ZUGFeRD – A standard for electronic invoices in PDF/A format

Are you still sending out paper invoices to your business partners? Then you may be part of a dying breed. Although 90 percent of all invoices worldwide are still being sent out by post, experts predict that electronic invoices will make up the lion’s share by the middle of the next decade.

There is an abundance of different data formats for e-invoices. So it’s high time for standardization. The ZUGFeRD standard has become increasingly established in the German-speaking countries. ZUGFeRD invoices are based on the ISO standard PDF/A.

They combine machine- and human-readable data in the same document, which gives users the choice of handling invoices manually or through automated processes.

Also the EU has recognized the need for a standard e-invoice format, which is why it created the European standard EN 16931. The new ZUGFeRD version 2.0 meets the requirements of this standard in full. And best of all: ZUGFeRD 2.0 is just as easy to use as the previous version.

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Contact our Pdftools team to understand ZUGFeRD in detail.

How does ZUGFeRD work?

ZUGFeRD is based on the ISO standard PDF/A, which has been designed specifically for long-term archiving. It therefore meets the legal retention obligation for business documents. PDF/A guarantees that an invoice will display correctly in the long term.

However, the image alone is not enough for processing electronic invoices automatically. That’s why a ZUGFeRD invoice also contains the invoice information in machine-readable XML format. This is based on PDF/A-3, part 3 of the PDF/A standard. The extension allows structured XML data to be embedded in the PDF/A file. A ZUGFeRD invoice is therefore always a hybrid document, i.e. a PDF file with integrated XLM data. The PDF can be easily read by humans, while XML guarantees machine-readability.

What is ZUGFeRD 2.0?

ZUGFeRD was revised following the publication of the European standard EN 16931 in June 2017. This EU standard aims to standardize electronic invoicing throughout Europe and create a corresponding legal basis, with a view to supporting public administration processes and correct taxation in particular. However, an electronic invoicing standard that is recognized throughout Europe also facilitates B2B commerce in general, as it makes sending, receiving, and processing invoices electronically just as easy as in paper format – or even easier, thanks to automated processes.

The previous ZUGFeRD standard had to be adapted to the new one. ZUGFeRD 2.0, internationally referred to as “Factur-X”, was created as part of the Franco-German Digital Agenda. The new ZUGFeRD version meets all the requirements of EN 16931 and is also based on PDF/A-3.

What does ZUGFeRD 2.0 mean specifically?

Generating and exchanging ZUGFeRD invoices will remain just as easy as before. Some business software and archiving solutions already support the standard. ZUGFeRD does not stipulate how to send the invoices. An e-invoicing platform is therefore not essential, as PDF/A documents can be sent easily by email. In any case, the documents’ full compliance with the standard is crucial. The 3 Heights® PDF Validator from PDF Tools is recommended for this purpose.

Since early 2018, achieving compliance has become even easier in Switzerland. Since the abolishment of the OElDI rule and the adoption of the freedom of evidence principle in the new Value Added Tax Act, emails need no longer be digitally signed in order for issued PDF invoices to be VAT-compliant. Proper bookkeeping is enough to prove the origin and integrity of an invoice. This makes life easier for small companies and microbusinesses in particular.

Nevertheless, digital signatures in ZUGFeRD documents will still be important. After all, only invoices that have been digitally signed are manipulation-proof and meet the legal requirements for long-term archiving. PDF/A-3 supports signatures in accordance with the ETSI/EN standards, including PAdES (PDF Advanced Electronic Signatures). PAdES ensures the long-term validity of a signed document, even if the underlying algorithms are broken. This fulfills even the strictest compliance requirements.

What will ZUGFeRD 2.0 mean for Europe?

ZUGFeRD 2.0, or “Factur-X”, is a multi-profile package. The “EN 16931” profile replaces the ZUGFeRD 1.0 “Comfort” profile and is fully compliant with the EU standard, though it only defines the core elements of an invoice. With the “Extended” profile, additional details can be included in an electronic invoice, depending on the industry, the legal requirements, and other factors. What’s more, two additional profiles have been defined for smaller suppliers: “Basic” and “Basic WL”.

ZUGFeRD is suitable for organizations of all sizes, and “Factur-X” also has greater international significance thanks to EN 16931 compliance. The “EN 16931” profile is recognized by all European authorities. The closest link exists between Germany and France: Public authorities that are connected to the “Chorus” e-invoicing portal also accept the other profiles. Moreover, starting from November 2018, electronic invoices will become mandatory in Europe for B2G transactions.

Last but not least, ZUGFeRD 2.0 is based on the global “Cross Industry Invoice” standard developed by UN/CEFACT. This means ZUGFeRD 2.0 could establish itself worldwide as well.

What is the global e-invoicing situation?

Use of electronic invoicing differs greatly depending on the continent and country. An e-invoicing study carried out by the Swiss company Billentis in 2017 shows a spectrum with “leaders” at one end and “laggards” at the other. According to the study, the international e-invoicing market is most developed in Scandinavia, Central America, and Latin America. Europe, North America, and Australia represent the average, while Asian countries are still developing.

The differences in focus between the regions are also interesting. In North America, large and medium-sized companies in particular are using e-invoices to optimize their accounts receivable and accounts payable processes. More than 15 different formats with more than 40 subformats are used for this purpose, with interoperability suffering as a result. In the USA, the PDF/A format is still not particularly widespread outside of the pharmaceutical industry. Furthermore, a standardized e-invoicing platform for B2G transactions between companies and official bodies has not yet made it past the planning stage.

Latin America paints a completely different picture. The finance ministries of several countries have created e-invoicing platforms with the aim of fighting tax evasion. Invoice issuers and recipients must send invoice details to the tax authorities for validation.

One example from Asia is Singapore. The government there is currently working on creating an e-invoicing framework that will enable companies to exchange invoices more easily to improve efficiency and reduce costs. Hong Kong, Taiwan, and South Korea are also leading the way in Asia when it comes to e-invoicing. In some other Asian countries, however, paperless B2B invoices are not yet permitted, or only with special approval from the tax authorities.

Things to keep in mind

  • Electronic invoices are usually subject to retention requirements. Like other business-related electronic documents, they must be digitally archived

  • To create ZUGFeRD-conform invoices, use only software that complies with the requisite standards

  • Before archiving, use a suitable validator to check whether the electronic invoice complies with the standards

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