positive – opinion on the revised Impact Assessment was issued on 8 May 2013. The main modifications in response to the first and second opinions of the IAB are presented in Annexes 1.1 and 1.2.

1.2. External expertise and consultation of interested parties

This Impact Assessment builds on the analysis of external research and consultations with stakeholders.

Two meetings of the European Multi Stakeholder Forum on e-invoicing (EMSF)[11] were held in Brussels (on 26 September 2012 and 7 March 2013) and provided an important forum for discussing the building blocks of the potential EU initiative on e-invoicing in public procurement. The discussion papers of four Activity Groups of the EMSF[12] provided practical feedback from the representatives of national multi-stakeholder forums and practitioners, such as service providers and firms. Additionally, a questionnaire was circulated among the members of the EMSF which attempted to gather data on existing e-invoicing systems, and their effectiveness, costs and benefits. The 20 replies which were received (19 from national fora and one from a standard-setting body) were also extensively used in this Impact Assessment.

The content of the initiative was presented and discussed with the Advisory Committee for Public Contracts (ACPC), comprising of Member State representatives, during a meeting on 19 September 2012. More informal bilateral meetings also took place with representatives of various industry associations, including the European E-invoicing Service Providers Association (EESPA), Business Europe and the European Association of Craft, Small and Medium-sized Enterprises (UEAPME).

Finally, an on-line consultation via the Interactive Policy Making tool (IPM) was held between 22 October 2012 and 14 January 2013 to gather information on current usage of e-invoicing and opinions concerning a potential EU initiative in this area. The public response to the consultation was very positive, with more than 700 replies submitted.

The various consultations with stakeholders provided the Commission with a good cross-section of the views held by the different stakeholders.

1.2.1. Summary of the public consultation

707 replies to the public consultation were received, with a very good geographical and sectoral spread of participants: every Member State and every group of stakeholders was represented[13]. The questionnaire asked participants about their experience with using electronic invoicing and their opinions concerning a possible EU initiative to promote the uptake of e-invoicing and enhance interoperability between existing systems. The responses reveal broad support for EU action in e-invoicing in public procurement; no single category of stakeholder or nationality was outright opposed to EU action in this field. Support for an EU initiative to promote the uptake of e-invoicing in the EU by making governments act as the front-runners is overwhelming – almost 9 in 10 respondents are in favour. There is also strong support for increasing the interoperability of e-invoicing systems, with more than 4 out of every 5 stakeholders supporting EU action to achieve this objective. Finally, the vast majority of respondents wish to see a rapid EU intervention in the area of e-invoicing in public procurement: 90% of stakeholders call for making it mandatory before the end of 2017.

When looking individually at the different groups of stakeholders, the greatest supporters of EU action in e-invoicing in public procurement are the e-invoicing service providers, followed by Member States, contracting authorities, and finally, enterprises. Yet even for enterprises, support hovers around 80%.

The full synthesis report of the responses can be found in Annex 1.11.

2. Policy context, Problem definition and Subsidiarity

2.1. Background and context

2.1.1. Key concepts

This Impact Assessment refers to a possible initiative that lies at the intersection of two policy areas: the public procurement policy and the use of electronic means of communication for invoicing. These two concepts are presented below.

2.1.1.1. Public procurement

Public procurement refers to the acquisition of goods, works or services by government institutions and public sector organisations. The EU procurement legislation applies common principles of transparency, open competition and sound procedural management to public contract award procedures which are likely to be of interest to suppliers across the Internal Market. Open and well regulated procurement markets are expected to contribute to a better use of public resources[14].

The procedures to be applied for the award of contracts by contracting authorities[15] are provided in Directive 2004/18/EC. Firms which are active in the utilities markets (contracting entities) are subject to the provisions of Directive 2004/17/EC. Procurement in the field of security and defence is regulated by the Defence and security procurement Directive 2009/81/EC.

The three above mentioned legal acts (hereinafter referred to as “the Directives”) regulate the organisation of tender procedures for high value contracts (i.e. contracts falling above certain monetary thresholds[16]). The Directives also contain a number of exclusions (e.g. Directive 2004/18/EC does not apply to inter alia contracts requiring special security measures, secret contracts or to service concessions)[17].

In line with the general principles of the Directives, contracts of values falling below the monetary thresholds set out in the Directives (i.e. national procurement not covered by the Directives) and contracts excluded from the scope of the Directives will be out of the scope of this initiative.

In December 2011, the European Commission adopted proposals to modernise Directives 2004/18/EC and 2004/17/EC, containing provisions that relate to the transition towards electronic procurement (e-procurement)[18]. If the Commission's proposals are accepted during the legislative process, the vast majority of procurement procedures covered by the proposals will be carried out using electronic means of communication by mid-2016.

While the rules of the Directives do not go beyond the award stage, the public procurement process or cycle[19] is a broader concept. It consists of a number of steps which take place before and after a successful bidder has been selected: tendering, award, ordering, invoicing, payment and archiving of the procurement documentation. The key elements of public procurement process are presented below (Figure 1).

Figure 1): The scope of the Directives and public procurement process

Source: DG Internal Market and Services

This initiative takes into account the complete public procurement process and analyses the interactions between its components. Such a broad approach addresses the recently observed integration of procurement process which has been driven by IT developments. It is also in line with the scope of various other initiatives concerning electronic procurement, which acknowledge that all elements of the procurement cycle have become much more integrated. For example, the PEPPOL project defines e-procurement as a process encompassing all steps from e-sourcing to e-payment[20]. The Commission’s 2004 “Action Plan on e-procurement”[21] also referred to the entire procurement chain, including the pre-award and post-award phases. The Commission Communication “A strategy for e-procurement”[22] from 2012 recognises that: "[t]he ultimate goal is 'straight through e-procurement' with all phases of the procedure from notification (e-notification) to payment (e-payment) being conducted electronically." Finally, the on-going revision of the public procurement Directives addresses, among other elements, e-catalogues, which is also an important element of the post-award procurement process.

2.1.1.2. E-invoicing

An invoice is a document certifying the delivery of a product or the provision of a service, showing the date of accrual and the amount payable in consideration for the product or service provided. It is the central element of a procurement process once a contract has been awarded, and its creation is a prerequisite for the supplier to receive payment for supplied goods or services.[23] In Europe, invoicing rules are governed by Directive 2006/112/CE, as amended by Directive 2010/45/EU[24], which establishes equal treatment between paper and electronic invoices.

E-invoicing is the electronic transfer of invoicing information between business partners (supplier and buyer). It is an essential part of an efficient financial supply chain and it links the internal processes of enterprises to their payment systems[25].

Several competing definitions of electronic invoicing coexist. In its broadest sense, e-invoicing is understood as any method of invoice submission which does not include the physical presence of paper. This implies that any form of invoice sent by electronic means (e.g. email with a scanned invoice as an attachment) constitutes e-invoicing[26]. However, in recent years a more restrictive definition appears to be gaining broad support. According to this view, e-invoicing can only truly be referred to as such if the message containing the invoice is structured in such a way that its receipt and processing does not require any human intervention[27]. The view that only structured invoices can be seen as full e-invoices is shared by many stakeholders (e.g. the results of the EMSF consultation confirm that neither PDFs nor unstructured invoices are seen as full e-invoices[28]). Structured e-invoicing offers greater opportunities for the full automation of invoicing procedures and allows other elements of the post-award supply chain process to be automated[29] (e-ordering, e-payment, and e-archiving, etc.). Although the existence of non-structured invoice documents cannot be ignored, their role (and that of various hybrid solutions[30]) is generally perceived as temporary[31], or as a step towards full automation.

In summary, the definition which sees e-invoicing as fully-structured electronic invoicing messages seems by far the most appropriate and this Impact Assessment will only consider structured invoices as e-invoices.

In terms of the stakeholders involved, e-invoicing can take place between two businesses (B2B), between business and government (B2G), between business and the consumer (B2C), and finally between government and the consumer (G2C). By its very nature, public procurement transactions concern invoices submitted by businesses (suppliers) to public authorities (buyers), i.e. B2G invoicing. The other sectors (B2B, B2C and G2C) therefore fall outside the direct scope of this Impact Assessment, except insofar as the introduction of e-invoicing in the B2G sector may generate spill-over effects to these sectors.

2.1.2. Benefits of e-invoicing

The benefits of e-invoicing when compared with paper-based invoicing are numerous and widely acknowledged. Electronic processing of invoices generates operational savings due to less complex processes and shorter processing times; it increases transparency, improves the security and auditability of data; and it can reduce administrative burden for enterprises. It is also better for the environment.

These benefits are among the main drivers for the adoption of e-invoicing. For example, the Austrian government, in announcing its plans to mandate e-invoicing in the public sector transactions, argued that paperless invoicing offers numerous advantages such as time and cost savings, transparency, traceability, error reduction, as well as positive environmental impacts[32]. In launching their pilot projects, both Belgium and Ireland stressed the savings opportunities presented by e-invoicing.[33] In Greece, it was estimated that both the state and enterprises were losing more than EUR 4 billion annually from illegal invoicing practices; electronic invoicing is expected to effectively combat such practices[34]. Finally, savings and transparency motives were also referred to as reasons for the adoption of mandatory e-invoicing by the federal administration in the United States[35]

The principal operational gains of e-invoicing come from less complex procedures and therefore shorter processing times. The invoice-to-pay cycle time in paper-based invoicing may take between 30 and 100 days[36]. By automating some of the processes and eliminating the need for human intervention, it is estimated that this period can be shortened to around 10 days when invoices are processed electronically[37]. The shortened invoice-to-pay cycle also means that payment delays would be less frequent, and that contracting authorities could save on late payment interests. E-invoicing could therefore contribute to attaining the objectives of the late payments Directive 2011/7/EU[38].

The simpler and shorter processes result in savings. For example, the Finnish State Treasury and some Finnish companies have estimated that an incoming paper invoice incurs costs amounting to EUR 30-50 to the receiving company. By moving to electronic invoicing, these costs can be lowered to EUR 10 by semi-automating the invoice process, and to EUR 1 by fully automating the process[39]. Some service providers estimate that processing of paper invoices is around 60% to 80% more expensive than electronic invoices[40]. The European Association of Corporate Treasurers has reached similar results, estimating that companies could save up to 80% of their current costs by processing invoice data automatically, i.e. removing paper and manual efforts[41].

The electronic processing of invoices positively influences the transparency of the procurement process. When a tax audit occurs, e-invoices can be more easily made available to tax authorities than paper invoices, allowing them to check for compliance more easily. Industry publications underline that e-invoicing significantly reduces operational risk of fraudulent invoices and duplicate payments[42]. If e-invoicing is integrated with tax reporting, it can reduce administrative burden, as tax declarations can be generated automatically.

Finally, e-invoicing is more environmental friendly, as it reduces the use of paper and the amount of waste generated by public buyers and firms, as well as the CO2 footprint caused by transportation.

More detailed information about the benefits of e-invoicing is provided in Annex 1.3.

2.1.3. Policy context

The potential benefits from the use of e-invoicing are perceived as an opportunity by a wide range of actors, chief among them:

· Member States, who have called for measures to promote e-invoicing at the Informal Competitiveness Council of February 2012 and in the European Council Conclusions of June 2012[43].

· The European Parliament, which called for making e-invoicing compulsory in public procurement by 2016 in a resolution adopted in April 2012[44].

· Stakeholders (chiefly economic actors and NGOs), which in various fora (conferences, studies, and reports) have highlighted the benefits which e-invoicing could bring with respect to cost savings, increased efficiency, simpler and faster payment processes, or a reduced environmental impact.

An initiative facilitating the use of e-invoicing in public procurement would contribute to achieving the objectives of several existing Commission initiatives, both legislative and non-legislative. These are discussed below.

2.1.3.1. Legislative initiatives

While at present, no EU legislation specific to e-invoicing in public procurement exists, some related legislative acts do address e-invoicing directly or indirectly. Council Directive 2010/45/EU[45], on the common system of value added tax revises and simplifies the rules for the submission of electronic invoices vis-à-vis traditional invoices, setting both methods on an equal footing with a view to promoting its usage in the context of tax rules. E-invoicing is also indirectly related to objectives of the late payments Directive 2011/7/EU[46], as it could contribute to shortening the payment processing times. The present initiative would be fully in line with the objectives of both of these Directives. Additionally, the Commission has recently proposed to modernise Directives 2004/17/EC and 2004/18/EC, one element of which is the introduction of mandatory e-procurement. The initiative on e-invoicing would build on these efforts in order to achieve the objective of “straight through e-procurement” as defined in the recent communication “A strategy for e-procurement” (see: section 2.1.3.2 below).

Finally, e-invoicing is embedded in a patchwork of legal requirements, which cover rules on accounting, auditing, protection of personal data[47], archiving and customs issues. The proposed initiative would fully respect all of these requirements.

2.1.3.2. Non-legislative initiatives

A number of non-legislative initiatives dealing specifically with e-invoicing have been adopted, in particular:

· The Communication from the Commission "Reaping the benefits of electronic invoicing for Europe", COM(2010)71, which outlines the benefits which e-invoicing can bring the Single Market and sets out a plan for increasing its uptake across the EU. It has set as an objective that "e-invoicing becomes the predominant method of invoicing by 2020 in Europe".

· The Communication from the Commission “A strategy for e-procurement”, COM(2012) 179 final, which states that the ultimate goal is “straight through e-procurement” with all phases of the procedure from notification (e-notification) to payment (e-payment) being conducted electronically.

· The European Commission's initiative "A Digital Agenda for Europe", COM(2010) 245, which gives a prominent role to achieving a single digital market and calls for removing the regulatory and technical barriers which prevent mass adoption of e-invoicing; and

· The Commission proposal for a Connecting Europe Facility (CEF), which foresees support to digital services infrastructures (which will also enable e-invoices).

As mentioned previously, the European Commission has also established the EMSF on e-invoicing, composed of delegates from national e-invoicing fora and key stakeholders from the user side of the market, which could be leveraged in the context of a possible initiative on e-invoicing in public procurement[48]. Finally, the Commission has supported and implemented a number of projects to facilitate the roll-out of e-invoicing in the EU, namely: PEPPOL, e-SENS, and e-PRIOR (more information about the scope and objectives of these projects is provided in Annex 1.7).

2.1.4. Nature and size of the public procurement market

Public buyers are traditionally the largest consumer in the economy. In 2010, the public sector spent over EUR 2 406 billion on goods, services and works – amounting to around 19.7% of EU GDP. As mentioned in Section 2.1.1.1, the majority of public expenditure on goods, works and services is not covered by the Directives – this includes various exemptions, below threshold procurement or large amounts of public expenditure on goods and services to provide health, education and social services. In fact, only 1/5 of total public expenditure on goods and services is covered by the Directives. In 2010, over 160 000 invitations to tender were published in conformity with the Directives in the OJ/TED[49] website. The estimated value for these contracts was EUR 447 billion (see: Figure 2), representing approximately 3.7 % of the EU GDP.

Figure 2): The size of public procurement market above EU threshold

Source: DG Internal Market and Services, based on OJ/TED data

Within the procurement covered by the Directives, only a relatively small proportion of contracts are awarded to firms from another Member State. Direct cross-border procurement accounted for 1.6% of awards or roughly 3.5% of the total value of contract awards published in OJ/TED during 2006-2009. In addition to direct cross-border procurement, there is a considerable volume of indirect cross-border procurement. For example firms can bid for contracts through their foreign affiliates or subsidiaries. This channel accounted for 11.4% of awards published in OJ/TED and 13.4% by value during 2006-2009[50].

2.1.4.1. Nature and size of e-invoicing in public procurement

Governments are among the principal recipients of invoices. The public sector is listed as one of top three industries with the highest inbound invoice volumes, estimated at 9-15% of the share of all invoices (other industries mentioned are: retail 10%, healthcare 5-13%)[51].

The above data refers to all invoices. As far as e-invoices are concerned, there are some limitations in the available data, but a rough outline of the usage of e-invoicing by governments in the EU is beginning to emerge. For example, Eurostat provides detailed data on the percentage of enterprises sending/receiving e-invoices in a standard structure suitable for automatic processing and electronic data to/from public authorities, which may be used as a good proxy of structured e-invoicing in public procurement.

Figure 3): Enterprises sending / receiving e-invoices in a standard structure suitable for automatic processing and electronic data to/from public authorities in 2011 [%]

Source: Eurostat, E_INV2_ADEGOV

The EU average of 12% confirms that, for enterprises, exchanging e-invoices with public authorities in Europe is still more an exception rather than a rule.

Looking at the data from a different perspective, namely the share of e-invoices in all invoices received (i.e. e-invoicing market penetration), a similar picture emerges. According to a number of recent studies, e-invoicing makes up approximately 4 - 15% of invoicing procedures in the EU[52]. This is in line with the Eurostat data, and there is therefore no reason to assume that the percentage of e-invoicing penetration would be significantly higher in public procurement.

2.1.5. Main stakeholders concerned

The main groups of stakeholders that may be affected by the EU initiative on e-invoicing in public procurement are:

· Member States (understood as policymakers at all levels), who would implement the new initiative (including possibly the transposition of legislation).

· Contracting authorities, as purchasers of goods, works and services, who apply the provisions of the Directives;

· Firms, including SMEs[53] (i.e. suppliers), who sell works, goods and services to contracting authorities (i.e. are active on public procurement markets);

· Enterprises providing e-invoicing services (e-invoicing service providers).

2.2. Problem definition

Based upon research of the e-invoicing market and the results of the public consultation, the existence of multiple non-interoperable (national and proprietary) e-invoicing standards across the EU has been identified as the main problem driver with regards to the exchange of invoices in public procurement. This driver results in an excessive level of complexity, legal uncertainty and additional operating costs for firms when issuing invoices across the EU. As a consequence, firms encounter market access barriers that deter them from bidding on public procurement in other Member States, which in turn translates into inefficiencies in the functioning of the Internal Market.

However, the identified problems must also be placed in a broader context, where despite efforts to stimulate and promote the use of e-invoicing across the EU, and despite the broad acknowledgment of the economic, environmental, and other benefits of its use, the public sector across the EU has been quite unresponsive. As mentioned earlier in this Impact Assessment, the use of e-invoicing in the EU remains limited, particularly in public procurement. This appears to be to some extent a case of market failure, where market forces have not been sufficient to drive forward changes in public procurement processes which offer significant potential benefits to all stakeholders. The reasons for this can only be guessed at, but most likely include a mixture of bureaucratic inertia, the difficulties of process change, and the effects of the short-term nature of the political cycle.

The above situation results in the continued predominance of inefficient paper-based invoicing processes in EU public procurement, with all the negative side-effects which this implies. The scale of these inefficiencies corresponds to the potential benefits which are foregone due to the fact that e-invoicing is not being used[54].

The problem tree which summarises the above finding is presented in Figure 4), where problem drivers, problems, and their consequences are presented together with the context of the low uptake of e-invoicing in public procurement.

Figure 4): Problem tree

2.2.1. Problem driver (D0)

The e-invoicing market in Europe is characterised by the existence of many (national and proprietary) standards. Examples of e-invoicing standards used in the EU are provided in Table 1) below.

Table 1): Examples of e-invoicing standards

Common global and regional standards || Industry specific standards || National standards

UN/CEFACT Cross Industry Invoice (CII) version 2 UN/EDIFACT ANSI X12 eCOM (includes GS1 EANCOM and GS1 XML) ebXML UBL RosettaNet || ODETTE PIDX CIDX || Facturae (Spain) ebInterface (Austria) OIOUBL (Denmark) Svefaktura (Sweden) ZUGFeRD (Germany)

Source: "European e-invoicing guide for SMEs" European e-business lab, pages 54-56 and DG Internal Market and Services research.

These and probably quite a few more global, regional, and industry-specific standards coexist in the EU. Most of these standards are not interoperable and none of them appear to be dominant.

Paradoxically, the multiplicity of standards and lack of a dominant technical solution creates a “vicious circle” situation, where even more new standards appear on the market. As one of the e-invoicing service providers has pointed out, “lack of information about existing standards has resulted in the re-invention of dozens of niche standards (domestic or industry focus)”[55].

Despite the co-existence of many non-interoperable standards on the market, a number of Member States, who have recognised the economic benefits of e-invoicing, have decided to make it mandatory (de facto or de jure) in public procurement within their national administrations[56]. However, in a situation where no clear indication exists on which standard to use, when making the decision to facilitate or mandate the use of e-invoicing, governments (both national and local) frequently decide to come up with their own technical solutions, based on a separate national standard.

For example, e-invoicing is currently mandatory in Denmark and Sweden, and it will become mandatory in Austria as of 2014. In these three countries only, three different technical solutions have been chosen: Denmark requires the use of OIOUBL (based on UBL 2.0), Sweden recommends the use of the Svefaktura, while Austria has opted for PEPPOL solutions.

This process of fragmentation is continuing, as even more standards are appearing or will soon appear on the market driven by government initiatives:

· Spain currently makes it possible for the central government to accept electronic invoices on a voluntary basis, and has established a national standard to facilitate the exercise (known as Facturae).

· Italy has passed basic laws on mandatory e-invoicing, and is planning to introduce mandatory e-invoicing “in the near future” on the basis of an XML-based national standard.

· The Czech Republic allows their governmental departments to mandate e-invoicing if they so choose and a non-mandatory national standard exists (ISDOC based on UBL 2.0).

· The German national e-invoicing forum (Forum elektronische Rechnung Deutschland or FeRD), supported by the German Ministry of Economy and Technology, has recently unveiled a German national standard, known as ZUGFeRD.

· Belgium is preparing a pilot project, allowing the submission of e-invoices to certain departments and/or regions. A UBL-based standard will be mandatory.

· The Netherlands has established an e-invoicing portal (Digipoort) and obliges central government bodies to accept e-invoices if they are submitted via this portal. One of two specific standards (UBL and a Dutch version of an XML-based standard) must be used to do so.

Additionally, e-invoicing is being used by some government departments, public sector organisations, and localities across the EU, although no specific laws regulating the practice currently exist.

The above clearly highlights the problem: if at some point in the future all Member States decide to switch to e-invoicing and each of them choses its own e-invoicing standard, a huge number of combinations of standards would be possible when sending and receiving e-invoices (e.g. even if only the 15 e-invoicing standards mentioned in Table 1 are considered, this results in more than 100 different combinations). To combat the problem of these multiple matches, translation between the standards is necessary – a process known as ‘mapping’. In theory, the mapping can be carried out by any market operator, but in practice, most of this work has been delegated to service providers.

The multiplicity of e-invoicing standards and the need to map them has resulted in a number of models which are applied to the exchange e-invoices. These are usually categorised as: bilateral exchange, 3-corner models, and 4-corner models[57]. Due to the fact that it allows each of the parties to an e-invoicing transaction to work through its own service provider, the 4-corner model is generally considered to be the most efficient and flexible system for exchanging e-invoices. However, such a system is still based on a bilateral exchange (in this case between two service providers) and it therefore still requires a large number of bilateral agreements on the method of communication to be used between them.

A report by EBA/Innopay summarises the difficulties of the current organisation of the e-invoicing market based on the above data exchange models, stating that “these market developments have resulted in a tendency towards separation and segmentation, often described as “silos”[58]. A similar diagnosis of the current situation can be found in a Deutsche Bank Research document, which stresses that “e-invoicing providers who offer their services as external contractors have not established a market standard to date. Also the high number of more than 400 e-invoicing providers in Europe has contributed to the existing siloed solutions. […] sending invoices electronically between clients of different providers is frequently impossible because of technical disparities.”[59]

The proliferation of e-invoicing standards therefore requires significant investments from service providers to be able to support them and elevated operating costs in order to perform the mappings. The degree of difficulty – and therefore of the associated costs – to a significant extent depends on the service providers’ ability to sign interoperability agreements. Several attempts have recently been made to simplify this process; however, due to the fact that all of these efforts have focused on a bilateral approach, none of them have resolved the problem of the multiplicity of potential combinations of standards. Even where interoperability can be ensured by means of a bilateral agreement, considering the number of such players on the market (in excess of 400) and the number of different standards, several thousand different agreements would be required in order to ensure full general interoperability. This is, for obvious reasons, very resource-intensive and, until now, has not been feasible.

Concluding, the multiplicity of non-interoperable standards (D0) dominates the EU e-invoicing landscape. Member States are co-responsible for the observed spur of e-invoicing solutions, as several of them have required that invoices submitted to the public sector must comply with specific – frequently national and non-interoperable – standards.

2.2.2. Problem (P1) – excessive complexity and legal uncertainty for firms

The existence of many different e-invoicing requirements and standards across the EU results in an excessive level of complexity and legal uncertainty (P1) for firms when issuing invoices to another Member State. This situation is not only burdensome for suppliers, but presents a risk that their e-invoices might not be accepted by buyers in other Member States. The fact that cross-border e-invoicing is problematic is confirmed in various publications. For example, the Euro Banking Association underlines the fact that barriers to adoption of e-invoicing persist, especially in the area of legal/tax rules and a lack of EU-wide harmonisation and clarity, which complicates intra EU–invoicing[60].

Similar views have been collected within the PEPPOL project, where a representative of an enterprise currently using e-invoicing in public procurement has stated the following: “We currently support many different standards, versions of standards and formats and this is not sustainable anymore. If you look at the cost benefits of automation, supporting 4 different standards represents a break-even point for us […]. Every new format or standard requires training, learning the codes, developing and testing new code, and then maintaining it. It is a serious investment and maintenance cost.”[61]

In the public consultation concerning this initiative, the multiplicity of standards/requirements in e-invoicing was identified as one of the main barriers to the adoption of e-invoicing by firms.

Figure 5): Reasons for not using e-invoicing – public consultation results

Source: DG Internal Market and Services

The results of the above-mentioned consultation also show that a lack of clarity concerning applicable laws and regulations is the third most frequently mentioned reason which discourages firms from e-invoicing (see: Figure 5).

Complexity and legal uncertainty concerning the acceptance of an invoice in different Member States was also mentioned by SMEs in a survey on the use of e-invoicing in Europe[62]. For example, the fear of lack of acceptance of invoices abroad was mentioned by as many as 47% of firms from Austria and 21% from Italy. In Spain and Finland this concern was mentioned less frequently, but around one in ten firms still perceived it as a problem (see: Table 2).

Table 2): Survey of SMEs – problems of e-invoicing

What do you regard as potential problems of electronic invoicing? [in %] || AU || FI || IT || ES

Complexity || 27,0 || 18,9 || 23,9 || 21,4

Expensive/high investment required || 12,3 || 17,5 || 15,6 || 11,1

Concerns over return on investment || 14,2 || 9,2 || 13,9 || 14,8

Readiness/compatibility of internal systems || 30,4 || 34,6 || 36,0 || 20,0

Customer compatibility/readiness || 36,0 || 51,8 || 23,9 || 20,7

Legal uncertainty concerning the acceptance of the invoice in different Member States || 46,8 || 9,4 || 21,4 || 12,0

There are no barriers || 10,3 || 11,6 || 20,8 || 15,0

Other || 23,7 || 10,3 || 0,0 || 15,4

Source: "European e-invoicing guide for SMEs"

In practice, the risk of non-acceptance abroad is typically driven by the existence of different technical standards. This is also confirmed by the fact that a lack of “customer compatibility” scores high on the list of problematic issues for SMEs (e.g. mentioned by 51% firms in Finland). Uniform technical requirements would undoubtedly simplify the e-invoicing processes as compatibility between buyers and sellers would be ensured.

2.2.3. Problem (P2) – higher costs for firms

As mentioned above, the existence of multiple requirements, standards, solutions, and networks/platforms across the EU results in a very complex situation. Since these standards and systems are not interoperable, and as no common standard is available on the market, firms which want to carry out cross-border procurement activities are often required to support, in one way or another, a new invoicing standard each time they access a new market. This in turn generates additional costs, irrespective of whether the invoices are submitted directly (which requires additional expenditure on creating new mapping possibilities) or through service providers (which will charge higher fees). Whether done via service providers or directly, the need to introduce new interoperability requirements increases operating costs for economic operators (P2), i.e. the costs of doing business cross-border.

The problems of these excessive costs are also recognised by firms participating in public procurement: “There are several fee structures that service providers typically use for e-Invoicing: from free for suppliers, a fixed subscription fee, a fixed fee per invoice to a percentage fee on the amount of the invoice. So, in addition to the technical complexities we also have to evaluate the fee structure when deciding to support a customer’s request for e-Invoicing or not. Some service providers have acceptable fee structures but there are others that for example charge a percentage of the amount of the invoice, so the exchange of a large invoice could cost us 1.500 Euro or more, even though it is exactly the same process whether you exchange a 100 Euro or a 1 million Euro invoice. This simply does not make sense economically. In such case we will contact the customer and revert back to a 100% manual process for a large invoice. This obviously defeats the whole purpose of automation for both customer and supplier but it allows us to save a significant amount of money.”[63]

The exact amount of additional costs for firms generated by the need to adapt to multiple standards is difficult to quantify, since as mentioned above, service providers use various business models and pricing schemes, which typically depend on the volume of invoices generated by the supplier. It is evident, however, that the need to support each additional e-invoicing standard leads to additional operating costs for firms. In passing, it should be noted that these higher operating costs may be especially burdensome for SMEs, and in particular for microenterprises.

Finally, it is important to note that it is not only suppliers that are faced with the problems stemming from the multiplicity of e-invoicing standards across the EU. The higher operating costs for these firms, which result from the need to support several different standards, indirectly also have a negative effect on the buyers. In order for the firms to make the same level of profit, higher prices need to be charged for their products or services, and these higher prices are ultimately paid by the contracting authorities. This aspect links the problems with the contextual aspects, such as the suboptimal use of resources in public procurement.

2.2.4. Consequences (C1, C2)

The need to adapt to multiple interoperability requirements generates excessive complexity and legal uncertainty (P1) and increases the operating costs (P2) for firms doing business cross-border.

The divergent legal or technical requirements, which are either “non-standardised” or adopted in the form of national standards, can constitute market access barriers in cross-border public procurement (C1) - in the same way as any other unknown legal or administrative requirements. These divergent requirements could be perceived as technical barriers to trade[64] and generate investment risk. In the worst-case scenario, the two above-mentioned problems might deter firms from bidding in public procurement in other Member States, meaning that enterprises would pass up on potential business opportunities due to specific e-invoicing requirements which they cannot support (or which they judge too expensive to support)[65].

According to a survey held in 2011 by Rambøll Management[66], for 71.5% of firms, legal requirements leading to market entry barriers in the awarding country are perceived as relevant or highly relevant obstacles to cross-border bidding in public procurement (i.e. high relevance for 47.6% and medium relevance for 23.9% respondents). “Unfamiliar formal requirements demanded” were important or very important for 63.1% of firms. The detailed results of the survey are provided in Figure 6.

Figure 6): Businesses' views on several possible obstacles to cross-border bidding

Source: "Cross- border procurement above EU thresholds”, Ramboll Management, May 2011

If the above examined legal uncertainty (P1) and higher costs (P2) resulting from different e-invoicing requirements were to be classified respectively under the headings “legal requirements” and “unfamiliar formal requirements” in the above survey, its findings would then show that the persistence of these obstacles discourages firms from participating in cross-border public procurement.

Similarly, the connection between e-invoicing and cross-border public procurement is confirmed by the results of the public consultation, where 72% of 661 respondents either agreed or strongly agreed with the statement: "If the EU established a common standard for e-invoicing in public procurement, cross-border procurement transactions would be facilitated". Only 10% disagreed or strongly disagreed. The proportion was almost identical for enterprises, i.e. the stakeholders most directly concerned: 71% either agreed or strongly agreed with the statement while a mere 8% disagreed or strongly disagreed (out of 122 firms which replied).

Figure 7): Impact of EU common standard for e-invoicing on cross-border procurement

Source: DG Internal Market and Services – results of the IPM public consultation, Dec 2012 – Jan 2013

Finally, the risk of emergence of market entry barriers in cross-border public procurement due to functional as well as technical IT characteristics was identified as early as 2004 in the Commission Communication “The Action plan for the implementation of the legal framework for e-procurement”. This Communication recognises that “barriers for businesses may emerge in cross-border tendering, if design of IT standards is incompatible. Diversity and incompatibility of technical solutions can render suppliers’ access to e-procurement systems impossible or discourage their participation because of additional difficulties or increased costs”[67].

To summarise, both the higher operating costs for enterprises and the excessive complexity/legal uncertainty generated by the need to acquire and maintain interoperability between various invoicing systems are a potential source of market access barriers in cross-border procurement (C1), which ultimately leads to a situation where e-invoicing regimes are still delineated along national borders. Where it does take place in the EU, e-invoicing is for the most part limited to separate – often national – networks, creating 'islands of e-invoicing' in the Internal Market. The domination of national e-invoicing regimes and national technical solutions/standards means lower cross-border bidding, fewer participating companies, and therefore lower competition, which in turn translates into an inefficient functioning of the Internal Market (C2).

2.3. Developing a baseline scenario

The baseline scenario consists of the EU undertaking no additional measures with regards to e-invoicing in public procurement beyond those which have already been implemented.

The EU's policy towards e-invoicing is currently set-out in the 2010 e-invoicing Communication[68], in which the use of e-invoicing was recommended and self-regulation on the basis of a number of guidelines was urged. This Communication recognises that if the full benefits of e-invoicing are to be realised, public sector initiatives in the Member States are critical to accelerate its uptake and market penetration. In order to achieve this, the Commission recommends that Member States should develop national strategies "to promote e-invoicing at national level, including by setting targets for the adoption level of e-invoicing".

The Communication also recognises the drawbacks of the multiplicity of standards for e-invoicing. In particular, it points out that "the diversity of data and usage requirements, and very different approaches to their implementation, have led to market fragmentation" and that "as a consequence, market players, such as enterprises, software companies and financial service providers nowadays need to support multiple formats, necessitating the need for substantial mapping and conversion exercises to cope with data expressed in different syntaxes."

In order to overcome this fragmentation, the 2010 e-invoicing Communication asked international and European standard-setting bodies to undertake efforts to facilitate convergence on and implementation of the chosen data model. However, the Communication stated that it should be left to the market to define how this data model is subsequently adapted to suit specific business needs. In line with this approach, the Commission has also implemented or funded projects of its own to promote the use and interoperability of e-invoicing at European level, with a particular focus on the B2G/public procurement domain (e.g. the e-PRIOR and PEPPOL projects; see Annex 1.7 for details).

Three years on from the publication of the 2010 e-invoicing Communication, the situation is less than optimal. Although a small number of Member States have taken some steps towards implementing e-invoicing in public procurement and a few others are considering action in this direction, these initiatives are uncoordinated and inconsistent.

As mentioned previously, Denmark, Finland, and Sweden had already required the submission of e-invoices before the 2010 e-invoicing Communication was adopted, and a number of other Member States have recently launched projects (e.g. Austria, Ireland, Belgium, the Czech Republic, Germany) to introduce e-invoicing in the public sector, which could be considered as their response to the recommendations published in 2010.

However, this gradual and uncoordinated progress in the adoption of e-invoicing by Member States (including via a mandatory approach) only aggravates the interoperability problem described in Section 2.2, as ever more technical standards and requirements need to be supported by suppliers in order to be able to send e-invoices to Member States’ public administrations across the EU. These initiatives are therefore bringing further complexity and fragmentation to the Internal Market. So far, only three EU Member States have opted to implement inter-operable solutions based on EU co-funded projects: PEPPOL in Austria and foreseen in Ireland, and e-PRIOR, currently being implemented by the Belgian Federal administration.

In undertaking no new EU action, it can be expected that in the foreseeable future, the adoption of e-invoicing in public procurement in the EU would continue at a slow and steady pace, with more and more national standards appearing on the market. Even if some Member States opt for interoperable solutions, there is no guarantee that this will be the case everywhere. Indeed, recent experience suggests otherwise.

As a consequence, achieving EU-wide interoperability of e-invoicing systems in public procurement risks becoming increasingly complex and costly, despite the Commission's on-going support for this objective. Service providers (or buyers and suppliers that choose to communicate directly) would have to cater for a growing number of national requirements and standards. The associated costs would ultimately be borne by suppliers – either directly in peer-to-peer transactions or in the way of fees, if service providers handle the format conversions. In other words, market access barriers would not only continue to exist but could in fact increase, preventing the Internal Market from functioning correctly.

2.4. The EU's right to act and justification

2.4.1. Legal basis

The EU’s right to take action to ensure the functioning of the Internal Market stems from Article 114 of the Treaty on the Functioning of the European Union (TFEU), which provides the tools for achieving the objectives set out in Article 26 TFEU.

Article 114 TFEU would therefore constitute the legal basis for a potential EU initiative on e-invoicing in public procurement.

As mentioned in Section 2.1.3, no specific legislation at EU level has until now dealt with the post-award part of procurement. The current approach to address the post award stage is clearly driven by IT developments in the area of public procurement. For a long time and until recently, invoicing could easily be thought of simply as one of the consequences/outcomes of public procurement rather than an integral part thereof, with very little impact on the actual procurement itself. As such, it was simply not relevant enough to figure significantly in public procurement policy. However, the recently observed adoption of electronic procurement methods and tools has significantly changed the procurement processes, which have become much more integrated and the digitalisation of all elements of the procurement cycle is nowadays a reality[69]. The above IT-driven changes in the public procurement process have necessitated a reassessment of the pre-award / post award division.

The fact that a number of Member States have introduced electronic tools and processes into invoicing and that several of them have made it mandatory, means that these practices are the source of new market access barriers in cross-border public procurement. As has been shown in Section 2.2.1, the existing or planned national rules are based on different national standards which are not interoperable. There is now a real risk of an enterprise not participating in cross-border public procurement due to the inability to meet e-invoicing requirements of a particular Member State[70]; hence the introduction of electronic invoicing has recently started to have a direct impact on public procurement. As has been argued in Section 2.2.4, these new technological market access barriers (unknown e-invoicing standards, non-interoperable functional requirements, etc.) hinder the efficient functioning of the Internal Market.

There is therefore an urgent need to address the emerging problem of market access barriers before additional Member States enact their own unique national standards for e-invoicing in public procurement. Article 114 TFEU provides the most appropriate legal basis for a legislative act harmonising the de facto and de jure actions undertaken by Member States in the area of e-invoicing.

2.4.2. Subsidiarity and proportionality

EU action in the area of e-invoicing in public procurement is justified on grounds of subsidiarity and proportionality.

(1) Necessity Test

As described in Section 2.2, the number of existing standards, requirements, and solutions remains very large and e-invoicing networks appear to be growing more, not less, entrenched along national boundaries. The bottom-up initiatives from Member States have aggravated the interoperability problem, as more e-invoicing standards have emerged on the market, further increasing the costs and complexity of ensuring interoperability. The fact that uncoordinated standardisation activities at Member State level can lead to conflicting national standards and impediments to the functioning of the Internal Market has already been recognised in the acquis[71]. European standards therefore play a very important role within the internal market[72], and such standardisation by nature requires coordination at the EU level.

In the particular context of public procurement, actions undertaken by Members States, which frequently involve the introduction of national standards, are not sufficient to ensure e-invoicing interoperability in cross-border procurement.

(2) EU added value

The rationale for an EU action stems from the transnational nature of the problem of insufficient interoperability between national (and proprietary) e-invoicing systems. Given the cross-border nature of public procurement transactions covered by the Directives and the lack of any meaningful efforts on the part of the Member States to resolve the interoperability issues, an EU action on e-invoicing in public procurement seems to be the only solution available to co-ordinate their actions and to prevent further fragmentation of the Internal Market. Furthermore, only the EU can act as an unbiased arbiter in the discussion on interoperability and objectively recommend the best approach to eliminating market barriers.

There is little indication that, without EU action, the current situation concerning e-invoicing in public procurement will change or improve in the foreseeable future.

(3) Proportionality

Under the principle of proportionality (Article 5(4) TEU), the content and the form of EU action shall not exceed what is necessary to achieve the objectives of the Treaties. The potential EU initiative considered in this Impact Assessment will be limited only to those aspects of e-invoicing in public procurement that Member States cannot achieve satisfactorily on their own, with the aim of respecting the heterogeneity of requirements and invoicing traditions among industries, geographies and jurisdictions, as well as the existence of legacy IT systems currently used by some Member States. The proportionality of the different policy options has been assessed and the result of this assessment is described in the relevant part of this Impact Assessment (see, in particular, Sections 5 and 6.1).

2.4.3. Justification for EU action on e-invoicing in public procurement

The existence of the problems and consequences described in sections 2.2.1 to 2.2.4 is widely recognised by stakeholders, as has been shown in these sections by quoting their views or citing the results of various surveys. The majority of the stakeholders share the view that action at EU level should be undertaken to facilitate interoperability in e-invoicing (e.g. 85% of respondents to the IPM consultation support a possible EU initiative to enhance interoperability in e-invoicing)[73]. For many – especially firms which consider using e-invoicing – “government policy emerges as the most important determinant of progress in e-invoicing adoption”[74]. The latter statement also links the problem definition with the context of the low uptake of e-invoicing in the public sector, as stakeholders would very much appreciate seeing governments as front-runners in this area.

EU intervention concerning e-invoicing in public procurement is also justified despite the relatively low level of cross-border procurement in the EU[75], as market access barriers driven by insufficient e-invoicing interoperability can influence firms’ propensity to bid on public procurement in other Member States. As a result, it can be argued that this low level is actually a result of the existing barriers. Such an assessment is also in line with WTO practice[76]: where differences in technical regulation and standards may be recognised as potential unnecessary obstacles to trade, the volume of the cross-border procurement is incidental, since any potential barrier to trade may have an impact on the market. Therefore theoretically, if barriers to cross-border e-invoicing were removed, the volume of cross-border procurement could rise significantly.

3. Objectives

3.1. General objective

The primary objective of this initiative would be to improve the functioning of the Internal Market by introducing mechanisms that would diminish market access barriers in cross-border public procurement, generated by insufficient interoperability of e-invoicing technical requirements or standards.

3.2. Specific objectives

The specific objectives contributing to the achievement of the general objective would be the following:

– Reduce complexity and improve clarity and legal certainty for economic operators (to combat problem P1), by enabling firms to send invoices in standards with which they are familiar and which will be widely accepted;

– Lower operating costs for economic operators participating in cross-border public procurement (to combat problem P2), such as cost of supporting multiple e-invoicing standards and systems.

3.3. Operational objective

Considering the main problem driver highlighted in Section 2.2, as well as the general and specific objectives described above, the following operational objective has been identified:

– Create conditions for the emergence of (a) technical solution(s) for e-invoicing in public procurement which would ensure cross-border interoperability – in other words, create conditions in which communication and mapping between e-invoicing systems will be less resource-intensive, allowing buyers and sellers to exchange invoices in public procurement at the lowest cost and with minimal complexity.

It is proposed to implement this initiative within as short a period of time as possible for all contracting authorities which award public procurement contracts covered by the Directives. Taking into consideration the necessity of developing a common standard and the time which this requires, the most realistic deadline for the introduction of a technical solution that would ensure cross-border interoperability appears to be between 2017 and 2018. Such a deadline would be coherent with the 2010 e-invoicing Communication[77], which called for e-invoicing to become the predominant method of invoicing in Europe by 2020.

4. Policy Options

With a view to achieving the above-stated objectives in the most effective and efficient manner, the following policy options are proposed:

– Option (1) - No new EU action (“no change”): no new action would be undertaken at the EU level; the Commission would continue to monitor the implementation of the 2010 e-invoicing Communication, expecting self-regulation among stakeholders or the conclusion of multilateral agreements between e-invoicing service providers;

– Option (2) - Free-choice approach: the EU would propose a European e-invoicing standard to the market, but its use would not be obligatory (i.e. the EU would recommend it, but the final decision would be left to the stakeholders);

– Option (3) – Selective conversion to e-invoicing: the EU would propose a European e-invoicing standard to the market; the Member States or contracting authorities which have already made or which subsequently make e-invoicing mandatory would be obliged to accept invoices submitted in this standard; exchanging e-invoices in other standards would still be allowed if both parties of the transaction so agree;

– Option (4) - Obligatory acceptance: the EU would propose a European e-invoicing standard to the market; the acceptance of invoices submitted in this standard would be obligatory for all contacting authorities; exchanging e-invoices in other standards would still be allowed if both parties of the transaction so agree;

– Option (5) - Full harmonisation: the EU would propose a European e-invoicing standard to the market, which would become the only means of exchanging invoices in public procurement; exchanging e-invoices in other standards would no longer be allowed.

As explained in Section 2.1.1, the above proposals would apply to public procurement covered by the Directives. In all Options, firms would be allowed to send paper invoices unless the Member State or the contracting authority decides to ban paper invoicing; the introduction of mandatory sending of e-invoices is not considered in the Options analysed in this Impact Assessment.

An overview of key differences between the above proposed Options is presented in Table 3).

Table 3): Key differences between Options

|| A new European standard is proposed to the market || Member States must accept invoices compliant with the new European standard || Only the new European standard is allowed

Option (1): No new EU action || NO || NO || NO

Option (2): Free-choice approach || YES || NO || NO

Option (3): Selective conversion to e-invoicing || YES || NO/YES (YES - only if a Member State or a contracting authority mandates the use of e-invoicing) || NO

Option (4): Obligatory acceptance || YES || YES || NO

Option (5): Full harmonisation || YES || YES || YES

With the exception of the baseline scenario (i.e. Option (1) “No new EU action”) which follows the recommendations of the 2010 e-invoicing Communication[78], the remaining Options foresee that a specific instrument (a European e-invoicing standard) would be proposed to the market to facilitate interoperability.

The above raises a key question, namely which technical solution should be chosen as the backbone of the new interoperability framework. Theoretically, the operational objective defined in this Impact Assessment could be achieved in one of two ways:

(a) choosing one of the existing standards and proposing it to the market, or

(b) developing a new standard and proposing it to the market, e.g. a European standard (EN).

These alternatives could constitute sub-options of each of the four above-mentioned main Options (i.e. the five Options less the baseline scenario). However, for a number of technical and practical reasons, such an approach has not been used. The principal reason is that there is currently no adequate solution available on the market which could ensure cross-border interoperability at the EU level. As such, the development of a European standard remains the only viable solution. The justification for the above decision is presented in more detail in Annex 1.9.

Finally, the proposed new European standard should cover only the elements that are necessary to ensure cross-border interoperability in e-invoicing. The exact scope of the EN should be left to the relevant European Standardisation organisation and follow the standardisation process as defined in Regulation (EU) No 1025/2012. However, at this stage of analysis it seems that the new European standard should above all focus on the semantic alignment[79] of various national standards / technological solutions used in e-invoicing across the EU.

4.1. The choice of coercive or non-coercive instruments

The proposed menu of options ranges from options which would be implemented using soft law measures, to options where legal instruments would be necessary. A question arises if coercive instruments should be at all considered in this Impact Assessment, knowing that in the public consultation the majority of respondents (52%) preferred voluntary instruments to be used in order to enhance interoperability, while 42% chose mandatory and 6% voted for both.

Firstly, the majority in favour of voluntary instruments only slightly outweighs the number of supporters of mandatory actions at the EU level. Secondly, the options proposed in this Impact Assessment that envisage some mandatory enforcement of common rules to facilitate e-invoicing interoperability in public procurement are actually a mixture of coercive and non-coercive measures. For example Option (3) foresees coercive measures only with regards to the Member States or contracting authorities which have mandated or will mandate the use of e-invoicing. For the remaining stakeholders, the use of e-invoicing would be voluntary. Similarly, Option (4) would contain certain mandatory elements (i.e. an obligation to accept invoices if compliant with the new European standard), but the uptake of e-invoicing would depend on the decisions made by firms participating in public procurement, and therefore it would have a partially non-coercive character.

Taking into account the fact that the results of the public consultation do not show a clear or overwhelming opposition to mandatory action at the EU level and that the proposed initiatives to facilitate e-invoicing interoperability in public procurement contain in practice a mixture of voluntary and mandatory elements, the proposed menu of options is fully justified and should be maintained.

5. Analysis of Impacts

A specificity of a potential initiative on e-invoicing in public procurement is that most, if not all, of its impacts would be observed irrespective of the Option chosen, the only difference being their size and the speed with which they would materialise. For this reason, before the impacts of each Option are analysed, an overview of the common impacts is presented below.

5.1. The expected common impacts

The removal of market access barriers is expected to generate impacts that are mainly economic in nature, both in terms of the costs and the benefits. The economic costs for both firms and public bodies will be limited to the expenditures necessary for the introduction of e-invoicing systems (e.g. acquisition of relevant software and/or hardware). The economic benefits, on the other hand, will primarily consist of (i) lower operating costs, as well as more clarity and legal certainty for firms active in public procurement; and (ii) lower processing costs and lower prices for contracting authorities due to more intense competition (i.e. more bids submitted in part due to increased participation of firms from other Member States). Any social and environmental costs would be limited. These impacts will be referred to in this Impact Assessment as ‘primary impacts’.

The above primary impacts will be supplemented by additional ‘secondary’ or ’side effect’ impacts, as improved interoperability would most probably translate into increased uptake of e-invoicing by both contracting authorities and firms. The secondary impacts of the initiative will be economic, social, and environmental. In some Options, these secondary impacts are highly probable, since the availability of an interoperable European standard in e-invoicing could encourage many market players – which until now have been hesitant – to switch to e-invoicing. Although the wider adoption of e-invoicing is not an objective of this initiative, the secondary impacts will nevertheless be analysed for each Option, as they may be significant.

The division into primary and secondary impacts to a significant extent reflects the split between the key problems and the context identified in section 2.2 (i.e. primary impacts relate to the key problems, while the secondary ones to the context of the low e-invoicing uptake by the public sector). An overview of these common impacts is provided below. The extent to which they would materialise will depend on the Option chosen (as analysed in section 5.4).

5.2. Primary impacts

As mentioned in the previous section, the removal of market access barriers to cross-border e-invoicing would have mainly economic impacts. The main stakeholders concerned would be firms active in public procurement and contracting authorities. The scale of these impacts would depend on the Option chosen - the more users align to a single solution, the fewer market access barriers would remain.

5.2.1. Impacts on firms

The establishment of a common standard would solve the interoperability problem for firms dealing with contracting authorities which adhere to the new rules (voluntarily or due to the mandatory nature of the new provisions). Specifically, the availability of one interoperable and commonly acceptable standard would attenuate the complexity of doing business abroad and provide more legal certainty for enterprises. It would also reduce costs for firms which result from the need to support many different e-invoicing standards.

The availability of a single standard would be beneficial for both large enterprises and SMEs. These expected benefits are also recognised by the firms themselves – according to one supplier active in public procurement, “dealing with 2 or 3 standards would put us in a very good position, but having to support one single standard would result in huge savings, as we would realise the real benefits of business automation with minimal setup and maintenance costs”[80]. Similar views were shared by the contributors to the European Committee for Standardisation (CEN) workshop agreement (CWA 16461)[81], who pointed out that” since a large number of different formats are in use, a reduction to a small number of common format specifications (if not one), i.e. standards, could make it much easier for an SME to get started with structured data exchange and to address the majority of their customers (especially the large enterprises) with one common format.”

SMEs also confirm that they would appreciate the resolution of the interoperability problem by the emergence of a common standard. Their opinions were collected in a survey conducted within the third Working Group of the EMSF[82] and are provided below.

Table 4): SME adoption drivers (1=least helpful; 5 = most helpful)

Models || Mean || Median

Integration with SMEs’ accounting software || 4.01 || 4.00

Affordability || 3.99 || 4.00

A common national standard for invoice content || 3.93 || 4.00

Peace of mind on VAT compliance || 3.75 || 4.00

A common EU standard for invoice content || 3.67 || 4.00

Source: “Good practices in the adoption and promotion of e-invoicing in Europe” ACCA Discussion Paper

As presented in Table 4), the availability of a common e-invoicing standard is mentioned among the most helpful drivers for the adoption of e-invoicing in SMEs.

The introduction of a new European standard could potentially be the source of some costs of adoption. These could include the cost of purchase of new software and IT equipment, business disruption due to process change, the costs of retraining staff, or potential service provider fees for suppliers.[83] However, considering recent developments in information technology and the nature of the software required, heavy investments should not be necessary. The availability of cloud-based and ‘software-as-a-service’ solutions mean that in many cases, no installation of software would even be necessary, and users could be charged on a per-use basis.

Furthermore, it is important to note that any such costs would be borne only once, as only one new standard would need to be introduced. The risk of suppliers having to bear such costs a number of times due to the need to support numerous other e-invoicing standards would be eliminated. The ‘avoided costs’ can effectively be considered as an overall cost reduction or as potential savings. The scale of the potential savings can vary greatly depending on, among other factors, the type of solution chosen, the business model and pricing schemes of service providers, and the volume of invoices generated by the supplier. The huge variety of e-invoicing business models[84] and cost structures[85] that exists on the market makes any attempt to provide a precise aggregate figure difficult.

Finally, further potential savings for firms may come from some adaptations of the pricing schemes and market structures for e-invoicing transmission, since the e-invoicing service providers would have to modify their business models to support the new interoperable standard. The availability of a common solution may for example reduce the roaming (i.e. e-invoice transfer) fees. This observation is shared by stakeholders: during discussions in the EMSF, the opinion was voiced that a common standard would simplify communications between service providers by removing the need for them to constantly agree on which standard is to be used. Similarly, according to Deutsche Bank Research, “Interoperability would […] further expand and promote the existing competition between providers with its positive impact on innovation activity and the value for money offered”. This should help to reduce the operating costs for suppliers even further.

Summarising, the introduction of a single interoperable solution would be beneficial for enterprises, both large and SMEs: they would need to invest only once in the adaptation to the common EU e-invoicing standard, whereby their costs would be proportionately reduced.

5.2.2. Impacts on contracting authorities

Any measure requiring the use of a new European e-invoicing standard would impact the way contracting authorities carry out procurement, and would therefore generate operational costs for contacting authorities and/or Member States. Depending on whether Member States and/or contracting authorities react positively, a recommendation to take up the new standard could have a similar effect. As mentioned in section 5.2.1 above, however, it seems that that these costs would not be excessive and would in any case be outweighed by the expected benefits (i.e. operational savings from e-invoicing and lower prices in public procurement due to enhanced competition).

Several examples of estimated costs to public administrations – based on existing projects to introduce e-invoicing in the public sector – are provided below. Although the available data do not allow to distinguish between the savings from operational enhancements and savings due to increased competition in all cases, the figures for estimated savings are provided as an indication of the possible economic benefits resulting from the take up of e-invoicing[86]. They all show a positive cost-benefit ratio.

· Estimates made in 2004 by officials in the Scottish Executive showed that the introduction of e-invoicing would reduce administrative costs by around £5.4 million during the first four years of implementation. The total cost of implementing such a project were estimated at around £600 000 during the first two years[87].

· Belgium estimates that the costs of implementation of its e-invoicing pilot project in the federal government will amount to approximately 370 000 EUR for basic infrastructure and support services, while yearly savings in excess of 3 million EUR will be generated (not including the judicial sector)[88].

· In Spain the costs and benefits of an introduction of e-invoicing in the central government administration and related bodies (excluding the social security agency) are estimated to be about 100 000 EUR per annum, based on the creation of a central management model/platform to receive all e-invoices submitted to the central government administration. Savings to the central government from the move towards e-invoicing are estimated to be about 2.5 million EUR per annum[89].

· Norwegian municipalities estimated that a requirement to switch to structured e-invoicing based on a common standard for all incoming invoices would generate costs for suppliers peaking at some NOK 400 million (about 54 million EUR at current exchange rate) per annum 3 years after the introduction of the scheme. Then costs would steadily decrease and savings accruing to suppliers would exceed their costs by the 4th year. The total NPV of the benefits accruing to suppliers were estimated to be NOK 2077 million over a 10 year period (about 280 million EUR). A similar assessment of the introduction of mandatory e-invoicing in the Norwegian central government administration made in 2008 also concluded that there would be a net present value for suppliers, estimated at 178 million NOK (about 24 million EUR at current exchange rates)[90].

The available data thus indicates that the cost-benefit balance of the adoption of e-invoicing by public administrations is generally positive. In other words, the costs generated by any measure where the contracting authorities or Member States would be asked either to align to a new European standard or to adapt to e-invoicing more broadly would be outweighed by its expected benefits.

Additionally, the removal of market access barriers should also result in more cross-border bids submitted by firms and therefore lead to increased competition (or at least increased competitive pressure) in public procurement.

As explained in section 2.2.4, currently some potential suppliers wishing to bid on a public procurement contract in another Member State might decide not to do so if the contract requires the subsequent submission of e-invoices in a standard which they do not support. However, if such barriers were removed, these suppliers may decide to participate. This would result in more bids (more competition) and should in principle lower the prices paid by contracting authorities for goods, works and services that they purchase.

As presented in Figure 8) below, based on aggregated data available for 2011, a positive relationship can be observed between the number of tenders received and the extent of savings: the higher the number of bids received on a given public procurement tender, the greater the savings realised. For example, if a contracting authority receives two bids instead of one, the typical saving per contract raises from 3% to 8%.

Figure 8): Relationship between the number of tenders received and savings over expected expenditure

Source: 2011 average saving (as % of estimated price) on public procurement contracts in the EU compared with the number of bids received, estimates by DG Internal Market and Services based on OJ/TED data.

The above example shows that increased competition induced by the removal of market access barriers in public procurement is likely to translate into tangible savings for contracting authorities.

5.3. Secondary impacts

As mentioned in the introduction to the impacts chapter, the adoption of a new EU e-invoicing standard may generate secondary impacts through the increased uptake of e-invoicing in public procurement. This increase in the use of e-invoicing (which is highly probable in some Options) would be the source of certain economic, social, and environmental impacts.

5.3.1. Economic, social, and environmental impacts

The economic impacts of an increased uptake of e-invoicing would be basically linked to savings to the economy generated by the expected savings in the public procurement cycle, i.e. reduction of operating costs for buyers and sellers, increased transparency, faster payment processing times. However, as far as secondary impacts on firms are concerned, it is assumed that these impacts are more positive if firms are allowed to switch to e-invoicing at their own speed.[91]

The social impacts are expected to be neutral – they may involve some reassignments or redundancies in selected sectors (e.g. public administration, postal services, paper production) but these should be marginal and would most likely be counterbalanced by job creation due to the identified savings. The environmental impacts are expected to be positive – they would above all translate into a reduced use of paper and lower CO2 emissions. A more detailed analysis of economic, social and environmental impacts of increased uptake of e-invoicing is provided in Annex 1.3.

5.3.2. Reduction of administrative burden

The broader uptake of e-invoicing would also contribute to the reduction of administrative burden through the automation of invoicing procedures, including validation and processing of invoice data. By definition, this will reduce the burden of dealing with invoices on both the sender’s and the recipient’s side. Additionally, the availability of invoice data electronically would simplify auditing and tax collection by the Member States’ tax authorities, as well as the preparation of any reports which need to be provided by the company. This would in turn reduce the administrative burden on enterprises. Importantly, due to the fact that such administrative requirements usually weigh more heavily on smaller enterprises, the reduction of administrative burden resulting from the introduction of electronic invoicing would be particularly beneficial to SMEs.

Due to the high potential of e-invoicing in public procurement to reduce administrative burdens, the initiative has been included on the list of actions with a potentially significant positive impact on administrative burden reduction, contained in Annex II of the Commission Work Programme for 2013[92]. The recent Communication “Entrepreneurship 2020 Action Plan – Reigniting the entrepreneurial spirit in Europe”[93] also mentions this initiative.

5.3.3. The scale of secondary impacts

The overall secondary impacts of each Option would to a large extent depend on the expected scope of e-invoicing adoption – the extent to which the appearance of an interoperable e-invoicing solution influences a wider adoption of e-invoicing across the EU will have the greatest impact on the macro scale. Clearly, the wider the adoption, the greater the economic and environmental benefits from e-invoicing (the more significant the impacts). Similarly, the faster the adoption, the sooner the secondary impacts of wider e-invoicing uptake would emerge.

The expected scale of secondary impacts will be analysed separately for each Option.

5.4. Impacts of defined options

As mentioned in the introduction to Section 5, the common impacts are expected to materialise in all Options, but to a varying degree depending on the case. In order to discuss these differences, the impacts of each Option will be compared using the following grid:

· Primary impacts – generated by the removal of market access barriers in cross-border public procurement / enhanced interoperability (economic);

· Secondary impacts – generated by potential ‘side effects’ of the availability of an interoperable technical solution in e-invoicing, which may lead to an increase in the uptake of e-invoicing (economic, social, and environmental).

5.4.1. Option (1): No new EU action

The baseline scenario was described in section 2.3. The current situation confirms that the objectives of this initiative would not be fully met if Option (1) were retained.

Table 5): Impacts of Option (1)

Primary impacts (related to improved interoperability) || Interoperability would not be ensured – market access barriers would most probably remain and/or worsen.

Secondary impacts (related to increased uptake of e-invoicing) || Some secondary impacts may appear, but because of the voluntary nature of this Option, the scale of these impacts is uncertain.

5.4.2. Option (2): Free-choice approach

The second Option would be similar to the “no EU action” approach, as market users would retain their freedom to choose any technical solution that they find best suited to their needs. However, a new (interoperable) European e-invoicing standard would be developed and made available to the market, with a recommendation (but without any obligation) to use it in public procurement.

With the introduction of the new e-invoicing standard merely recommended and not required, several significant risks remain which may prevent the objective of interoperability from being achieved. The acceptance of e-invoices in the European standard would remain at the discretion of each Member State and/or contracting authority, who may decide not to accept it. This could lead to the continued co-existence of several e-invoicing standards across the EU, or even within an individual Member State. There is therefore a high likelihood that the cost burden on enterprises would not decrease, as they would be forced to maintain numerous e-invoicing standards at the same time in order to be able to meet various technical requirements of other Member States (especially if mandatory e-invoicing is required by the public buyer). Should they choose not to do so, potential business opportunities would be foregone.

As far as the objective of this initiative is concerned, it would not be achieved, as interoperability would remain problematic. An impediment to the effective operation of the Internal Market would remain.

Due to the very large number of agreements required between invoicing parties in order to ensure a satisfactory level of interoperability, the self-regulation process is practically certain to be much more time consuming and more costly than standardisation by CEN.

Secondary impacts would be observed only to the extent to which a switchover to e-invoicing occurs. It can be expected that the availability of a common standard might encourage some market players to make this decision (presumably more than would be the case if no common standard were available), but due to the voluntary nature of this Option, the scale of this process is difficult to predict.

Table 6): Impacts of Option (2)

Primary impacts (related to improved interoperability) || Interoperability would be only partially facilitated (depending on the scale of uptake of the new European standard); numerous e-invoicing standards would still co-exist on the market, so the cost burden on enterprises would remain. The self-regulation approach is more costly that the CEN process and its results are uncertain.

Secondary impacts (related to increased uptake of e-invoicing) || Some secondary impacts may appear, but because of the voluntary nature of this Option, the scale of these impacts is uncertain.

5.4.3. Option (3): Selective conversion to e-invoicing

In this Option, contracting authorities and/or Member States which on their own initiative mandate the submission of e-invoicing in public procurement, would be required to accept electronic invoices in the agreed European standard as of that point in time. While not imposing the use of a new European e-invoicing standard in public procurement on all contracting authorities, this Option would nevertheless have some positive impacts: among those Member States / contracting authorities which have made (or will make) e-invoicing mandatory, the interoperability issues would effectively be resolved. Nevertheless, the possibility of different legal interpretations of the future e-invoicing provisions may become a source of complexity and legal uncertainty, which undermines the achievement of one of the two specific objectives. On the other hand, for Member States / contracting authorities which do not make e-invoicing mandatory, the effects of this Option would be identical to those of Option (2) – i.e. there is no guarantee that the objective of the initiative would be achieved.

Overall, the main benefit of this Option would be that interoperability would be facilitated: its implementation would lower the costs and complexity of e-invoicing for enterprises, which could now expect to be able to send electronic invoices in a single standard to any contracting authority which mandates e-invoicing. However, two risks would remain that it would not be ensured entirely: firstly, if some Member States delay the introduction of mandatory e-invoicing (perhaps as a result of the implementation of this Option); secondly, when e-invoicing is required de facto, but not mandated in the legal sense (de jure). The implementation of this Option may therefore involve legal uncertainty for firms.

As far as the broader policy context is concerned, this Option might have some negative side-effects. On the one hand, Member States / contracting authorities which have already required the transition towards e-invoicing in public procurement would be negatively affected because the obligation to adapt to the new standard would at first only concern them. On the other hand, Member States / contracting authorities which have no plan to switch to e-invoicing would not face any specific new obligations. This ‘asymmetric’ treatment of Member States (obligation put only on the front-runners vs. lenient treatment of laggards) might act as a disincentive: since any such move would require the (additional) introduction of the new European standard, it could discourage those Member States which have not yet adopted e-invoicing from doing so quickly. . Moreover, leaving the option to "do nothing" to Member States that currently do not use e-invoicing in public procurement also calls into question whether this option constitutes a real harmonisation measure.

The scale of the secondary impacts of this Option is difficult to predict. Even if all Member States do eventually decide to opt for e-invoicing the process might take a very long time. As a result, the potential benefits of greater cost efficiency in public procurement would not materialise or would do so only very slowly. Nonetheless, even if only some Member States introduce mandatory e-invoicing and therefore take up the EU standard, this would generate net savings for all stakeholders.

Table 7): Impacts of Option (3) – summary

Primary impacts (related to improved interoperability) || Interoperability would be facilitated as invoices sent in the European standard would have to be accepted by all public buyers which mandate e-invoicing, but the implementation of this Option may involve some legal uncertainty. The costs of the process would be proportionate as existing e-invoicing systems would not be replaced by the new solution.

Secondary impacts (related to increased uptake of e-invoicing) || The asymmetric treatment of contracting authorities / Member States may deter some potential ‘candidates’ from switching to e-invoicing. As the overall balance of indirect/secondary impacts is positive, these benefits will materialise, but probably at lower speed than with the two following Options.

5.4.4. Option (4): Obligatory acceptance

In Option (4), a new, European standard would be developed and made available for use by all market operators. In this scenario, acceptance by all contracting authorities of e-invoices compliant with this standard would be required in public procurement, without however replacing other existing technical solutions (i.e. the invoice could still be sent in another standard if both parties so choose).

This Option would ensure that the operational objective of the initiative would be met rapidly: the requirement to accept e-invoices compl