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 […]

ShipCompliant
October 23, 2020
The Data: Wine DtC Shipments and Off-Premise Retail (September 2020 Special Report)

The wine market is in greater flux than ever as producers, retailers and consumers navigate the impacts of a global pandemic. Keeping a pulse on marketplace data has never been so important given these shifting dynamics. Nielsen is collaborating with Wines Vines Analytics and Sovos ShipCompliant to provide a much more comprehensive view of the […]

Tax Information Reporting
October 22, 2020
Latest Updates: State Direct Reporting Requirements for Form 1099-NEC

With the latest IRS announcement in Publication 1220 stating that information reporting data for the new Form 1099-NEC  will not be included in the Combined Federal/State Filing (CF/SF) program,  numerous states are beginning to publish direct reporting requirements. The Sovos regulatory analysis team will continuously update this page with the latest state requirements for Form […]

EMEA VAT & Fiscal Reporting
October 22, 2020
Post-Brexit: UK Postponed Import Accounting for VAT

If you listen carefully, you can hear the tick tock of the Brexit clock growing ever louder. As 31 December looms into view, there’s lots to consider from a VAT point of view. One area business must get up to speed with is the movement of goods between the EU and the UK post-Brexit. Whether […]

EMEA IPT
October 22, 2020
In Focus: Italian Registrations and the Filing Process

As an insurer authorised to write business in Italy, IVASS (Italian Insurers Supervisory Board) have provided you with the appropriate insurance certificate but what else is needed and what happens next? This is just the start of a lengthy and at times demanding journey towards insurance premium tax (IPT) compliance. At the outset, the insurer […]

Sales & Use Tax United States
October 21, 2020
The On-premise Challenge of Content Updates for Modern Tax – Part I

Introduction: Should we move our tax engine to the cloud or keep it on-premise? This conversation is taking place in many organizations as they assess their approach to sales tax management. In this three-part series, we’ll explore some of the problems IT is working through to maintain on-premise solutions that may not always be visible […]