Peppol unveiled (1/2): An introduction to Peppol

Peppol is a secure, international network that enables companies to exchange business-critical documents and data electronically with other network participants. Hundreds of thousands of public and private companies have already registered.

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What does Peppol stand for?

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Peppol stands for Pan-European Public Procurement Online. It began as a project for the European Union's "Competitiveness and Innovation Programme", running from May 2008 to August 2012.

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Peppol is an open network dedicated to securely transmitting a range of digital business documents, with a strong emphasis on invoices. Created through funding from the European Commission and 18 governmental entities, from May 2008 to August 201, its main objective is to simplify purchasing, payments, and interactions between the public and private sectors and suppliers.

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The project was designed to solve issues in electronic procurement and facilitate trade between European governments. Ultimately, the end goal was to standardise cross-border, electronically supported, procurement procedures for European countries.

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Following the successful completion of the project, the OpenPeppol Association was founded in Belgium to continue the work. The OpenPeppol Association is a non-profit organisation with members from both the public and private sectors.

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While initiated with the European Commission, Peppol's influence now extends globally. As it gains prominence as the go-to platform for invoice exchange, it's becoming the anticipated industry standard for exchanging documents (including invoices but also orders, order confirmations, goods catalogues, shipping documents, etc.) across borders.

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At its core, Peppol prioritises standardised communication. The network ensures seamless document exchange by adopting shared standards and protocols. This enables effortless information sharing without the need for complex data translation or system adaptation.

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Peppol compliance: Why do businesses use Peppol?

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Businesses favour Peppol because it offers a simple and secure way to complete electronic transactions such as e-invoices and procurement documents.

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E-invoicing is becoming more widely adopted because of the way it benefits business processes, such as improving simplicity, security, and more importantly, time and cost. In addition, governments around the world are now puttinge-invoicing mandates in place to enable them to better monitor and enforce tax laws and collect VAT from businesses.

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Since 18 April 2020, all EU public sector organisations have been legally obliged to receive Peppol invoices. The theory behind this decision is that it will make it simpler for businesses to trade throughout Europe, without needing to deal with different national standards.

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Peppol is an open and interoperable network, meaning that different devices and systems can smoothly communicate, without effort from the user. Anyone who is registered can use it and, as an example, governments do not need to put their own system in place, instead making use of Peppol throughout the country.

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In addition to this, some public sector bodies, such as Singapore's IMDA and the UK's National Health Service (NHS), to name just a couple, champion the use of the network.

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Who's using Peppol?

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As of now, 38 countries have OpenPeppol members. This widespread membership means businesses in these countries can effortlessly exchange documents across borders. While many European nations, including Belgium, Germany, France, and the UK, have embraced Peppol, it has also found takers in countries outside Europe, such as Singapore and Australia.

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If you're interested in learning more about which countries use Peppol, and the different ways it is used in different countries, take a look at our dedicated blog on this topic.

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How does Peppol work?

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This widespread membership means businesses in these nations can effortlessly exchange documents across borders. But how do you ensure that you are sending an electronic document that actually meets the Peppol standard's requirements, and how do you correctly address your recipient?

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The Peppol network is based on what is known as the four-corner model - named after the four essential players in the document exchange process: the document sender, the recipient and each side's respective Access Points.

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When businesses are looking to set themselves up with Peppol, they need to be with a provider that has a certified Access Point (AP), such as Unifiedpost Group. A Peppol Access Point, as its name suggests, is an authorised service provider that connects you to the Peppol network and acts as an intermediary in the four-corner model.

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Once this is set up, the supplier can send e-invoices and other electronic documents to the Access Point, which validates the document to ensure it can be sent via the Peppol network. After this check is complete, the sender's Access Point performs a lookup for the recipient's Peppol ID and then sends the document to the buyer's Access Point to be validated and processed into their accounts payable (AP) system.

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The supplier invoice is entered into the buyer's system automatically, saving time by removing the need for manual data entry and checks.

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The World of Peppol IDs

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As described in our previous blog post "Understanding B2G E-Invoicing in Germany: A Comprehensive Guide (4/5): The Role of Peppol", the Peppol Participant ID, or Peppol ID for short, is a unique reference used to determine who is sending and receiving a Peppol document. It serves as a key to identifying transaction partners in the network. The receiving company's Peppol ID, along with the organisation's name and the country in which it is based, is published in the global Peppol directory managed by OpenPeppol.

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The Peppol ID comprises two main elements:

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• An Identifier Scheme: This scheme code is a specific code or abbreviation associated with a particular type of identifier. Identifier schemes include both internationally recognised schemes (such as DUNS number, IBAN, and GLN) and specific nationally defined schemes. In Germany, these are:
  
  - the Leitweg-ID (DE:LWID, ICD 0204) - for public bodies, and
  - the German VAT identification number (DE:VAT, ICD 9930) - primarily in the business sector.

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• The value provided by the identifier scheme: This is the actual unique identifier of the company and depends on the chosen scheme. This can be a DUNS number or an IBAN, or - specifically in Germany - the company's VAT identification number or (in the case of a public entity) the Leitweg-ID.

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The Peppol ID serves not only to identify the transaction parties. As participants must register with certified Peppol access providers (such as Unifiedpost Group), which verify the company, using the Peppol ID guarantees participants that they are communicating with a legitimate entity in the network. This authentication provides an additional layer of security.

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Peppol in continuous evolution

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As technology advances and e-invoicing becomes more widespread, Peppol is also evolving continuously to meet the growing requirements and achieve global expansion. Three main aspects can be identified:

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1. Peppol goes global: Expansion beyond Europe

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While Peppol originated in Europe, its reach is expanding globally, particularly in the Asia-Pacific region. Countries such as Australia, New Zealand, Singapore, Japan, and Malaysia have already adopted or announced plans to implement Peppol.

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It's interesting to note that not all countries utilise Peppol in the same way. Most European countries leverage the network to enable their B2G e-invoicing mandates. Some, like Germany or Luxembourg, operate an open interoperability network, while others, such as France or Belgium, prefer a single access point.

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On the other hand, countries in the Asian region are promoting Peppol to achieve higher levels of digitalisation in their B2B markets. A notable example is Singapore, which introduced the network under its own "InvoiceNow" framework, becoming the first country outside Europe to do so. While e-invoicing for B2B transactions in Singapore is voluntary, the government actively encourages its adoption among businesses.

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For more information on how different countries use Peppol, check out our corresponding blog: Which Countries Use Peppol?

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2. The Emergence of the Peppol International Invoice (PINT) Model

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With Peppol's global expansion, the Peppol International Invoice Model (PINT) represents the next generation of Peppol. PINT acts as a common language for business documents, facilitating trade through a unified framework that makes it easy for companies worldwide to understand each other and collaborate seamlessly.

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Compared to the original Business Interoperability Specifications (BIS) model, developed specifically for electronic document exchange in the European market, PINT offers a more flexible and adaptable format that can cater to country-specific requirements.

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3. Peppol in the Era of Real-Time Transaction Control

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Peppol is increasingly evolving towards enhanced transparency and real-time control of commercial transactions. Known as the interoperable "Four-Corner Model" (as described above), it is now expanding to include a "fifth corner", integrating tax authorities to provide real-time insights rather than capturing summary data periodically.

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This progress is reflected in various compliance models for tax regulations and e-invoicing, in particular the new decentralised Continuous Transaction Controls and Exchange (or DCTCE) model, which is gaining traction alongside the traditional centralised Continous Transaction Controls (CTC) model.

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In the new model, certified software providers validate the invoices while facilitating exchange between supplier and buyer. This combines continuous transaction controls with interoperability: Certified software providers meet the minimum technical requirements set in each country and report invoice data to the tax authority immediately. Meanwhile, the exchange of invoice data between supplier and buyer occurs within an uninterrupted supply chain.

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Supported by Peppol, GENA, dspanz, VeR, and other players in the e-invoicing sector, this model aims to simplify tax compliance and benefit not only tax authorities but also businesses and software providers.

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Choosing the right provider

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Although Peppol's popularity is growing, it's not the only network businesses need for e-invoicing, and many governments have started to develop their own, such as Italy's Sistema di Interscambio (Sdl) portal. It's crucial to choose a provider that can connect to Peppol and other local networks without additional effort needed from you.

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Unifiedpost Group is a certified Peppol Access Point Provider. Both our Banqup one-stop-shop solution for small and medium-sized companies and our Channel & Collect solutions for medium-large businesses connect directly to many countries' use of Peppol all over the world. In addition, we are connected to other countries through other channels to enable comprehensive electronic documents and data exchange. These solutions allow businesses of all sizes to utilise electronic document and data exchange, while ensuring tax and e-invoicing compliance in over 60 countries.

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Contact us to learn more about how we can simplify your business and look out for our next blog in this series where we will go into more detail on how to connect to Peppol, how the exchange process works and what this means for your business. For more information on Peppol, visit our dedicated Peppol page.