Two recent developments show how the Council of Europe is determined to keep pushing for improved efficiency across the European Union.

Directive to create common e-invoicing standard and fully automate procurement

The Council of the European Union has approved a directive to create a common standard for electronic invoicing in public procurement. MEPs voted in favour of the creation of the standard at the start of February 2014, following its endorsement by member states in January, and this has now been ratified by the Council.

The single standard will remove compatibility problems between systems. It is claimed a move to e-invoicing could save EUR 2.3 billion annually across the EU, but current use is between 4% to 15% of total invoices.

The European standardisation organisations CEN, Cenelec and ETSI are set to develop the new standard. Once published, central government are set to have 18 months to implement it, and local and regional contracting authorities are set to have 30 months.

All public sector buyers will be required to carry out their procurement electronically by 2016.

Simpler rules on VAT invoicing

Up untill now, rules on invoicing value-added tax (VAT) have been so complicated that they have hampered the use of electronic invoices in trading across borders. To enable businesses to cut costs and ease administrative burdens, the Ecofin Council on 16 March reached a general agreement on a directive aimed at modernising VAT invoicing requirements.

It is estimated that the new instrument can reduce the industry's charges by up to 18 billion euros annually. It will be of particular help to small and medium-sized enterprises (SMEs), as simplified invoices will be extended to include those for smaller amounts. Furthermore, it will allow SMEs to account for VAT on a cash basis. Paper and electronic invoices will be treated equally. Rules on storing of information and recording periods will be harmonised. The directive should boost electronic commerce.

The proposal also includes measures to help tax authorities tackle VAT fraud. Rules on VAT deduction will be tightened to enable speedier exchange of information on supply of goods and services internally in the EU. As businesses operating cross-border will have to report their transactions in the month of the supply, carousel fraudsters will not be able to abuse the possibility of including an invoice in a later reporting period.

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CTMfile take: These are laudable objectives and, as usual, very tight timelines have been set by The Council, nevertheless, these initiatives could make trade across the whole European Union much easier and more efficient.