On September 29, 2022, the law implementing mandatory B2B e-invoicing in Spain was published in the Official Gazette (Boletín Oficial del Estado -BOE-). Therefore, from that date, the Government has 6 months to approve the necessary regulatory framework.
More information about this law is in our blog: Spanish Congress Approves Mandatory B2B e-Invoicing
The Colombian government has announced the decision to resume the Days without VAT (Días sin IVA) in 2023. Although the government had eliminated the Days without VAT implemented by the last administration, this decision has been changed and the carrying out of these days in the next year has been announced.
The Colombian Chamber of Electronic Commerce has informed that it is encouraging the government to define in advance the exact dates of the two days without VAT that will take place the following year, as well as the conditions in relation to prices, amounts, and delivery time of the goods and/or services that will be included in the exemption.
Further official information is anticipated, from the government, regarding the 2023 Days without VAT in Colombia.
On 12 July 2022 a Council Regulation of (EU) 2022/1207 was issued amending Regulation (EC) No 974/98 regarding the introduction of the Euro in Croatia from 1 January 2023. A fixed conversion rate between the Kuna and Euro has been confirmed, being set at 1 € = 7.53450 kn.
Based on the communication from the Croatian tax authority, we understand the first settlement period in the new currency will be January 2023 or the 1st quarter of 2023 for Motor IPT and the Croatian Fire Brigade Charge respectively. Both taxes apply equally to insurers operating on a Freedom of Services basis as they do to those established in Croatia.
The Argentinian tax authority (AFIP), by means of Resolution 5259/2022, established the obligation to consign the number of the electronic document for the transport of meats (Remito Electrónico Cárnico – REC) in the electronic sales invoice that support the operations of sale of meat and by-products derived from the slaughter of the cattle/buffalo species and swine. This means that the two electronic documents will be linked following the process of e-invoice issuance.
It will also be necessary to consign in the e-invoice all the products listed in the respective REC. Only the merchandise included in the transfer document can be listed in the e-invoice.
This new obligation will become optional for electronic invoices issued from 15 November 2022 and mandatory for those issued from 15 December 2022.
Technical specifications update for the electronic sales invoice have not yet been released.
Portugal’s state budget entered into force on 27 June 2022 after protracted negotiations. The budget contained an interesting provision: the obligation to present invoice details to the tax authorities was extended to all VAT-registered taxpayers including non-resident taxpayers, who had long been exempt from this obligation.
VAT-registered non-residents now have three options for communicating invoice details:
In practice, the Billing SAF-T file is the least onerous option for taxpayers. It is worth discussing the contents of this file, which is submitted separately from Portugal’s Accounting SAF-T file.
Portugal was the first country in the world to adopt SAF-T, and its requirements are based on the original OECD 1.0 schema. The current schema for the Billing SAF-T is set out in Portaria no. 302/2016 consisting of a specified header, master files, and source documents.
Master files can include customer and/or supplier tables, product tables, and tax tables. Source documents can include sales and purchase invoices, documentation on movements of goods, and payment information, as applicable. For the most part, information in the schema is conditionally required, meaning most fields only need to be submitted if the relevant data exists in a taxpayer’s source system.
Importantly, the Billing SAF-T file must be generated by “certified billing systems,” as designated by the tax authorities, a requirement unique to Portugal. As of 2021 this requirement extends to non-resident taxpayers as well, a strong indicator that they would eventually be required to submit Billing SAF-T.
Although the Billing SAF-T only has four sections, it is nevertheless a complex file to generate. Portaria no. 302/2016 containing guidance on fields and definitions is over 100 pages long in the official gazette. Taxpayers must be able to generate required fields within their source systems and must know what conditionally required data they are able to provide.
The latest state budget has adjusted the monthly deadline for submitting Billing SAF-T. The deadline is now the fifth day of the month following the reporting period, previously taxpayers could submit by the twelfth day of the month following the reporting period.
For these reasons, the introduction of this obligation to non-resident taxpayers represents a significant burden. Existing and potential non-resident taxpayers in Portugal should immediately familiarise themselves with the Billing SAF-T requirement and ensure they are using certified billing software to remain compliant.
Need to ensure compliance with Portugal’s Billing SAF-T requirements? Get in touch with our tax experts.
Continuing our IPT prepayment series, we take a look at Italy’s requirements. In previous articles we have looked at Belgium, Austria, and Hungary.
All insurers authorised to write business under the Italian regime have a legal obligation to make an advance annual payment for the following year.
The amount of prepayment is calculated as a percentage of the total IPT and Anti-Racket contribution made in the previous year, deducting any IPT paid in respect of Motor Third-Party Liability business. The IPT prepayment rates increased from 85% for tax year 2020 to 90% for 2021 and 100% for tax year 2022 onwards.
All insurers writing non-life insurance risks in Italy need to pay 100% of their 2021 tax bill in November 2022 as a 2023 prepayment, in anticipation of their future tax liabilities. Once settled, the prepayment can be offset against IPT liabilities (excluding Motor third-party liabilities) arising from February 2023, when the January 2023 tax liabilities are due. Businesses can use excess prepayment to offset tax liabilities in the next period or offset against the next prepayment.
Prepayment is due by 16 November each year. No prepayment is required if the insurance company deregistered for IPT purposes prior to the prepayment deadline. Penalties and interest for late payments are strictly applied by the Italian tax authorities. They are time sensitive and calculated daily and payable alongside tax liabilities/prepayments.
Where the prepayment for the year is not fully utilised, balances can be carried forward to offset against future liabilities or used towards next year’s prepayments. If a company is no longer writing business in Italy and doesn’t expect further premiums to be received, they should formally file for a reclaim of any prepayment credits. Recovery is made through a formal reclaim and takes significant time (a few years) for the authorities to process and return the funds.
Although prepayment shouldn’t represent an additional cost to insurance transactions, it can pose some cash flow considerations for insurers. It’s Important to note prepayment is due on a historical basis and cannot be settled based on an estimate of future tax liabilities. The legal obligation to pay the prepayment doesn’t cease, even if the insurance company foresees termination of their insurance risks in Italy. This creates issues for insurance companies winding down their Italian exposures, starting underwriting Italian risks through EU based subsidiaries, or when closing the business.
Most UK insurers changed their company structure due to Brexit. A special application for transferring the prepayment credit needs to be made to the Italian tax authorities for mergers or portfolio transfers and a response or approval from the tax office can take significant time.
When an insurer is exiting Italy, be it due to Brexit or any other reason, being aware of their current and ongoing prepayment obligations is key to minimising unnecessary pain in the future.
Get in touch with our tax experts today for advice on how to navigate this often confusing IPT procedure in Italy.
Many NetSuite users are unaware of capabilities within their ERP that could help reduce the risk and burden around organizational compliance.
Natively built on the NetSuite platform, SuiteTax simplifies your basic tax processes by integrating tax calculations within the same system you already use for sales, billing, payment processing and other core business transactions. The additional SuiteTax API layer allows you to connect multiple tax engines and define separate nexuses for each subsidiary, as well as connections for other compliance tools related to EU VAT reporting, 1099 compliance and sales tax filings.
In this event, you will hear from NetSuite’s Director of SuiteTax and get a better understanding of how Sovos’ Built for NetSuite tools seamlessly integrate with your NetSuite environment to ease the burden of global tax. In product-specific breakout rooms, you can also see the integrations in action.
10:30 a.m. – 11:15 a.m. EST: Opening Session
11:15 a.m. – 11:45 a.m. EST: Product Line Breakouts
In these breakouts, you will see the Sovos tools at work within NetSuite and how to use that data for reporting to government agencies or in tandem with other Sovos solutions.
11:40 a.m. – 12 p.m. EST: Open Q&A
When organising a virtual event, it’s important to determine how this supply will be treated for VAT purposes.
We have previously discussed VAT rules and place of supply for virtual events, this blog will discuss the potential future changes to the VAT position for EU Member States.
For B2B delegates, the current rules mean that virtual admission is classified as a general rule service, meaning VAT is due where the customer is established.
For B2C delegates, the current rules depend on whether the virtual attendance can be considered an electronically delivered service or a general rule service. For electronically delivered services, the place of supply is where the customer normally resides and for other services, the place of supply is where the supplier is established.
In other words, online conferences and events with a host and delegates asking questions in real-time via live chat or similar have a human dimension that prevent this from being classified as an electronically delivered service which means that:
The EU Council adopted Directive 2022/542 on 5 April 2022 declaring from 1 January 2025, the supply of a virtual event is taxable in the country where the consumer resides or is established (being a Directive, the relevant rules must be implemented by each EU Member State by 31 December 2024). The new rule will apply to all live-streamed activities.
Italian tax authorities clarified in the ruling reply 409/2022 pubblicazione (agenziaentrate.gov.it), published on 4 August 2022, that the supply of training courses in ‘online’ mode are relevant for VAT purposes where the customer is established or resident, regardless of whether the customer is a taxable person or a private individual.
In the clarification to the taxpayer, Italian tax authorities referred to:
This means that the content of the VAT Directive 2022/542 seems to have already been implemented by the Italian tax authorities.
Therefore, the same supply could be subject to VAT in two different EU Member States.
How Sovos can help
Our team of tax experts can support you in understanding in which country your supply is subject to VAT in to ensure all compliance requirements are met, including registering for VAT purposes as a non-resident.
The Romanian Ministry of Finance has announced another delay to e-transport requirements for high-fiscal risk products by issuing a draft emergency ordinance (“GEO”) on 21 September 2022. The fines had already been delayed from July 2022 to October 2022, but this time the entry into force has been postponed to January 2023.
Another significant change envisaged in the draft GEO is that the validity period of the e-transport document has been extended from 5 days to 10 calendar days for intra-community acquisitions, whereas for the rest of the transports, the five calendar day rule remains valid.
Brazil is known for its highly complex continuous transaction controls (CTC) e-invoicing system. As well as keeping up with daily legislative changes in its 26 states and the Federal District, the country has over 5,000 municipalities with different standards for e-invoicing.
The tax levied on consumption of services (ISSQN – Imposto Sobre Serviços de Qualquer Natureza) lies under the competence of the municipalities. Each municipality has authority over the format and technical standard of the services e-invoice (NFS-e – nota fiscal de serviço eletrônica). This poses a significant compliance challenge, as e-invoicing is mandatory for nearly all taxpayers in the country.
However, important steps have been taken towards changing this scenario. An agreement (Convênio NFS-e) recently signed by the Brazilian Federal Revenue Agency (RFB), the National Confederation of Municipalities (CNM), and other relevant entities, has established the National System of the NFS-e with a countrywide unified standard for the services e-invoice.
The SNNFS-e introduces a unified standard layout for the issuance of the NFS-e, as well as a national repository of all e-documents generated within the system. Adhesion to the system is voluntary for municipalities. Since the bill proposed to regulate this issue (PLP 521/2018) has been static in Congress since 2019, the agreement was designed to allow municipalities to voluntarily adopt the national standard, which then becomes mandatory for taxpayers.
The system will allow issuance of the NFS-e in a national standard, through the web portal, mobile app or API (application programming interface). It also creates the National Data Environment (ADN), the NFS-e unified repository.
The SNNFS-e offers several service modules and municipalities can choose which ones to adopt. The ADN is the only mandatory module, as it ensures the integrity and availability of information contained in the documents issued is in the unified standard. Additionally, the ADN allows adhering municipalities to distribute issued NFS-e among themselves and taxpayers.
Once the agreement is signed, the municipality must activate the system within a certain deadline, which hasn’t been established. Activation involves configuring system parameters and amending municipal legislation to reflect the national system requirements. Only after complete activation will taxpayers be able to issue invoices based on the unified standard.
Technical documentation of the NFS-e has also been released, but these are not the definitive specifications, which are still to be approved by the National Standard Electronic Service Invoice Management Committee (CGNFS).
The NFS-e national standard provides substantial simplification of taxpayers’ e-invoicing obligations. With a standard layout, compliance with multiple formats can be drastically reduced. The document format for issuance of the standard NFS-e is XML and it must be digitally signed.
Another benefit is that one of the available modules allows taxpayers to pay the ISSQN owed in several municipalities at once, using one single document (Guia Única de Recolhimento) issued by the system.
Although municipalities may choose to keep their current NFS-e issuance system, they must still adhere to the communication deadlines, layout, and security standards of the national NFS-e. They must also ensure transmission of all issued documents to the national data environment. This ensures that taxpayers will only be required to issue the NFS-e in one standard layout.
The first phase of production started on 23 July 2022 with five pilot municipalities. Transmission will be available through different methods, with gradual implementation. According to the initial implementation schedule of the National Confederation of Municipalities, API transmission is set to happen from mid-October 2022 or later, depending on the stability of the other transmission methods. Further development of this schedule can be expected in the coming months.
São Paulo, Salvador, and Florianópolis are among the many municipalities that have already signed the agreement. The success of this national NFS-e standard relies on significant adoption by municipalities, so taxpayers must ready themselves to comply as this takes place across the country.
Need to ensure compliance with the latest e-invoicing requirements? Get in touch with our tax experts.
How resilient is your tax team?
Continued changes in the VAT landscape mean businesses trading B2B face increased complexity and need additional resource to continue trading compliantly.
Managing the ongoing cycle of varied filing and reporting obligations, combined with the need for local language capabilities and expertise can be challenging for in-house teams. Outsourcing alleviates the compliance workload and can work out cheaper to meet obligations in Europe and beyond.
Our tax experts join together to give you an overview of everything you need to consider when trading cross-border and how we can help.
This webinar will cover:
The expansion of the Value Added Tax (VAT) and Goods and Services Tax (GST) indirect tax to include business to consumer (B2C) sales of digital services is one of the most important new revenues for many countries.
E-services that a company supplies electronically can be:
The general place of supply rule for business to business (B2B) supplies of services is that VAT is due where the customer is established.
A business is always established where it has its main place of business (i.e. headquarters) and this is referred to as its ‘business establishment’.
The general place of supply rule for B2C supplies of services is that VAT is due where the supplier is established.
Most services fall under the general rule set out above. However, there are certain services that don’t (referred to as ‘exceptions’) which usually results in the supply being subject to local VAT.
The place of supply of cross-border digital services is the location of the non-business consumer. This is determined by where that person usually lives.
To simplify the rules for some supplies of digital services the supplier can make a presumption about the place where the supply is to be taxed.
If the supplies carried out by your company are treated as supply of digital services to a non-business consumer (i.e. B2C supplies) then the place of supply will be where the customer resides.
This customer’s location information could be based on:
Generally, the application of this rule would require the seller (i.e. your company) to register in all EU Member States where your clients are established, irrespective of the sales value performed.
From 1 July 2021 the European Union introduced the One-Stop Shop (OSS), replacing existing distance-selling rules in the Member States.
The previous thresholds for distance sales of goods within the EU have been abolished and replaced by a new EU-wide threshold of €10,000. Below this threshold, supplies of TBE (telecommunications, broadcasting and electronic) services and distance sales of goods within the EU may remain subject to VAT in the Member State where the taxable person is established.
The number of jurisdictions implementing a full VAT/GST liability regime for the taxation of cross-border services and intangibles is consistently growing and it represents the possibility to significantly increase sales.
Speak to our team if you have any questions about compliance with requirements for the supply of digital services abroad.
It’s time to return to Insurance Premium Tax (IPT) prepayments – a continuation of our blog series on this important IPT topic. You can find the first entry in our blog series here.
IPT is declared and settled differently throughout Europe. Monthly, quarterly, or biannual declarations – the frequency varies across Member States – and some jurisdictions request prepayments to ensure the liabilities due from insurance companies are collected in good stead.
Hungary is one country where legislation states prepayments are required. However, the prepayment obligation is a new requirement, introduced alongside the so called ‘extra profit tax’ or supplemental IPT, which is payable on an annual basis. No prepayment is required in relation to the ‘normal’ insurance premium tax paid monthly.
Prepayments are defined as a tax payment credit made to a tax authority before the payment is actually incurred.
This prepayment tax will be deducted to cover the tax liabilities until the total credit is used, then current liabilities must be paid by the basis applied in each “jurisdiction“.
You can learn more about IPT prepayments in our blog.
Before the introduction of extra profit tax, or supplemental IPT, prepayment for IPT in Hungary wasn’t a requirement. The ‘normal’ IPT is paid monthly with no prepayment obligation and there is no need to submit an annual return.
In Hungary the prepayment concept is used for taxes where there is an annual declaration obligation, such as in the case of corporation tax.
Regarding IPT, the prepayment obligation was introduced with the extra profit tax regime. Extra profit tax or supplemental IPT is an annual tax. This might be the reason for the introduction of the prepayment obligation for this tax type.
Supplemental IPT prepayment is due on 30 November 2022 regarding 2022 (bi)annual supplemental IPT, while for 2023 the prepayment is due by 31 May 2023.
Based on the original concept, the basis of the prepayment for 2022 was the premium collected during the period between July 2021 and June 2022, applying the rates applicable for 2022. However, this was modified shortly after the issuance of the Government Decree of 197/2022 on extra profit taxes.
This adjustment most likely occurred as the original concept would have generated a substantial overpayment since the base period to calculate 2022 prepayment is one year and the supplemental tax is due only for the second half of 2022. According to the updated rules the basis of the 2022 prepayment remained the same but the applicable rates were changed from 2022 rates to the rates normally applicable for 2023. The 2023 rates are half of the 2022 rates, decreasing the prepayment amount by reducing the rate instead of changing the base period from one year to half year.
Regarding 2023, the calculation of the prepayment is equal to the supplemental tax paid for 2022 in January 2023.
The tax office confirmed that any overpayment regarding the extra profit tax/supplemental IPT can be offset against the ’normal’ IPT and vice versa. This is because the extra profit tax has the same tax code (number 200) and is payable to the same bank account as the IPT.
For example, if the prepayment for 2022 is higher than the 2022 extra profit tax there will be an overpayment on the 200 tax account at the end of January. This overpayment can be offset against the January 2023 IPT liabilities which are payable by 20 February 2023. Or if the insurance company has an IPT overpayment at the end of November 2022, this overpayment can be used to cover the extra profit tax/supplemental IPT prepayment obligation.
Get in touch with our tax experts today for advice on how to navigate this often confusing IPT procedure.
According to this Law, not yet published in the Official Gazette, all entrepreneurs and professionals must issue, send and receive electronic invoices in their business relationships with other businessmen and professionals. Additionally, the recipient and the sender of electronic invoices must provide information on the status of the invoices.
The Government will have 6 months from the publication of this Law in the Official Gazette to approve the regulatory framework for developing the new e-invoicing system in the country.
The provisions regarding mandatory B2B electronic invoicing will be effective according to their annual turnover:
This means that the B2B e-invoicing obligation could be effective for large taxable persons by the first quarter of 2024.
More details about this law are in our blog.
The Independent Authority for Public Revenue (IAPR) has made some updates to the MyDATA system in recent weeks, including technical and regulatory changes. The changes include the following:
The Congress of Spain has approved the Law for the Creation and Growth of Companies, and it is expected to be published in the Official Gazette (BOE) in the following days.
This Law also amends Law 56/2007 on Measures to Promote Information to adopt the mandatory electronic invoice issuance requirement for all entrepreneurs and professionals in their commercial relationships.
According to this Law, all entrepreneurs and professionals must issue, send, and receive electronic invoices in their business relationships with other entrepreneurs and professionals. Additionally, the recipient and the sender of electronic invoices must provide information on the status of the invoices.
The main rules of the Law related to e-invoicing establishes that:
The process for accreditation of interconnection and interoperability of the platforms will be determined by the regulations at a later stage.
The law establishes that companies providing the supply of certain services to final consumers must issue and send electronic invoices in their relations with individuals who agree to receive them or who have explicitly requested them. This obligation affects companies supplying telecommunication services, financial services, water, gas, and electricity services among other sectors and activities prescribed in Article 2.2 of Law 56/2007.
These companies must provide access to the necessary programs so that users can read, copy, download and print the electronic invoice for free without having to go to other sources to obtain the necessary applications. They must also enable simple and free procedures so users can revoke the consent given to the receipt of electronic invoices at any time.
Companies within scope that refrain from offering users the possibility to receive electronic invoices will be sanctioned with a warning or a fine of up to 10,000 euros.
The Government will develop provisions of this Law in accordance with the regulations, and within the scope of its powers. Therefore, the Ministries of Economic Affairs and Digital Transformation and of Finance and Public Administration will determine the information and technical requirements to be included in the electronic invoice to verify the payment dates and obtain the payment periods.
It is also necessary to establish the minimum interoperability requirements between the providers of electronic invoice technology solutions, and the security, control, and standardisation requirements of the devices and computer systems that generate the documents.
The Government will have 6 months from the publication of this Law in the Official Gazette to approve the regulatory framework.
The provisions regarding mandatory B2B electronic invoicing will be effective according to their annual turnover:
This means that the B2B e-invoicing obligation could be effective for large taxable persons by the first quarter of 2024.
It is important to highlight that the entry into force of the B2B e-invoicing obligation is subject to obtaining the community exception to articles 218 and 232 of the VAT Directive. This exception is less difficult to obtain the previously as has been granted to other Member States such as Italy, France, and Poland to allow them to adopt the mandatory e-invoicing regime in their jurisdictions.
Need to ensure compliance with the latest e-invoicing requirements in Spain? Get in touch with our tax experts
The DIAN (Colombian tax authority) has informed that a maintenance window of the Electronic Invoicing System will occur on 15 September 2022, from 7pm until 11:59pm. During this window, e-invoicing services will be unavailable.
The Italian government has eliminated the obligation to electronically preserve accounting books and ledgers, providing a certain degree of simplification to its archiving requirements.
Until now, accounting books and ledgers must be preserved electronically, following the same preservation process as for e-invoices (conservazione sostitutiva), within three months following the deadline for submission of the relative annual VAT declaration.
Going forward, however, according to the recently published simplifying Law Decree no. 73/2022 converted into Law no. 122/2022, it becomes sufficient to keep accounting books and ledgers up to date in the taxpayer’s computer systems and to print them, upon request by the authorities.