VAT Talks - Gerard Bottemanne

Gerard Bottemanne

In this episode of VAT talks we speak with Gerard Bottemanne. Gerard has been conducting research into accounting software and related subjects for years. One of those subjects is e-invoicing, something that is very relevant in the realm of VAT as we briefly discussed in a previous blogpost. In this blogpost we discuss the latest development of e-invoicing in the Netherlands and the EU, the importance of harmonisation and the role of Peppol in this regard.

Could you tell a little bit more about your background and your current work?

“I have a background in IT and accounting. I started my career as a software developer and developing is something I still like to do. However, currently I’m mainly doing research into the accounting software sector and related developments such as e-invoicing, cloud computing, robotic accounting, PSD2 and RGS. I publish those researches on I also organise events related to the previously mentioned subjects, something that is currently on hold unfortunately. Lastly, I have the certificate Keurmerk betrouwbaar boekhouden voor standaard boekhoudsoftware, RGS-ready voor standaard boekhoudsoftware en UBL-ready voor elektronisch factureren..”

What is it about e-invoicing that makes you like it so much?

“I think standardisation in the realm of e-invoicing is very important. This will allow companies to exchange invoices in a fully automated way. And it should not be too hard to achieve this standardisation. We are discussing Big Data, we are traveling to space, but, and this is actually ridiculous, we are still issuing paper invoices. Basically everything is done electronically, think of e-commerce, but at the end of the transaction the invoice is still sent via mail…”

“e-invoicing has now been a relevant topic for over 10 years, and it is still in development. What I find really interesting is to think about how we can incentivise companies to actually make use of e-invoicing. Related, it is very interesting to see that some companies are competing rather than collaborating to achieve a higher adoption rate of e-invoicing. These competing companies are often little clubs of people hovering around the companies that actually want to collaborate such as accounting software companies. Those clubs created their own revenue model that does not benefit from achieving the common goal: having one single e-invoicing standard. It is very challenging to find a way through these clubs, but to be honest I also really enjoy doing it.”

When speaking about e-invoicing in the European Union, the name Peppol often pops up. Could you tell us what Peppol is?

“Peppol is actually a network, a secured network in which the sender and receiver need to on-board to exchange invoices. You could compare Peppol with sending email, which is also an agreement structure with technical specifications with which you need to comply.”

“On-boarding refers to the identification of the sender and receiver of invoices. As with opening a bank account, you need to identify yourself. You need to prove that you are actually the person or organisation you say you are. Once your identity is verified, you will receive a Peppol ID. For a private company this is the Chamber of Commerce ID, whereas for governments this is the government ID code, but it can also be a GLN number. This ID is then linked to the address where the invoices need to go via Peppol. This means that if you send an invoice to a certain Chamber of Commerce ID, Peppol knows exactly where the invoice needs to go.”

Is Peppol only for B2G transactions?

“Although Peppol is still mainly used for B2G transactions, it can also be used, and is even already being used for B2B transactions. The reason why B2G transactions are prevalent is because all EU governments had to be able to accept invoices in an electronic format before May 2019. Now that governments have met these requirements, they are focusing on the outgoing invoices. Besides, as I said, B2B is also already happening for years, for example in the Scandinavian countries. So, Peppol for B2B transactions is not something new.”

“There are still new developments regarding Peppol though. One of those are response messages. This is a very interesting development. In the current set-up of Peppol if you send an invoice, you are not completely sure if it actually ends up with the right buyer. It is very plausible that something goes wrong during the ‘delivery’. To overcome this problem, Peppol offers the possibility to work with response messages. The network itself is ready, that’s not the problem, but you need to realise that the invoice first needs to go from the legacy system of the receiver, via the service provider to Peppol, to the service provider of the sender. Thus, there are a lot of different parties involved. This process has been started now and is operational in Belgium, although on a small scale.”

“What is also relevant, is BIS V3. These are the invoice specifications as Peppol defined them. Now this is where it gets quite complicated, so let’s start at the beginning. There is one big e-invoicing standard called UBL. This standard contains more than 2000 elements and only for a couple of these elements you are free to fill anything you want. For example, you need to fill in a country code. Here you could fill in Netherlands, Ned, NL or something else. To avoid confusion, there are subsets that tell you how you should actually fill in these elements. One of those subsets is the EN 16931, a subset created by the European Commission, with which all Member States should comply. I think this is a great development as there is now 1 standard that shows you which ISO code you need to use for the country code on your invoice. It also shows you how to fill in the VAT number, etc.”

“Before the EN 16931, there were different subsets, of which Peppol BIS was one. However, the latest version of Peppol BIS, Peppol BIS V3, is completely based on the European subset. There are some minor additions, which has to do with the Peppol network itself such as addresses and validation. In the Netherlands we currently have NLCIUS, but hopefully we will migrate to the Peppol subset, just like the Scandinavian countries and Italy did. They decided to use Peppol BIS V3 with some small changes, especially regarding the VAT system because, as you probably know better than I do, every country has its own VAT rules. So, I hope we can do the same thing in the Netherlands. The beauty of Peppol is that the documentation is very straightforward, it means that you don’t need all kinds of different subsets.”

“All in all, based on these developments, I think the Dutch government is really trying their best to harmonise e-invoicing. This is one of the reasons why I decided to join forces with the government: I really see movement in the right direction and that is very cool to see.”

It is not always clear what is meant with e-invoicing as different parties are using different definitions as you experienced before:

During a NMBF meeting on 16-04-2020 I learned that the Dutch Tax Authority considers sending an invoice in PDF form via email as an e-invoice [1].

How would you define e-invoicing and why is such a definition necessary?

“In fact an e-invoice is nothing more than:

Sending an invoice electronically in an agreed manner by a supplier and subsequently receiving and processing the invoice electronically in that same manner by a buyer.

“Another relevant term is electronic invoice processing which means receiving and processing invoices in an electronic way. It is important to have such definitions in order to avoid misunderstanding. As the previously mentioned anecdote of the Dutch Tax Authority shows, this misunderstanding was an issue in the past. Luckily, there now seems to be a consensus about the definition. When the tax authority spoke about sending an invoice in PDF form, they actually were speaking about a digital invoice. This is not an e-invoice. Although I now see the importance of having a clear definition, 5 years ago I did not see this as such an important discussion to be honest.”

Although this confusion is to a certain extent solved, there is still a variety of standards available in the Netherlands. What does this landscape look like and what are the consequences of such a diverse landscape?

“I do not fully agree with your statement, that the landscape is very diverse. We basically all use UBL or UN/CEFACT. It is true that there are a lot of subsets of UBL available. Those are often country specific or predecessors of EN 16931. It is important to note that this European standard is not connected to UBL, it is a so-called semantic standard. By doing this, the European Commission said: you may either use UBL or UN/CEFACT. The latter is also formatted in XML and for example used in Germany and France where they use the name Factur-X. What I really like about this standard is that they allow for sending a PDF, with the XML file embedded.”

In the Netherlands Simplerinvoicing has/had an important role regarding e-invoicing, could you describe this role? And do other countries in the EU have similar organisations?

“In the Netherlands, Simplerinvoicing was the ‘Dutch Peppol-authority’. However, as of October 1st 2020, the Ministry of the Interior and Kingdom Relations will take over the supervision over the e-invoicing infrastructure, with a transition period until the end of 2020 for existing service providers. The new website of the Ministry is already live From an international perspective, this is a logical step as the Netherlands was the only country that had a seperate foundation for the maintenance and supervision of the Peppol network. Now we are on the same track as the others again.”

What is the most interesting recent development regarding the digitalisation of accounting?

“I think PSD2 is a very interesting development. PSD2 enables a third party to get access to electronic bank statements. Currently, these queries still go via banks or accounting packages, which really slows down the process. Therefore, PSD2 is a major development, and multiple accounting software providers are looking into the possibilities to receive a PSD2 license. This is a very hot topic at the moment.”

“I would also like to mention Big Data, as this is basically robotic accounting. The thing is, robotic accounting is a bit of a hyped term (something that is also true for Machine Learning and Artificial Intelligence by the way), but there are some relevant applications. For example, you could build ‘bookkeeping intelligence’ on top of the bookkeeping of a particular company. Think of a company that receives a certain invoice and books it on a certain account. The next time this company receives the same invoice the system can ask the company if it wants to repeat the same action as with the previous invoice. You can imagine that large companies such as Exact, Visma, UNIT4 are currently investigating this ‘bookkeeping intelligence’ to see if they can do the same trick for multiple companies. Think of 10 companies that receive the same invoice and book it on the same account, the 11th would probably do the same thing. This could be automated. On the one hand these bigger bookkeeping companies use robotic accounting to offer automated services, and on the other hand to benchmark. This shows the importance of data at this moment.”

What are according to you the biggest challenges to make Peppol fully accessible for businesses?

“Actually, I do not see very big challenges. There is only one tiny issue that I would like to mention. This has to do with the on-boarding. Let’s say that you want to make use of e-invoicing via Peppol, then you need to authorise yourself, something that is often done by your accounting software provider. For this there is an increasing amount of documentation available, but one tiny challenge is when you want to change your accounting software provider. For example, you first use accounting package A, but you want to change to accounting package B. How will Peppol know that the invoice should not go to A, but to B? Another scenario is that you use A for incoming invoices and B for outgoing invoices. How can Peppol know about this? Those are the questions that I sometimes throw in the community. [laughing] They probably often think: ‘there is that annoying Gerard Bottemanne again’, but those are problems that could actually occur in practice.”

Some countries coupled e-invoicing with invoice reporting to combat VAT fraud (think of multiple countries in Latin-America). What do you think of this development?

“I think this is a good development, I get that VAT needs to be checked. The only thing that really concerns me is that all those countries will do it on their own, developing their own system. I’m a bit scared that when you have an internationally operating business you suddenly need to comply with all kinds of different systems. Then you are practically back where you started. We are finally doing a very good job with e-invoicing: we have Peppol, we have UBL, we have sorted out everything within the EU. It would be a pity if an internationally operating business is then confronted with differing VAT legislations, which would require countries to develop yet another interface. That is my only and biggest concern. I would therefore love to see further harmonisation and maybe we should look how Peppol could help to achieve this goal.”

If you could give one piece of advice to the European Commission regarding e-invoicing, what would it be?

“I have actually said it several times already: push even harder for further harmonisation. We need harmonisation and transparency!”

We would like to thank Gerard again for his time and for his e-invoicing knowledge. The opinions expressed in this article are personal. If you have any questions, suggestions or if you want to be our next interviewee, do not hesitate to contact us via