Digital signature requirements for accountants in the EU: a comprehensive guide

Digital signatures have revolutionised the accounting industry, helping accountants to shift away from legacy paper-based processes and embrace seamless digital workflows instead. But while they seem simple at first glance, there’s much more to digital signatures than meets the eye. 

In this article, we’ll explore the legal requirements of digital signatures in the European Union (EU), the different types of digital signatures available, and how accountants can use them effectively.

Understanding digital signatures in the EU

Thanks to digital signatures, it’s no longer necessary to print a document, sign it with a physical pen, and then post it or scan it. Instead, accountants and their clients can sign documents and formalise agreements using any device, in a matter of seconds. 

However, replacing pen and paper with a digital mark raises all sorts of concerns around validity and authenticity. If a document can be signed on any device in just a few clicks, how can we be sure it was signed by the right person and not someone else? 

To answer this question, regulations have been put in place to ensure that digital signatures meet strict verification and security requirements. This allows accountants and other professionals to request digital signatures that are legally binding and trustworthy.

Digital signature and electronic signature — what’s the difference?

The terms “digital signature” and “electronic signature” are often used interchangeably, but they have slightly different meanings. Understanding the difference between the two is key to choosing the correct e-signature software and ensuring compliance with relevant legislation. 

Electronic signature

An electronic signature, also known as an e-signature, is a broad term comprising multiple different methods used for capturing a signer’s consent or approval on a digital document.  

Digital signature

A digital signature is a type of electronic signature that uses cryptographic techniques to provide digital assurance of the signer’s identity, making them tamper-proof and impossible to impersonate. As a result, digital signatures are used in professional fields and highly regulated industries, including accounting.

What is the eIDAS regulation?

In the EU, the regulation for electronic ID, Authentication and Trust Services, known as eIDAS, sets out the standards for electronic transactions, including signatures, timestamps, seals, and documents. eIDAS came into force almost a decade ago and aims to ensure that digital interactions between businesses are trustworthy, fast, safe, and efficient. 

Despite leaving the EU, the UK adopted an amended version of eIDAS, known as UK eIDAS, which retains many of the key aspects of the original EU version. 

Different types of electronic signatures in Europe

eIDAS splits electronic signatures into three distinct categories: simple electronic signatures (SES), advanced electronic signatures (AdES), and qualified electronic signatures (QES). Each type carries different legal weight and offers different levels of assurance around validity. Let’s explore them in more detail.

Simple electronic signatures (SES)

SES is the most basic form of e-signature available. Instead of requiring strong signer authentication or identity verification, SES only requires knowledge of the signer’s email address or confirmation that they received a unique access code before signing. 

Advanced Electronic Signatures (AdES)

AdES is a step up from SES, requiring more stringent rules to be met around trust, validity, and data security. According to eIDAS, there are three key requirements for AdES:

1. The signer must be linked to the signature via a unique identifier — think of this like a digital pen owned by the signer
2. The signer has sole control over this “digital pen” — nobody else can access it
3. The signature must be able to detect if it has been tampered with

Qualified Electronic Signatures (QES)

QES takes things a step further, meeting all three requirements of AdES but also using qualified certificates and multi-factor verification to identify the signer. 

In addition, QES uses third parties, known as qualified trust service providers, to verify the signer’s identity. This provides an additional layer of assurance, giving QES the highest level of security and trustworthiness possible for e-signatures in the EU. In fact, QES are the only e-signatures explicitly recognised by eIDAS as being legally equivalent to handwritten signatures.

How can accountants use electronic signatures?

Electronic signatures, and digital signatures in particular, are a game-changer for accountants, enabling them to do away with outdated paper-based processes and embrace fully digital workflows instead. 

Electronic signatures can be used to sign any kind of electronic document or form. But because each type of digital signature has its own benefits, some are more suitable for certain use cases than others. Here are some examples: 

• When can SES be used? Accountants typically use SES for everyday transactions and day-to-day sales and procurement agreements. They can also be embedded in simple forms that require an e-signature, such as questionnaires used for gathering documents or client information.
• When can AdES be used? Because AdES provides a higher level of security and assurance, accountants can use them for signing contracts, agreements, and other similar legal documents. 
• When can QES be used? As the most secure and trustworthy form of digital signature, accountants can use QES for high-value transactions or any document or process subject to stringent regulatory requirements.

Is it legal to use electronic signatures for accounting and tax purposes?

Yes, it’s legal to use electronic signatures for accounting and tax purposes, but the specific legal requirements for an electronic signature depend on the jurisdiction, type of document, and the industry or transaction it relates to.

For accounting and tax purposes, QES is the gold standard. As we mentioned earlier, it’s the only type of digital signature that has explicit legal equivalence to a handwritten signature, meaning it’s legally binding and as trustworthy and secure as possible.

Because the QES verification process involves a trusted third party, e-signature providers tend to charge a fee per QES to cover the costs associated with this process. For this reason, you’d be better off using a SES, which tends to be free of charge, for signing less important documents, such as forms for gathering client documents.

How to create an electronic signature

While there are various free workarounds you can use, such as handwriting, scanning, and uploading an image of your signature, these are time-consuming and come across as highly unprofessional. To create effective, legally binding digital signatures at scale, you need the right software. 

There are plenty of standalone document management and e-signature tools out there, such as DocuSign, Adobe Acrobat Sign, and Dropbox Sign, all of which can be integrated with your existing accounting software. Alternatively, you can use a comprehensive practice management software such as TaxDome, which offers legally binding e-signatures alongside a whole host of tools designed to automate your accounting workflows.

What are the benefits of using electronic signatures?

Electronic signatures offer a wide range of benefits for accounting firms, from cost savings and increased efficiency to greener processes. Here are some of the key advantages: 

• Increased efficiency: accountants and clients can sign documents anywhere, anytime, and on any device with just a few clicks — no need to waste time printing, scanning, or posting documents
• Cost savings: while e-signature software comes at a cost, you’ll save money on paper, ink, and printing equipment, not to mention the time you’ll free up by going digital
• Improved security and compliance: while QES signatures have legal equivalence to handwritten ones, they’re actually more secure and trustworthy because they cannot be forged
• Built-in audit trails: most e-signature software provides detailed audit trails, including timestamps, making the audit process easier
• Convenience and accessibility: being able to sign documents anywhere with internet access is a game-changer — especially for clients, who now expect a seamless digital experience when interacting with your firm
• Environmental benefits: electronic signatures minimise the need for paper and other physical supplies, which helps to reduce your carbon footprint

Best practices for implementing electronic signatures

The benefits we’ve outlined above aren’t a given. To realise them, you need to implement best practices. In this section, we’ll highlight some steps you can take to integrate e-signatures into your accounting workflows effectively.

Understand the legal and regulatory requirements

It’s worth familiarising yourself with the relevant regulations for digital signatures and how they apply to the work you do as an accountant. This will also help you choose the right software.

In the EU and UK, this would be eIDAS, but if you have clients in the US, you’ll also need to look at the Electronic Signatures in Global and National Commerce Act (ESIGN) as well as the Uniform Electronic Transactions Act (UETA).

Choose the right electronic signature solution

No two e-signature providers are the same. Some are standalone e-signature tools, while others are comprehensive practice management platforms. Some offer just basic SES, while others offer legally binding QES. Some come with rigid e-signature limits, while others offer unlimited e-signatures. 

Spend some time researching the different options out there. Weigh them up against your professional goals, legal requirements, and budget. We also recommend checking out online user reviews to get a feel for what existing customers think.

Establish clear policies and procedures

Given the strict legal requirements associated with electronic signatures, it’s important to establish clear policies and procedures that answer questions such as:

• How will e-signatures fit into your current accounting workflows?
• Which type of electronic signature (SES, AdES, QES) will you use in different situations?
• Who is authorised to create and request electronic signatures?

Provide detailed training  

Successful implementation of a new electronic signature system requires detailed training on how to use the software, as well as the legal requirements and repercussions for not following them. To increase efficiency, make sure employees know how to integrate e-signatures into their existing workflows.

Introducing TaxDome: digital signature software for accountants — and a whole lot more!

TaxDome supports all three of the e-signature types outlined in eIDAS. You get unlimited free SES as part of your TaxDome licence, while AdES and QES both carry a small per-signature fee to cover the verification process. For our US-based customers, we also offer knowledge-based authentication (KBA) to ensure compliance with the IRS. 

In addition to meeting eIDAS standards, all of our e-signatures meet the key requirements of the ESIGN Act as well as UETA, ensuring that your e-signature and document workflows are safe, secure, and legally compliant

For more information on how AdES and QES work in TaxDome, check out this article.

TaxDome is much more than just e-signature software, however. As a comprehensive practice management platform, you get all the tools you need to manage your clients, teams, projects, documents, and workflows. Unlike many e-signature systems, TaxDome is designed specifically with accountants in mind, with features such as:

• Industry-specific signature templates
• Seamless integration with accounting and tax software
• Recurring payments with integrated e-signatures
• Automated workflows that auto-send e-signature requests when certain actions are triggered

Conclusion

Electronic signatures enable accountants and their clients to sign documents on any device in a matter of seconds. In today’s digital world, this is more than just a nice-to-have — it’s an expectation. Put simply, firms that continue to stick with paper-based forms and handwritten signatures will be left behind.

To implement e-signatures effectively in your firm requires the right planning, preparation, and training. But perhaps the most important factor to consider is the technology you use. 

With TaxDome, you get legally compliant e-signatures — including SES, AdES, and QES — alongside a range of powerful document management features. 

But that’s not all. Unlike standalone e-signature tools, TaxDome is a comprehensive practice management platform, providing all the tools and processes you need to run a highly efficient and profitable accounting firm. 

To see for yourself, request a demo today!