Understanding e-invoicing: Key technical terms and concepts you should be familiar with
E-invoicing is becoming the global standard for tax authorities, but its complex terminology can be overwhelming. Tax, finance, and IT professionals must not only stay updated on requirements but also understand the specific language of e-invoicing.
This helps them identify similarities and differences across countries, aiding in the development of a global strategy and scalable solution. To help, we've created a high-level overview of key terms and concepts.
What is XML?
XML (Extensible Markup Language) is a format for storing, transmitting, and reconstructing data. It defines rules for structuring documents, making data machine-readable. This enables developers to create APIs for automating XML data processing, which is appealing to tax authorities for receiving and processing tax and transactional data under e-invoicing or digital reporting at scale.
What is Schema?
A schema defines the rules for an XML document's structure. Tax authorities typically create a specific schema for e-invoicing or digital reporting.
What is Syntax?
Syntax is the structure of an electronic message, representing data elements in a machine-readable format. Proper syntax enables automated processing. UBL is the standard XML syntax for e-business documents like e-invoices, while CII is another common XML syntax.
What is UBL?
UBL (Universal Business Language) is a standard XML syntax developed through international collaboration to define electronic business documents like e-invoices.
What is CII?
CII (Cross Industry Invoice) is a technical specification for creating message syntax to be exchanged globally between trading partners, developed with input from governments and tax authorities, including the UK's HMRC.
What is a hybrid PDF?
A hybrid e-invoice combines a human-readable PDF and machine-readable XML for automation. An example is Factur-X in France, based on the European Semantic Standard EN 16931, featuring a PDF and an XML file in CII syntax. It is identical to Germany's ZUGFeRD 2.2 standard.
What is CIUS?
CIUS (Core Invoice Usage Specification) provides detailed guidance, rules, and examples for implementing structured information in a core invoice model, typically applied at the national level with specific rules and restrictions.
What is EN 16931?
EN 16931 is the European e-invoicing standard developed by CEN for the European Commission, consisting of a semantic data model and two mandatory syntaxes: UBL and CII.
What is a Semantic Data Model?
A Semantic Data Model defines the core elements and meanings of an e-invoice, specifying required data and their definitions, like a data dictionary.
What is Peppol?
Peppol, initially created for EU public procurement (B2G), is now a network and standard for e-invoicing and procurement. It meets the European e-invoicing standard (EN16931) via Peppol BIS Billing 3.0 and uses certified access points, making it an example of the 4-Corner e-invoicing model.
What is the 4-Corner e-invoicing model?
In the four-corner model, C1 (the sender) sends an e-invoice to C2 (its service provider), who forwards it to C3 (the customer's provider), and finally to C4 (the customer). Each party (C1 and C4) uses their own chosen system/software.
