Speaking the e-invoicing language – common technical terms and concepts you should know

E-Invoicing is the clear direction of travel for tax authorities globally. However, the language used by tax authorities in legislation and technical requirements can appear complex and daunting, with its own unique terminology. For tax, finance and IT professionals looking to prepare for e-invoicing, it is not only important to have advanced knowledge of future e-invoicing mandates, but also to build knowledge around the specific e-invoicing terminology. Understanding its nuanced terms and phrases helps to quickly identify and understand synergies between e-invoicing requirements across the globe, as well as key differences. This is important as businesses look to develop a global e-invoicing strategy and invest in a single, scalable, and global e-invoicing solution.
To help, we have prepared a high-level introduction to some of the common terms, phrases and concepts. 

XML is the abbreviation for Extensible Markup Language, and it is a language and file format for the storing, transmitting, and reconstructing of data. It is effectively, a set of rules for encoding a document to control its structure, format, and the relationship between its different parts, which allows the data file to be machine-readable. It also allows system developers to create Application Programming Interfaces (APIs) to allow the automated processing of XML data.

This is particularly attractive to tax authorities, as it allows them to receive tax and transactional data under e-invoicing or digital reporting in a predefined format and to be able to ingest it through APIs at scale.

A schema is a formal way of describing an XML, setting out the detailed constraints on an XML document’s logical structure. Tax authorities will generally define a specific schema for an e-invoice or digital reporting requirement. 

A syntax is the electronic message structure.  Another way of looking at a syntax is that it is the machine-readable language used to represent the required data elements. Correct deployment of the format allows for automated processing of the content. UBL is the standard XML syntax for electronic business documents, including e-invoices.  A second common XML syntax is CII.

UBL is the abbreviation for Universal Business Language. It is a technical specification and standard XML syntax that is the result of international collaboration to define a library of standard electronic XML business documents such as e-invoices.

CII is the abbreviation for Cross Industry Invoice. It is a technical specification that is used to create a message syntax which can be exchanged globally between trading partners. It was developed with input from Governments and Tax Authorities, including the UK’s HMRC.

A hybrid e-invoice combines both a human-readable PDF for users and machine readable XML data for process automation. An example of this is Factur-X in France which is an implementation of the European Semantic Standard EN 16931 and is a fully readable invoice in a PDF A/3 format and a set of invoice data presented in an XML structured file (conforming to the CII syntax). Factur-X is an identical standard as the ZUGFeRD 2.2 in Germany.

CIUS is the abbreviation for Core Invoice Usage Specification. It is a specification and set of instructions that provides a business with detailed guidance, explanations, examples, and business rules related to the actual implementation and use of structured information elements present in a core invoice model.  CIUS are generally implemented at a national level, setting out specific rules and restrictions.

EN 16931 is the European standard on e-invoicing that was developed and published by the European Committee for Standardization (CEN), at the request of the European Commission. There are two main parts to the standard, a semantic data model and the two mandatory syntaxes that comply with the standard i.e. UBL and CII.

A Semantic Data Model is a structured and logically interrelated set of terms and their meanings that specify the core elements of an electronic invoice. In effect, this defines the content requirements of an e-invoice, what data elements need to be included and what they mean (like a data dictionary).

Pan-European Public Procurement Online, or Peppol, was originally creased to set common standards for public procurement across EU (B2G). However, today it is both a delivery network and standard for e-invoicing (and other procurement processes). Peppol meets the European e-invoicing standard (EN16931) through its Peppol BIS Billing 3.0 specifications. The Peppol network is accessed through access points and certified providers and is therefore a good example of the 4-Corner e-invoicing model.

Under the four-corner model, there are four corners underpinning the issue, exchange and receipt of e-invoices, namely C1 (the Sender of Invoice) who sends an e-invoice to C2 (its service provider), who sends the e-invoice to C3 (its customer’s service provider), who in turn sends the invoice to C4 (the Customer – the ultimate receiver of the e-invoice). The senders and receivers of e-invoices (C1 and C4) utilise their own choice of system/software.

If you’d like to learn more about e-invoicing and e-reporting models, you can watch our latest webinar on-demand now.  This includes an overview of the post-audit model, the clearance model, Continuous Transaction Controls (CTCs), as well as more information on Peppol and the future of e-invoicing models & trends around the world.

Please contact us if you would like to speak with Avalara’s e-invoicing experts.