VAT & B2G Reporting Newsletter: January 2018

Brian Elswick
February 1, 2018

International News

European Commission Proposes Changes to VAT Regime

On January 18, 2018, the European Commission proposed an overhaul of the European VAT System, building on the 2016 VAT Action Plan. The main goal of the proposed changes is to create a European VAT area that operates more efficiently in a globalized world and aids in preventing VAT fraud. The changes will also enhance Member States’ ability to collect revenues. The two-fold proposal demands more flexibility for Member States in setting VAT rates and extends VAT exemptions for small businesses that already exist for domestic companies to small businesses engaged in cross-border trading.

The expanded exemptions should cut VAT compliance costs for small businesses. The new rules around the setting of rates is aimed at helping ensure that similar products get equal treatment across borders. Under the proposal, Member States have the option to maintain their current VAT rates and systems. The Commission is set to submit the proposal to the European Council, the European Parliament and the Economic and Social Committee in hopes of gaining official approval.


European Commission Seeks Permanent Minimum VAT Rate

The European Commission has proposed a Council Directive that would make permanent a minimum standard VAT rate of 15% for all Member States. The 15% minimum rate currently exists as a “transitional” measure, though it has been extended six times since its enactment in 1992. 

If approved, the permanent 15% minimum rate of VAT would take effect on January 1, 2018. 


Country-by-Country News

Colombia E-Invoicing Resolution Changes Expected Requirements

The Colombian Tax Administration (DIAN) has enacted Resolution 000072 of December 29, 2017 which details the requirements for taxpayers to issue and report electronic invoices. While an e-Invoicing resolution was fully expected, the contents of the resolution (as it relates to timing) is markedly different from what was proposed by the DIAN just a few months ago. Specifically, the earlier proposal would have placed the e-Invoicing requirement on all “large taxpayers” as defined by Resolution 000076 of 2016. However, the new Resolution places the requirement on a select list of companies previously identified over the last five years. The DIAN deferred providing guidance on which “large taxpayers” will be required to comply, but only for a short while.

As to when the requirement will be imposed on the identified taxpayers, the Resolution states that it will become effective on the third month after the date in which the Resolution was published. Translated, this means that companies that issue less than 3 million invoices per year will be subject to the E-invoicing requirement on March 29, 2018. Those that issue more than 3 million invoices will have until June 29 to comply. While Colombian law gives impacted taxpayers some time to perfect their compliance approach, significant penalties for non-compliance are not far off. Later this month, the DIAN will publish a list that fully clarifies which companies are subject to this deadline.

As to the large taxpayers, the DIAN states that during the month of January they plan on publishing a Resolution specifying when they will be required to start issuing electronic invoicing. For any organization wondering if they will fall into this classification, note that Resolution 000076 includes an extensive list of impacted (3,602) companies. Sovos is working closely with the DIAN to confirm a number of details related to this mandate will post additional information to this forum as it becomes available.

The complete text of the resolution can be found at the following link: http://www.dian.gov.co/descargas/normatividad/2017/Resoluciones/Resolucion_000072_29_Dic_2017.pdf

The Colombian Tax Administration (DIAN) enacted Resolution 000072 on December 29, 2017 which details a requirement for taxpayers to issue and report electronic invoices. This resolution is fundamentally different from what was proposed by the DIAN in November for public consultation.

Specifically, the earlier proposal would have placed the E-Invoicing requirement on all “large taxpayers” as defined by Resolution 000076 of 2016. However, the new decree places the requirement on a select (but extremely large) list of companies previously identified over the last five years.

Resolution 000072 further establishes that the E-Invoicing requirement will become effective on the third month after the date in which the Resolution was published. However, based on vagaries in the wording of the Resolution, it’s not entirely clear when the effective date actually arrives. Sovos is working closely with the DIAN to confirm this critical detail and will post additional information to this forum as it becomes available.

The complete text of the resolution can be found at the following link: http://www.dian.gov.co/descargas/normatividad/2017/Resoluciones/Resolucion_000072_29_Dic_2017.pdf


Italy Appears Set to Delay VAT Increases Until 2019

On December 4th, 2017, Italy’s parliament adopted Law Decree no. 148, by way of Law no. 174. Under Article 5 of Law Decree no. 148, the current VAT rate of 10% would be increased to 11.14% effective January 1, 2018. However, the 2018 Italian budget bill currently provides for the reduced VAT rate to be 10% in 2018 and 11.5% in 2019, and for the standard VAT rate to remain at 22% in 2018 and increase to 24.2% in 2019. The 2018 Italian budget bill has been approved by both houses of Parliament: the Senate and Chamber of Deputies. The bill must now be promulgated by the President of the Italy. While the president may opt to resend the law to Parliament for a new review, it appears likely that the President will promulgate it. After promulgation, the law will be published in the Official Gazette of the Italian Republic before going into effect. Thus, Italy’s 2018 budget bill will override the previous reduced VAT rate increase of 10% to 11.14%, and will delay an increase in the standard and reduced VAT rates until January 1, 2019.


Italy Set to Implement Electronic Invoicing in 2018 and 2019

Italy published its Budget Law of 2018 in the Official Gazette on December 29, 2017, which came into force on January 1, 2018. Of particular interest, a two-phase approach to electronic invoicing was announced. As of July 1, 2018, electronic invoicing will be mandatory for B2B supplies of gasoline, or diesel fuel intended for use as motor fuel, and for services rendered by subcontractors under a contract with public bodies. As of January 1, 2019, however, electronic invoicing will become mandatory for all B2B and B2C supplies of goods and services between parties established or VAT-registered in Italy (for B2C, only if the customer expressly requests an invoice). The electronic invoices will have to be issued through the Sistema di Interscambio system (SDI), which is the platform Italy currently uses to transmit electronic invoices to public bodies, and which allows the Italian Revenue Agency to collect details of e-invoices. The electronic invoices will also have to be issued in the Fatura PA format, which is the only one currently admitted through the SDI. The electronic invoicing mandate will have further details to be released this spring by the Director of the Italian Revenue Agency. As the mandate currently stands, it will require derogation from the EU VAT Directive because of issues with buyer’s consent, the freedom to choose document format, and the issue of freedom to choose an Integrity and Authenticity method. 


Norway Revises SAF-T Mandate Timeline

On December 29, 2017, Norway’s Ministry of Finance amended their Bookkeeping Regulations to revise the timeline relating to the mandatory implementation of the Standard Audit File-Tax (SAF-T) mandate. The Ministry now specifies that SAF-T reporting will be required on January 1, 2020 or later. This action was entirely expected as the Norwegian Tax Administration had previously requested the Ministry to adjust the timeline. SAF-T filings are currently (and remain) voluntary for businesses operating in Norway.

While the deadline for SAF-T in Norway may have been temporarily deferred, requirements requiring transactional reporting to governments (sometimes in near real time) are beginning to take hold in Europe and the time remains right to consider a comprehensive and intelligent solution to what will be a growing compliance burden.


Panama Initiates eInvoicing Pilot

Panama has issued a new resolution announcing the implementation of a pilot program that will mandate the use of electronic invoices for VAT reporting in Panama.

The General Directorate of Revenues (DGI) has indicated that they will be implementing the new invoicing system during the first semester of 2018, with 30 companies participating in a pilot program, to test the validity of the mandate. According to Resolution 201-0235, gazetted on January 11, 2018, the electronic invoices issued by the taxpayers in the pilot program will be considered in the same manner that is currently utilized by the DGI for paper invoices. At this stage, the electronic invoices will only be required and accepted by the DGI from those taxpayers authorized to participate in the pilot program. The DGI has also indicated that further resolutions will be released, which will specify the other requirements established under this new eInvoice mandate.


New Query Functionalities for the SII

The AEAT has announced that new functionality has been added to the SII, which will allow users to review invoices from specific clients and suppliers. The invoice information can be viewed individually by client or supplier, or can be sorted in groups. 

The AEAT has also announced new functionality that has been incorporated into the Web query of the ledgers of issued and received invoices: users will now have access to a summary of displayed data, and unlimited export of the reported records will be allowed.

A snapshot of the new functionality can be seen here.


Spain Issues the 2018 SII Filing Deadline Calculator

Spain’s tax administration (the AEAT) has announced the release of the SII 2018 deadline calculator. This tool is designed to help calculate the exact date by which each SII report should be submitted to the AEAT. Determining the exact day of the deadline can be confusing under the current system when factoring in weekends and other Spanish holidays. This tool will ensure that these dates are not taken into account when calculating the deadline, and will also help to clarify any possible confusion arising from the fact that starting January 1, 2018, the deadline for reporting inbound and outbound invoice transactions was reduced from 8 days to 4 days.

The tool can be found here.


Hungary Releases Additional Information on Online Invoice System

The Hungarian Government has released a revised version of the draft regulation on real-time reporting of electronic invoicing. New technical documentation, available in both English and Hungarian, has also been released, and the government invoicing platform, available at https://onlineszamla-test.nav.gov.hu/home, has been updated as well.


As previously reported Hungary has set a go-live date of July 1, 2018, for the new real-time reporting requirements. In the last year, Hungary passed revisions to its VAT law requiring the reporting of electronic invoices to the government, requiring the submission of invoice data on paper invoices over the internet, and modifying the domestic summary report. The new draft regulation requires the instantaneous export of electronic invoices to the government upon issuance of the invoice, without any human interference. Transmittal of an invoice is not considered successful until the supplier has received confirmation from the tax authority. Suppliers must resubmit failed invoices as soon as the cause of the failure is resolved. Only invoices where the VAT charged is over 100,000 Hungarian Forints are required to be transmitted, however, companies may elect to submit smaller invoices as well. Both purchasers and suppliers are expected to be able to look up invoices once transmitted to the government. Suppliers are not required to use electronic invoicing, however non-electronic invoices over the threshold must still be reported in the government website within 5 days of issuance and in some cases within 24 hours.

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Brian Elswick

Brian Elswick is the Marketing Programs Manager for Sales & Use Tax, Business-to-Government Reporting, and VAT.
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