Nowadays we can meet more often with e-invoices, we should just think about the ones from the public services, as a result of we have less paperwork.
The use of e-invoicing is getting popular among the companies due to having many advantages over paper-based invoicing. However we have to know the detailed rules about accepting and saving e-invoices, so we are trying to help you with our short summary.
What is e-invoicing? What are their criteria?
The Act on Value Added Tax defines the concept of electronic invoicing as follows: shall mean an invoice that contains the information required in this Act, and which has been issued and received in any electronic format.
3 criteria could be set regarding this:
- Authenticity of origin
- Integrity of content
The authenticity of the origin and the integrity of the content of an electronic invoice can be ensured if guaranteed by means of a qualified electronic signature within the meaning of the Act on Electronic Signatures; or sent or made available by means of electronic data interchange (EDI)
The bill requires the invoice receiver’s approval of the adoption of electronic invoicing, but it is not obligatory to set these criteria in the contract. In practice the act of the customer could be sufficient that the buyer accepts the e-invoice and doesn’t raise any objection.
If the parties propose to issue electronic invoices by means of Electronic Data Interchange (EDI), the requirement of prior agreement, made in writing, concerning the use and application of EDI.
The seller is not liable to check that the e-invoice is accepted or not by the buyer. The end of the billing process the seller makes it available (sends via e-mail, uploads to a shared store). The issuer is not obliged to investigate whether the invoice was opened.
The Electronic Data Interchange is an electronic communication method between two parties, the invoice content’s reliability and credibility is provided by the closure of the system, which makes impossible any outside interference in the communication.
In this way the electronic signature is not a basic criteria of the EDI system because it just a closed communication between two computers. That's why the partners have to clarify the detailed technical description about EDI’s data, use of the system and which format do they use exactly, in the already mentioned written document.
- Archived data in a closed, secured system
- The invoices are not modifiable, erasable
- No access for unauthorized persons
- Data access through an encrypted channel
- Documents are retrievable and searchable from anywhere
- Cost-Effective Data Communication (no printing andfaxing costs)
- Reduced administrative costs (even on the side of the receiver)
Invoice in pdf format can be prepared with electronic signature; with electronic signature AND timestamp; or without electronic signature, but the last one – very common method among companies – is qualified as paper-based invoice, because it doesn’t comply with the criteria, as the integrity of content is not secured. Based on the experience gathered during audits performed by the tax authority, is is not common in practice to investigate how the buyer gets a paper-based invoice, or where it is printed.
Electronic signature is issued to verify the credibility and authenticity of the invoice by qualified certification-service-provider (registered according to certain laws). The authenticity of electronic signature is recognized at law. The electronic signature belongs to an invoice and vica versa. If it is made any small changes on a signed invoice, the signature will be no longer assigned, so it lost its credibility. The certification-service-provider provides a qualified certificate to its clients during the authentication process. To prepare the electronic signature it is necessary to have signature-creation data beside the qualified certificate. The owner of the certificate – signatory – keeps the signature-creation data, until the certification-service-provider publish the certificate to help others verify the created signatures. The certificate will be invalid, when the validity expires or the provider recalls or suspends it. If we sign a document according to an invalid certificate, it is like a non-signed document. In Hungary qualified electronic signatures may be created only by qualified certification-service-provider, using a signature device or other electronic-signature product that has been attested by an accredited organization registered by the Communications Authority.
A timestamp shows the time when an invoice was created. Since 1st January 2013 the timestamp is not a basic requirement of the electronic invoices but with its usage it can be known exactly when the invoice was prepared. If a document has both electronic signature and timestamp, it can be proven that the document was signed by the person whose certificate is in the signature and it has been signed before the date on the timestamp and hasn’t been changes since then.
How to book an e-invoice? – account assignment of the invoice
It is a frequently asked question from accountants, how to make appear the account assignment on the e-invoices. It has to complete only the basic requirements regarding it, the technical solution has to be formed by the companies for themselves.
In practice it can be accomplished by an attachment, or with the help of registration software. Even it would be suitable if the logical link is ensured via an electronic accounting system, where the account assignment is available.
What should be attended during archiving e-invoices? – Archiving
According to the decree of digital archiving, the obligor has to provide the exclusion of the possibility of subsequent modifications, deletion of electronic documents, avoid against annihilation and finally the accidental destruction and damage continuously until the expire date the obligation of storage.
Saving can be according to the Act on Electronic Signature:
- Keeping a document with advance electronic signature
- Using closed system, which is certified by a certification where the above mentioned terms are fulfilled
- Based on a written pre-agreement of using electronic data interchange system
In case of electronic documents which are created by EDI, the possibility of subsequent modification has to be locked out by a timestamp issued by qualified certification-service-provider
Problem of electronic archiving
As a part of the electronic archiving services, the service provider shall ensure that the validity chain is not compromised so that the validity of electronic signatures it represents can be controlled in the long term. Problem of ageing has to be solved during the archiving, as the increasingly growing computing efficiency; development of cryptography can lead to weakening the security of electronic signatures
Display and verifiability of the archived documents has to be ensured, regardless of whether the signature creation and visualization applications are used or not, so the long term archiving has to be solved for the applied software , for the running interface and for the hardware elements..
Taxation practice is that the tax payer shall report to the state tax and customs authority the place where official documents are deposited. Need to pay attention that the request of tax authorities the documents has to be available in 3 working days, either online access as well.
If the stakeholders make the archiving on their own, they have to deal with various technical problems.
For example the exclusion of the possibility of subsequent modifications can happen with advanced security or qualified electronic signatures. If the liable person for keeping does the archiving on his own and an advanced security or qualified electronic signatures was placed on more electronic document, than during the archiving it has to handle together. Furthermore the liable person for keeping is liable to check the validity of electronic signature, and has to place timestamp issued by qualified certification-service-provider, if any hasn’t been placed on it earlier.
Unfortunately, neither the signatory nor the supervisor has sufficient technical competence or device for maintenance of the validity of electronic signature in the most cases (especially in long term).
What does the National Tax Authority observe especially regarding e-invoices? – Control practices
The legislation defines the file format of the electronic invoice, not the issuing format, so the electronic invoice can be issued in any format, but the file format can be only what was published by the National Tax Authority.
So the electronic invoice can be issued for example in PDF format for easy viewing, however the file format can be only recognized at legislation in force.
The accepted file formats are the following by the tax authority: txt, csv, dbf, mdb, xls, xml, or any other called print file format, which doesn’t contain any formatted text, or characters and cannot be found – except line feed and page starting marker – instructions, and the content of the printed file (text, characters) are true and correct (nature and sequence of characters does not change during the printing).
Data gathering may be carried out with examination of IT system, when the tax authority will control over the economic environment, the management, IT system, those parts and the invoicing program. The archiving system can be examined as well, based on these, they can jump to a system-wide conclusion about the archiving and issuing of electronic documents.
The amendment of the Occupational Health and Safety Act made in July 2016 affected also the issue of electing a health and safety representative. With its coming into force, the amendment significantly expanded the range of employers who will have to familiarise themselves with the institution of health and safety representative.
With the entry of the provision into force, all employers where the number of employees covered by the Labour Code reaches 20 people must chose a health and safety representative. Before the amendment, this number was 50.
Within six months of the date of entry into force, that is, 8 July 2016, employers must hold health and safety representative elections where the number of staff requires this or where a health and safety representative has not been elected yet.
The health and safety representative is entitled to make sure that the conditions related to a safe performance of work that has no health risks are enforced at the workplace, including, in particular:
- inspect the safety of work stations, work equipment and personal protective equipment;
- measures for the protection of health and prevention of accidents at work and occupational diseases are undertaken;
- employees are prepared and have the knowledge about how to carry out their work in a safe manner that contains no hazards to the health.
In the context of these tasks, the health and safety representative
- may enter - within the their operational area and during working hours - the work stations, and can request information about the workers who are working there;
- can participate in the preparation of those decisions to be taken by the employer which may affect workers' health and safety, including the employment of professionals in accordance with the requirements, the planning and organization of occupational safety and health training, and decisions on the establishment of new work stations as well;
- may request information from the employer on all issues that affect the safe performance of work that does not entail health hazards;
- may express his or her opinion and initiate that the employer take the necessary action;
- can take part in the investigation of work accidents and, if initiated by the authorised person, take part in the examination of the circumstances of an instance of occupational disease;
- may, where appropriate, address a competent authority responsible for health and safety issues;
- during official inspections, may communicate his or her observations to the inspector.
The representative or representatives are elected from among the employees to represent their rights and interests related to a safe performance of work that does not entail any health risks. The relevant provisions of the Labour Code and those of the Occupational Health and Safety Act regulate exactly who can be elected for the position to be held for five years.
Those employees with legal capacity who have been employed for at least six months by the given employer, are not members of the senior staff and work on the given site can become health and safety representatives.
That employee who exercises employer's rights, is a relative of the executive manager, is a member of the election committee or who in the framework of an employment relationship performs health and safety tasks for the employer on behalf of the employer, as a main activity, cannot be elected a health and safety representative.
The number of health and safety representatives is differentiated according to the number of employees employed by the employer. For instance, if the number of employees at the time of the election does not exceed 100 people - properly applying the provisions of the Labour Code with relevance to the members of the works council and the works trustee - three persons can be elected.
If the number of health and safety representatives reaches three people, they can establish a health and safety committee at that workplace. If a committee is established, the health and safety representative’s rights shall be exercised by the committee in its own name. In order to ensure safe working conditions which contain no danger to health, the health and safety representative (or committee) and the employer must cooperate in exercising the rights and in performance of the obligations.
If initiated by the committee, the employer or an authorised and empowered agent of the employer must take part in the committee’s meetings.
In addition to organising the election of the representative, it is important that the employer ensures the necessary operating conditions and the relevant professional standards for the elected health and safety representative, as otherwise the health and safety authority can impose a health and safety fine.
For the performance of his or her duties, the health and safety representative is entitled to time off work equivalent to a minimum of 10% of their work time per month. Within one year after the election, an opportunity must be ensured for the representative to participate in at least a16-hour basic training, after which he or she shall take part in at least an 8-hour further training each year. The training costs must be borne by the employer and the training of the representative can take place only during regular working hours.