Practitioners are frequently confronted with the question whether pdf invoices are permitted for input tax deduction. Businesses have answered the question for themselves in different ways. While some have adjusted their internal procedures, even gone as far as printing out the invoices and adding a receipt stamp, others have completely refused pdf invoices and forced the suppliers to issue a paper invoice. Up to now we have been unable to answer our clients’ question with a yes, although in practice we are not aware of any cases, in which the Federal Tax Administration (FTA) has rejected the input tax deduction because of a pdf invoice.
Art. 70 MWSTG on accounting and retention and Art. 81 Para. 3 MWSTG on the free consideration of evidence are at odds with one another. As a result Art. 122 MWSTV is also important; it recognises the equal evidential value of electronic data and information, if the following requirements are fulfilled:
- Evidence of origin
- Evidence of integrity
- Non-repudiation of despatch
This has the consequence that the data must be unalterable (alternative: duty to record if data are changed). In addition at any time the origin of the electronic invoice must be clear (Where the invoice come from? Who provided the service?). It is easiest to evidence this by “advanced electronic signature” with a certificate of a certified provider. With the principle of free consideration of evidence it is not possible to solve every question of interpretation on accounting and retention.
But now, also in the FTA, there has been some movement on the issue and pdf invoices are treated in the same way as paper invoices if a detailed description of the procedure is available, which outlines the internal processes and controls in order to guarantee the integrity and authenticity of the incoming electronic invoices.
The following conclusion can be inferred:
If the incoming invoices have “advanced electronic signatures”, there is no risk in audits by the FTA. Without such signatures, the procedure for controlling the integrity and authenticity of the electronic documents must be on record in a detailed description of the process.