Introduction
In this article, we will tell you everything about e-invoicing in the construction industry, the connection between DICO and Peppol, and the specific matters and terms that apply.
Who Uses E-Invoicing Solutions in the Construction Sector?
As of January 1, 2022, electronic invoicing according to DICO (SALES005) is the method for invoicing in the construction industry. DICO (SALES005) is an agreement among manufacturers, wholesalers, construction, maintenance and installation companies, and housing corporations regarding the format of the e-invoice.
What is DICO?
DICO is a standard in the Dutch construction sector. The DICO standard is a set of agreements that provide rules for the electronic exchange of documents such as e-invoices. Nearly all software providers that have developed software used in the construction sector have integrated the DICO standard into their software packages.
What Exactly Do E-Invoicing Solutions in the Construction Sector Do?
E-invoicing solutions in the Dutch construction sector enable the sending and receiving of DICO (SALES005) documents using accounting software. The XML file in the DICO format is usually exchanged via email. Fortunately, there are more and more implementations of the DICO web service, where the exchange can take place more controlled and integrated. Two Peppol Service Providers have demonstrated in practice that receiving from Peppol has added value for the sector. This includes the implementation of receiving invoices from KPN. Unlocking Peppol for receiving provides significant time and efficiency gains. Adoption of Peppol in construction is still very low. To establish a Peppol connection with a DICO receiver, the different formats (DICO and Peppol standards) are transformed back and forth to the desired receiving format by the Peppol Service Provider. Common formats are SETU, SEEF, BISv3, NLCIUS, UN/CEFACT, and many foreign formats. A party on Peppol can be found by searching by IBAN, VAT number, or Chamber of Commerce number. For parties following the DICO standard (SALES005), there is the addition of the GLN code, a 13-digit number used in electronic messages to identify fixed address data. eConnect can enrich electronic messages with the GLN number. Processing invoices in the construction sector requires specific considerations such as the use of a blocked account (Dutch g-rekening) or VAT reversal and mentioning the order number on the invoice.
What is a GLN Code
A GLN code is a globally unique 13-position code used to indicate a unique address. Each company (or part of it) can request a unique GLN code. GLN stands for Global Location Number. The number is issued by GS1. The GLN code is applied by the (Foundation) Chain Standard for Dutch users of the DICO standard. Each member of the chain standard receives a GLN number and can request numbers for projects. In the DICO standard, like Peppol, a set of agreements and rules for electronic information exchange, both the sender and receiver must have a GLN number. To send electronic data according to the DICO Standard, companies need a globally unique GLN Address Code, which is encrypted in the unique 13-digit GLN number. This identifies the sending or receiving company location in all electronic documents. On the website https://dico-adresregister.ketenstandaard.nl/deelnemers of the Chain Standard, you can look up the GLN number of a supplier.
Since When Have Companies in the Construction Sector Been Using E-Invoicing Solutions?
Every year, millions of invoices are sent in different formats in the construction sector: email, PDF, paper, or e-invoice. As of January 1, 2022, electronic invoicing according to DICO (SALES005) is the method for invoicing in the construction sector. Every day, the DICO standard is used more than a million times to exchange information.
What is a G-Rekening? (blocked account)
A “g-rekening” (this only exists in the Netherlands - blocked account) is a bank account that can only be used to pay wage taxes and/or VAT to the Dutch Tax Office. The payment of wage taxes and taxes is 'secured' with the g-rekening. You cannot make other payments with it. The account is used by companies that provide personnel or hire personnel, such as employment agencies, contractors, and security companies. There is a wage tax obligation when 'labor' is hired; in practice, this often involves subcontracting in construction. When settling the invoice of the subcontractor or lender, a portion of the amount is directly deposited into their 'G-rekening'. This secures the payment of wage taxes and taxes within the 'chain'. The specific amount that goes to the G-rekening is agreed upon with the subcontractor (or lender). The amount should approximately correspond to the owed wage tax and VAT. This allows the subcontractor to pay the wage tax (and VAT) to the Tax Office from this account. A g-rekening is recognizable by the IBAN number series starting with "099". A g-rekening can be requested from the Tax Office and can only be used to transfer money to other g-rekeningen or to the Tax Office. Moreover, a g-rekening is something typically Dutch and is not found in other countries. You request a G-rekening from the Tax Office.
Can an E-Invoice Include a G-Rekening?
Because the g-rekening is something typically Dutch, there is no space for the g-rekening in the European core invoice (EU-N). We have solved this with an NLCIUS extension, similar to the energy e-invoice. A g-rekening can be included in the e-invoice in two ways: If the buyer has registered the extension, they can simply receive one e-invoice with two bank accounts, one of which is the g-rekening. If not, two invoices must be sent: One that can be sent to the normal bank account. This is the amount without the amount going to the g-rekening. One that is sent to the other bank account, where only the amount of the g-rekening is listed. This must include a special code so that you know that the two invoices belong together. In short, sending e-invoices with a g-rekening has been arranged for you. So yes, an e-invoice with a g-rekening is possible!
When does VAT Reversal Apply?
When working with a subcontractor, the obligation to pay VAT can sometimes be 'shifted' from the subcontractor to the main contractor. This is called 'VAT reverse charge', where the obligation to pay is shifted to another party.
What is the Relationship Between VAT Reversal and the G-Rekening?
With a g-rekening, the party hiring people (the hirer) covers themselves against liability risks. When settling the invoice of the subcontractor or lender, a portion of the amount is directly deposited into their 'G-rekening'. This secures the payment of wage taxes and taxes within the 'chain'. When work is outsourced to a subcontractor and they do not pay wage taxes to the Tax Office, the hirer can be held liable. To prevent this, the g-rekening was introduced.
What is the Importance of an Order Slip in the Construction Industry?
In the construction sector, it may be required to mention the order slip number on the invoice. The process implication is that the order slip must first be recognized and read before an e-invoice can be created, with the added complexity that the order slip may come from a different supplier. On a complete e-invoice for the construction sector, this order slip number must be listed as a reference. With eConnect's unique and powerful Scan & Recognize as a Service, this classification of specific slips is possible. The reason to 'connect' the order slip and invoice via the order number is to enable a quick and efficient comparison. By digitally recording the order confirmation, it is known which product is delivered at what price. If the delivery note is also processed automatically, the executor only needs to check the (delivered) quantities. Giving a digital approval on the slip is then sufficient, resulting in no need for extensive entry of rules. The invoice will then match much more often and faster, and its processing can be simplified and accelerated.
What is “Ketenaansprakelijkheid (Chain Liability)?
Ensuring that one of the parties in the chain pays wage taxes and VAT is regulated in the Dutch Wet Ketenaansprakelijkheid (Chain Liability Act - Wka). The Wka prevents contractors and subcontractors from abusing the payment of social security contributions. For people working in this chain, the company hiring them must pay wage taxes to the Tax Office. If you outsource work to a contractor who then outsources it to subcontractors, you can be held liable if the (sub)contractor does not pay the wage taxes to the Tax Office. Thus, a chain of liability is created. Each link in the chain is responsible for all subsequent links in the chain, which is called: chain liability. Chain liability is common in construction, for example, if you, as a main contractor, hire a subcontractor who then hires another company.
