In Latvia, by 2025, it is planned to introduce mandatory use of e-invoices between merchants and merchants and state and local government institutions, thus achieving convenient and uniform preparation and storage of documents, faster and safer information circulation between merchants, as well as simultaneous transfer of data to the tax administration, which it will no longer be necessary to request information from taxpayers.
In accordance with the growing importance of the level of digital development and concern for the green economy, progress towards a modern and safe paperless environment and the introduction of technologically advanced solutions will be ensured. According to the informational report of the Ministry of Finance, the State Revenue Service (SRS) is responsible for the implementation of the electronic circulation system of justification documents and goods delivery documents. This task is on the agenda of the SRS, and proposals are being developed, which must be approved in accordance with the procedures established by the legislators before implementation. The SRS admits that the planned implementation deadline - 2025 - could change, because in December 2022 the European Commission (EC) developed new proposals for the digital age of value added tax. Taking into account the developed proposals, the EC plans to introduce e-invoices as a mandatory requirement for European Union (EU) transactions in 2028. Thus, the purpose of the SRS is not to rush, not to create unnecessary costs and to be in step with the set standards planned by the EU, which will be mandatory for all EU member states.
What does document digitization mean?
Digitized documents (transfer of the original document into electronic format) – paper documents transferred into electronic format. This definition can also be applied to accounting justification documents; and for such documents that are converted into electronic format.
Electronic documents (e-documents) – any electronically created, stored, sent or received data that provides the possibility of using them for the performance of an activity, the exercise and protection of rights.
The company has the right to convert accounting justification documents in paper format (the original document that has legal force) into electronic format for storage in an electronic environment. The legislator has not specified specific digitization requirements, so the company's management can decide how to digitize the accounting justification documents. Before digitizing paper documents in electronic format, the head of the company must develop and approve the documents of the accounting organization, including the most important processes for the company's operation, such as:
- how will I digitize (for example, photographed or scanned documents) and to what format will I convert (for example, PDF, XML, etc.) accounting justification documents from paper format to electronic format;
- where the digitized documents will be stored, complying with the requirements of Article 27 of the Accounting Law (GL);
- who will be the responsible persons who will have access to and control the documents.
Legal force of digitized documents
The legislator has determined that if the digitization process is carried out in accordance with Article 29, Part 2 of the GL, i.e. for storage purposes, then the document in electronic format acquires the same legal force as its paper format. In compliance with the provisions of the mentioned legal norm, it is additionally possible to destroy (not keep) the paper format of the accounting justification document.
It is often mentioned that a digitized paper document is a copy of the original document. But it should be remembered that a digitized document cannot be considered a legal derivative (copy, copy, extract) or duplicate, because no actions have been taken that characterize the legal nature of the derivative or duplicate.
For example, in the case of e-invoices, they are not digitized documents, since they are initially prepared in an electronic format, they meet the definition of e-documents. According to the general regulation, in order for an e-document to have legal force, the Law on the Legal Force of Documents must be followed.
Taking into account the provisions of Article 29, Part 2 of the GL, that the document converted into an electronic environment for storage in electronic format has the same legal force as the original document in paper format, and that the document must meet all the conditions in order for this document to have legal and binding force, which are mentioned in Article 4 of the Law on Legal Validity of Documents, then it is not necessary to sign the digitized document with a secure electronic signature.
Example
The supplier issues an invoice in paper format, but the recipient wants to digitize it by scanning and destroying the original. And the receipts are photographed and thrown away. Do the originals still have to be stored in accordance with the regulatory enactments?
In accordance with Section 11, Part 8 of GL, invoices, checks, as well as other documents certifying the existence of the company's economic activity (if they contain the necessary details) are considered justification documents.
Considering that the invoice is considered a justification document, it is also an accounting justification document (GL Article 1, Part 1, Clause 2), therefore invoices are subject to GL Article 29, which regulates the conversion of paper-based accounting documents into electronic format for storage. Such digitized document has the same legal force as its original. The company (meaning the entities listed in Article 3 of the aforementioned law) can destroy the original document if the conditions listed in Article 29, Part 2 of the GL are met:
the display of the content of the original document and its compliance with the document storage period specified in GL Article 28 are ensured; the reading of the content on the screen of a computer or other electronic device in a human-readable format and, if necessary, the creation of a derivative in a paper format is ensured; the converted document is protected against alteration or destruction; the conversion process , as well as the process of destruction of the original document is documented in accordance with the procedure established by the company manager. Returning to the example of an invoice received in paper format, the original can be destroyed (not saved) if the document has been digitized in compliance with the above-mentioned conditions.
Example
The company starts document digitization. Should digitized documents be signed with a secure electronic signature?
The current regulatory framework does not result in the requirement to electronically sign the digitized documents, if the requirements for their digitization are met.
Example
The company carries out the document digitization process, but does not understand whether the originals of the documents should be kept in any case, in order to prove the legal validity of the documents if necessary?
The originals of accounting justification documents do not need to be kept in paper format, if the requirements set forth in Article 29, Part 2 of the GL are met.
Example
The check is in paper form that is scanned, is this a digitized document or is it a copy?
If the accounting justification document is scanned, ensuring the fulfillment of the requirements contained in Article 29, Part 2 of the GL, it is considered digitized (transfer of the original document in electronic format).
When a paper document is scanned, it is converted into an electronic format. It is a digitization process where a legally binding document is transferred into an electronic format for storage in an electronic environment.
When preparing a derivative (representation) of a document from a paper format, regulations of the Cabinet of Ministers (MK) No. 588 "Procedures for the preparation and presentation of documents" and other conditions must be taken into account, for example, whether the derivative of the document is prepared by a natural or legal person. The most important element in the case of derivatives is the certification, because without its correct execution the document will have no legal force and will only have an informational nature. If the derivative of the document is prepared by a legal entity, then Clause 49 of Regulation No. 588 of the Cabinet of Ministers applies to it, and Clause 50 if a natural person. Other norms specified in section 4 of the regulations "Development and execution of a derivative of a document" are also to be observed.
Legally, a digitized document cannot be considered a copy, as it is one of the types of derivative documents that must be certified in accordance with the law in order to obtain the same legal force as the original document.
Source: iFinanses