Beyond Tax Reliefs: The Impact of Covid-19 on E-Archiving

Gabriel Pezzato
April 1, 2020

The economic impact and consequences of coronavirus are unprecedented as it spreads across different countries. To protect their markets, many countries have reacted by loosening obligations and lowering rates. While most of these initiatives have an immediate impact on a business’s cashflow and are welcome they also, in many cases, have a long-term impact on the archive period for fiscal documents. 

The implications for e-archiving

Among the relief measures being taken, tax authorities have temporarily closed their tax offices and stopped tax audits. In parallel – and motivated by the interruption of tax authorities’ activities – many countries have extended their statute of limitations (aka periods of prescription or decadence in civil law countries). In other words, the period held by tax authorities to audit businesses and enforce fiscal obligations is quietly being extended. So far, Italy, Spain, and Portugal have taken this step.

The statute of limitations is generally associated with storage periods of probatory documents. But storage periods and statute of limitations are occasionally regulated by different laws. Consequently, while these periods coincide in some countries, in many others the extension of the statute of limitations directly impacts storage periods which are consequently prolonged. For this reason, changes in statutory periods mean taxpayers must analyze such initiatives and their impact on the storage period of fiscal documents.

Expanding limitation periods can impact local and multinational businesses alike. Local businesses may have to create a distinct storage period for fiscal documents created up until a certain date. Multinationals however face the additional challenge of keeping track of, interpreting and implementing new laws for multiple countries.  Many of the new rules are often passed quickly leaving little time for companies to prepare and comply.

A fragmented approach

Statutes of limitations differ from country to country.  They are the result of decades, if not centuries, of legislative and judicial developments. Consequently, statutory periods cannot be interpreted without their legal context. There are also variations on the legal mechanism to change statutory periods. In some countries, the time-barrier can be expanded through a decree from the executive power or even from the tax authority itself. In other States, a complex legislative process through the local parliament is necessary. Italy, for instance, leveraged a law from 2015 to expand its statute of limitations, while Spain and Portugal passed new laws on this subject.

Keeping track of these legislative changes can be daunting and time consuming.  It requires a deep understanding of local laws to be interpreted and applied correctly, and their impact on tax obligations.

So, while Governments around the world implement tax measures to protect their economy and support local businesses, taxpayers cannot just relax and benefit from these financial reliefs.  They must keep up to date and informed of changing requirements when it comes to tax compliance.

Take Action

Sovos provides eArchiving solutions for clients in over 50 countries. Find out more and follow us on LinkedIn and Twitter to keep up-to-date with regulatory news and other updates.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Gabriel Pezzato

Gabriel Pezzato is a Regulatory Counsel at Sovos. Based in Stockholm and originally from Brazil, Gabriel’s background is in tax, corporate and administrative law. Gabriel earned a Law degree and a specialization degree in Tax Law in his home country and has a master’s degree in International and European Tax Law from Uppsala University (Sweden).
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

Tax Compliance Tax Information Reporting United States
June 1, 2020
The Advantage of a Cloud-First Company

With the acquisition of Eagle Technology Management (ETM) and Booke Seminars, Sovos has united the very best in statutory reporting solutions, technology and expertise. Below is an overview of our strategy following these acquisitions: Sovos’s SaaS and Security Strategy  Sovos at its core is a Software as a Service (SaaS) and cloud-first company. This means […]

ShipCompliant United States
May 28, 2020
Ask Alex: Your Bev Alc Compliance Questions Answered (May 2020)

Do you have questions about the rules, regulations, and compliance requirements of the beverage alcohol industry? This series, Ask Alex, is a perfect opportunity to get those pressing questions answered straight from one of the industry’s regulation and market experts, Alex Koral, Senior Regulation Counsel, Sovos ShipCompliant.  To take advantage of this opportunity and get […]

E-Invoicing Compliance EMEA
May 28, 2020
Turkey’s Transition Conditions for E-ledger

On October 19, 2019, the Turkish Revenue Administration (TRA) published a communique making the e-ledger application mandatory for e-invoice users, companies subject to an independent audit, and companies identified by the Presidency to have poor tax compliance.  The e-ledger application enables businesses to create the legally mandated general journals and ledgers and submit e-ledger summary […]

ShipCompliant United States
May 27, 2020
How Technology Partnerships Improve DtC Compliance

To be an expert, one has a specialty. Ours is beverage alcohol compliance. Since compliance sits at the heart of operations, being connected at every step helps our customers focus on their business instead spending countless hours on manual processes. Compliance is challenging, but we make it easier with a large and robust network of […]

EMEA IPT Tax Compliance
May 26, 2020
Why IPT Reporting is so Complex for Insurers

Accurately calculating insurance premium tax (IPT) for reporting can be complex.  And the ramifications of getting it wrong can be far reaching from impacting profit margins to unwelcome audits, fines and damage to your company’s reputation in the market and with customers. Calculation methods When I speak to customers about how they calculate insurance premium […]