In our December 11 blog, we took a whirlwind tour of the sweeping changes underway in indirect tax reporting and electronic filing, highlighting some of the key markets where these changes are taking place. In addition, we profiled SAP’s solution set for these changing GST and VAT submission areas. In this follow-up article, we discuss the new PEPPOL requirements in the European Union and highlight SAP’s new document compliance offering for this multi-national commercial invoicing and tax reporting platform.

What Is PEPPOL?

Let’s start with a definition. PEPPOL is essentially a 21st Century Electronic Data Interchange (EDI) network for the EU, based on a set of open, interoperable technical specifications across purchase-to-pay business processes. But PEPPOL is not another eProcurement system. This European electronic data exchange network was designed to facilitate secure electronic transactions between buyers, sellers, and government agencies. The range of organizations include government departments, private and public companies and representative service providers. PEPPOL enables government offices and commercial enterprises to exchange electronic trading documents, contracts, and tax files over a certified network within the European Union.

PEPPOL standardizes the receipt of electronic ordering, invoicing, shipping, and tax data from entities involved in commerce within the EU and the relevant government authorities. PEPPOL consists of three components:

The PEPPOL network is based on a “four-corner” communication model. This model allows product and service suppliers to engage with the certified ‘Access Point providers’ (including SAP) of their choice to exchange official electronic documents with users within the PEPPOL network. This network is governed by the PEPPOL Transport Infrastructure Agreements that define a many-to-many legal framework for operations.

PEPPOL developed BIS for eProcurement processes (involving an eCatalog, eOrders, eDispatch Advices and eInvoice descriptions) to standardize electronic document exchange validation. All authorized documents are sent and received across an open and secure network via the identified provider nodes known as “Access Points.”

©PEPPOL Basics

PEPPOL Access Points

PEPPOL offers access to its network across the EU via accredited Access Points. Organizations using the network can themselves function as PEPPOL Access Points (APs) by meeting  published technical specifications. Connections between access points are inherently multi-lateral and thus only one PEPPOL connection per participating organization is required or authorized.

All PEPPOL Access Points are granted with the contractual agreement that no roaming fees are charged or received. Thus, an enterprise may pay for commercial services from a network service provider (or ISP), but when connecting via PEPPOL to a customer of a different service provider, neither the customer organizations nor their service providers can charge additional fees for the PEPPOL connection.

And because all APs have agreed to interoperability protocols, all existing eProcurement (P2P) and eInvoicing solutions become interconnected via PEPPOL. Therefore, when an organization uses an existing procurement solution on PEPPOL, their service provider is an AP that connects them to any other organization within the network.

PEPPOL Exchange Processes

To support the tendering phase, PEPPOL provides for three steps in the P2P process.

  1. In the first phase, validation of electronic signatures is performed based on electronic certificates issued by registered authorities. Documentary eSignatures offer identity-level verification within the network when applied to companies or to individuals.
  2. In the second phase, a virtual company dossier (VCD) supports suppliers by combining evidence of current company information, business licenses and certificates, legal attestations, and other corporate artifacts and presenting this information to the contracting authority.
  3. In the third phase, an electronic catalog allows suppliers to submit information about goods and services in a standardized format. The eCatalog describes the goods and services offered by suppliers. This information can be used by buyers and contracting authorities to source items and to obtain product and pricing details.

To support the actual purchasing phase, the PEPPOL platform offers an additional three steps in the P2P process.

  1. In the first phase, the eCatalog allows buyers to select goods and services that have been described by suppliers in the tendering (offer) phase.
  2. In phase two, electronic ordering and electronic invoicing facilitate the purchase of goods and services using a set of secure, structured procedures. The process allows for order change or cancellation requests from the buyer and for shipping advice from the supplier. Transaction data sent between Access Points is encrypted and eSignatures allow receivers of electronic documents to confirm the authenticity of senders with the assurance that information has not been modified in transit.
  3. In the third and final phase, the Transport Infrastructure (the PEPPOL network) is the foundation for post-acceptance services. This network is based on common, compatible platform standards and is governed by the rules set forth in the PEPPOL Transport Infrastructure Agreement (TIA). The Service Metadata Locator (SML) and Service Metadata Publisher (SMP) combine to publish PEPPOL receivers’ metadata and identify which Access Points have been used. The SML is the single PEPPOL component physically located in Brussels and is managed by OpenPEPPOL and the Directorate-General for Informatics of the European Commission.

The OpenPEPPOL Structure

The PEPPOL BIS are maintained by OpenPEPPOL in Belgium and build on the standards of the CEN Workshop on Business Interoperability Interfaces for Public Procurement in Europe (CEN WS/BII). PEPPOL BIS are formalized requirements designed to ensure pan-European interoperability of electronic Business documents. BIS addresses the end-to-end process of document exchange in a semantic data model.

The PEPPOL BIS model guarantees that, for senders issuing documents according to rules established in the BIS, all receivers will be able to process their information in the same manner. PEPPOL BIS handles the variety of complex business data exchanged between buyers and sellers by standardizing the format and criteria for complete commercial instructions. The PEPPOL BIS semantic data model identifies the content that receivers are expected to process without manual intervention or custom configuration.

OpenPEPPOL is a non-profit international association operating under Belgian federal law, comprised of both public and private sector members. The association assumes all responsibility and liability for the development and maintenance of PEPPOL network data and communication specifications and services to ensure its implementation across Europe. To date, the Netherlands has joined Belgium in the adoption of the PEPPOL network for authorized electronic commerce and tax reporting. These first two PEPPOL operating countries will soon be joined by Germany.  German authorities are adapting a series of interfaced communication and data exchange protocols for comprehensive PEPPOL participation by the end of 2020.

SAP Document Compliance for PEPPOL

Fortunately for all SAP customers doing business in or with entities in the PEPPOL markets of Belgium, the Netherlands and (via the XRechnung eInvoice standard) Germany, SAP is a certified PEPPOL Access Point. SAP now offers a version of document compliance (eInvoicing) with certified, PEPPOL-compliant functionality. A high-level view of the functional model showing the SAP Document Compliance, on-premise edition applied to PEPPOL, together with the new SAP Cloud Platform eInvoicing option for PEPPOL, is shown below.

SAP Document Compliance supports the registration of electronic invoices and related commercial documents required by national tax authorities, arranging these documents in their government-defined formats. Also known as eDocuments, SAP Document Compliance caters to specified country-level data formats, XML file generation, and certified connections to authorized electronic communication platforms (which now include the PEPPOL BIS).

SAP Document Compliance provides a central access point for compliant form submission, data error correction, and the tracing of source documents. The solution maintains a record of legal changes across all components with inherent integration to SAP data sources. SAP Document Compliance provides a single interface for multiple countries and electronic documents with simplified implementation via pre-packaged content.

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