Introduction
The Peppol network is increasingly being used as the infrastructure to exchange e-invoices by companies all over the world. One of the most recent developments is that Belgium might choose Peppol to implement mandatory e-invoicing. Therefore, in addition to the real-time reporting (or CTC) plans of the OpenPeppol organisation, summitto developed a pilot where real-time reporting is integrated in the Peppol network. In the following we will explain how invoice information is transmitted to the tax authority via this pilot. Furthermore, we show that this can be complementary to the proposed Peppol CTC model, as it offers different features and can help tax authorities achieve the same goal (tackling VAT fraud) in a different manner.
Integrating TX++ as the 5th corner in the Peppol network
The standard way in which e-invoices are exchanged in the Peppol network is the so-called 4-corner model. In this model, the seller (Corner 1) will send its invoice to its Peppol service provider (Corner 2), which gives the seller access to the Peppol network. Corner 2 will send the invoice to the Peppol service provider of the buyer (Corner 3), which subsequently sends it to the actual buyer (Corner 4). This model can help companies to automate their Procure-2-Pay process.
By expanding this 4-model to a 5-corner model real-time reporting can be implemented in a fully automated way. To prove that summitto’s real-time reporting system (called TX++) can be integrated in Peppol as the 5th corner, we have now established a pilot together with Peppol Service Provider A-Cube). Figure 1 provides a schematic visualisation of this set-up. As you can see, the invoice is sent from the seller to A-Cube. A-Cube sends the invoice plus the hash (which is explained in further detail here) to the service provider of the seller (in case of the pilot, its bookkeeping software provider). At the same time, A-Cube (automatically) forwards the fully encrypted invoice information to the tax authority. The third party service provider of the buyer will then receive the invoice in its bookkeeping software.
Figure 1: TX++ integrated with the Peppol network
Source: summitto (2022)
While the data is fully encrypted, the tax authority will still be able to make calculations on the encrypted VAT amounts. This is the main advantage of TX++, which offers the maximum protection to the confidentiality of taxpayers invoicing data.
Summitto’s solution and the Peppol CTC approach
It is worth emphasising that our approach does not conflict with the excellent work of the OpenPeppol organisation, with the development of the Peppol CTC model. Summitto’s approach is simply a different means to the same end: tackling VAT fraud. TX++ goes one step further than the Peppol CTC in protecting the data of taxpayers by not collecting any data at all. Although the Peppol CTC collects a minimum set of data, there is still relevant data and metadata stored that can be potentially leaked (as we have explained here). For those countries that really value this confidentiality, TX++ can be an excellent solution. Furthermore, summitto also implements corner 6 which provides the tax authority analytical tools to actually detect VAT fraud in an automated way.
However, not all countries might opt for this route and therefore summitto developed its real-time reporting model, so that it is interoperable with any regime that makes use of the Peppol network in order to implement e-invoicing.
Now it’s your chance to help tackle VAT fraud and boost e-invoicing!
By extending the pilot to more parties and across borders, we can show governments that it’s possible to implement real-time reporting in a confidential AND efficient way.
So, Peppol service providers, bookkeeping providers or any other type of company, reach out to us via info@summitto.com and help make an end to VAT fraud!