In Insurance Premium Tax (IPT) compliance, the Aviation Hull and Aviation Liability policy is defined under Annex 1, Classes of Non-Life Insurance, as described in DIRECTIVE 138/2009/EC (SOLVENCY II DIRECTIVE).
But there are variations and identifying which class the policy is covering can be a challenge.
This article will cover what insurers need to know about Aviation Hull and Aviation Liability policy and what IPT rate to apply.
Aviation can fall under Class 5, Class 11 or General Liability.
There are five different variations of an Aviation policy, either taken out individually or in combination. Although the descriptions vary, the most referred to are:
Class 5 Aviation policies are focused on the hull and physical aspect of the aircraft, whereas Class 11 Aviation Liability mainly covers the public and passengers or damage to property owned by third parties.
Defining between Aviation Liability Class 5 and 11 can be a headache. As aviation policies can include a combination of liabilities, it can be difficult to know the correct classification to apply.
Some tax authorities have recognised this and applied similar rates for both, but there are exceptions.
For example, in Hungary Class 5 is considered CASCO , which stands for Casualty and Collision (automobile insurance). So, it has a higher IPT rate of 15% whereas IPT for Class 11 on Aviation Liability is 10%.
There are also parafiscal taxes to consider. These mainly come into effect when the policy includes a fire element. But as always there are exceptions – in Greece both classes are exempt from IPT, but TEAEAPAE (or Pension Fund) can be due on Class 5 Aviation when cover includes the maintenance of the aircraft.
Once the correct class of insurance has been applied to the policy, an additional reference to an AVN clause is made.
AVN clauses are additional to the main risk and more specific than some of the other coverages, which are also included in aviation contracts. There are over 214 AVN clauses and most fall under Class 13 General Liability.
The last piece of the puzzle is how to report a policy document that could have up to three different classes.
The territory could have apportionment rules, meaning an insurer could benefit from some of those exemptions. Some insurers choose to take the prudent approach and apply the highest rate from the three classes to avoid noncompliance or penalties.
For most insurers, classification of an aviation policy is only the beginning of the journey. There are other considerations such as location of risk rules outside of Europe, which can mean double taxation, or exemptions depending on the use of the aircraft.
To ease the burden on compliance, many insurers work with a managed service provider with IPT expertise.
Get in touch with Sovos about the benefits a managed service provider can offer.
Back in 2019, Portugal passed a mini e-invoicing reform consolidating the country’s framework around SAF-T reporting and certified billing software.
Since then, a lot has happened: non-resident companies were brought into the scope of e-invoicing requirements, deadlines have been postponed due to Covid, and new regulations were published. This blog summarises the latest and upcoming changes.
Introduced in 2019, the de facto implementation of the QR code requirement was delayed, and is now expected to be fully implemented by taxpayers in January 2022. A QR code should be included in all invoices. Technical specifications about the content and placement of the code in the invoice are available on the tax authority’s website.
The ATCUD is a unique ID number to be included in invoices and is part of the content of the QR code. The ATCUD is a number with the following format ‘ATCUD:Validation Code-Sequential number’.
To obtain the first part of the ATCUD – the so-called ‘validation code’ -, taxpayers must communicate the document series to the tax authority along with information such as type of document, first document number of the series, etc.
In return, the tax authority will deliver a validation code. The validation code will be valid for the whole document series for at least a fiscal year. The second part of the ATCUD – the ‘sequential number’ – is a sequential number within the document series.
This month, the Portuguese tax authority published technical specifications for obtaining the validation code, creating a new web service. To access this web service, a specific certificate obtained from the tax authority is required and can be assigned to taxpayers or software service providers.
In addition, the tax authority has created a standard list of document classes and types, enabling the communication of document types in a structured format.
An ATCUD will be required in all invoices from January 2022. To be ready for the deadline, taxpayers must get the series’ validation codes during the last half of 2021 to apply in invoices issued in the beginning of 2022.
In April this year, Portugal clarified that non-resident companies with a Portuguese VAT registration should comply with domestic VAT rules. This includes the use of certified billing software for invoice creation, among others. These companies must also ensure integrity and authenticity of e-invoices. In Portugal, integrity and authenticity of invoices are presumed with the use of a qualified electronic signature or seal, or use of EDI with contracted security measures.
Consequently, since 1 July 2021, non-established but VAT registered companies must adopt certified billing software to comply with the Portuguese law as required by Law-Decree 28/2019, Decision 404/2020-XXII, and Circular 30234/2021.
The Portuguese e-invoicing mandate for business-to-government transactions includes a format requirement attached to specific transmission methods. In other words, invoices to the public administration must be issued electronically in the CIUS-PT format and transmitted through one of the web services made available by the public administration.
Initially, a phased roll-out started in January 2021, obliging large companies to issue e-invoices to public buyers. In July, the subjective scope was enlarged to include small and medium-sized businesses. The last step is to include microenterprises by January 2022.
Due to the Covid pandemic, Portugal established a grace period that has been renewed several times, whereby PDF invoices would be accepted by the public administration. Currently, the grace period runs until 31 December 2021, meaning that, in practice, all suppliers of the public administration, regardless of their size, should comply with the e-invoicing rules in public procurement by 1 January 2022.
Need to ensure compliance with the latest e-invoicing regulations? Get in touch with our tax experts at Sovos.
In our last look at Romania SAF-T, we detailed the technical specifications released from Romania’s tax authority. Since then, additional guidance has been released including an official name for the SAF-T submission: D406.
To alleviate taxpayer concerns due to the complexity of the report and difficulties with extraction, the tax authorities are introducing a voluntary testing period which is due to begin in the coming weeks. During this period, taxpayers may submit what is known as D406T which will contain test data that the authorities will not use in the future for audit purposes.
The Romanian SAF-T, D406, is based on the OECD schema version 2.0 which contains five sections:
The submission deadlines are as follows:
Taxpayers must submit sections of D406 monthly or quarterly, following the applicable tax period for VAT return submission.
For the first report, tax authorities have announced a grace period for the first three months of submission. This is from the date when the deposit obligation becomes effective for that taxpayer, where non-filing or incorrect filing will not result in penalization if correct submissions are submitted once the grace period ends.
The D406 must be submitted electronically in PDF format, with an XML attachment and electronic signature. The size of the two files must not exceed 500 MB. If the file is larger than the maximum limit, the portal will not accept it and the file must be divided into segments according to details set out in the Romanian guidance.
The tax authorities have indicated that, should a taxpayer find errors in the original submission, a corrective statement may be submitted to rectify these errors. The taxpayer should submit a second full corrected file to replace the original file that contains errors. If a taxpayer submits a second D406 for the same period, it is automatically considered a corrective statement.
Need to ensure compliance with the latest Romania SAF-T requirements? Speak to our team. Follow us on LinkedIn and Twitter to keep up-to-date with the latest regulatory news and updates or see this overview on VAT Compliance in Romania.
A tax authority audit can come in various forms, whether it be directly to the insurer itself or indirectly through a policyholder or broker.
It can be targeted, for example, where an insurer has been specifically identified to be investigated due to a discrepancy on a tax return, or it can be indiscriminate in its nature as part of a wider exercise being carried out by an authority.
Whatever form the audit takes, the key to responding is in the preparation beforehand.
First and foremost, insurers should ensure they are retaining copies of evidence that can be used to justify the tax amounts declared and settled. This may include the insurance contracts themselves, the invoices issued to policyholders and a record of their data that comprises the declarations that have been made.
It’s worth noting that in Italy there is a formal requirement to maintain IPT books which detail each of the premiums received during each annual period. Although this is not necessarily a specific requirement in other countries, applying this approach to all premiums received will put an insurer in a strong position if an audit is carried out.
Further documentation demonstrating compliance is also useful. If external advice has been sought, e.g., to determine the appropriate class of business for a policy and the consequent tax application, then retaining a record of this advice is advised in case this is required later.
There may be cases where a tax authority’s advice has specifically been sought and such correspondence will inevitably hold considerable weight if tax treatment is queried during a subsequent audit. Documentation of any processes in place to ensure compliance is also valuable.
As statutory limitation periods vary across jurisdictions, evidence should be kept as long as is practicable (subject to relevant data protection laws where applicable) so that it can be produced if an audit takes place.
In the digital age, this practice should hopefully not seem overly burdensome. It’s worth referring to the penalty regimes in place in some countries to put the potential repercussions of an unsatisfactory audit into context.
The UK is an example of where a behaviour-based approach to determining penalties is used, with the highest level of penalties reserved for cases of deliberate and concealed undeclared tax where the authority itself has prompted the declaration.
Lower penalties (or indeed no penalties at all) will be levied where reasonable care is taken, and reasonable care will be far more likely to be considered to have been taken where records are kept in the ways described.
Audits can happen at any time so it’s important insurers have taken the necessary steps to ensure information and data to demonstrate compliance is available to the tax authority when requested.
Ensuring the accurate and timely submission of tax returns is likely to reduce the possibility of a targeted audit. The IPT managed services team at Sovos has a huge amount of experience with tax filings in the UK and across Europe and has assisted many insurers with unexpected audits.
Get in touch with Sovos today about the benefits a managed service provider can offer to ease the burden of IPT compliance.
For anyone relatively new or unfamiliar with insurance premium tax (IPT), an understanding of each of the core components is key to ensuring compliance. They also sit in a logical sequence of five distinct areas.
1.Location of risk rules
This essentially is having a clear understanding of where the risk lies to determine in which jurisdiction the premium taxes should be declared. The rules can be complex and vary across different territories but having a clear process will help.
You’ll need to determine:
Next, check which rules apply. The EU’s four rules determine the correct jurisdiction depending on the nature of the risk:
Download our recent location of risk rules webinar to learn about the rules in more detail.
2.Class of business
A class of business is basically the category the risk falls under. Within the EU there are 18 classes of non-life business, ranging from accident and motor to miscellaneous financial loss and general liability.
The EU provides brief descriptions of each of these classes as well as some specific examples. The information is used by local tax authorities as guidance when implementing their own tax legislation.
Local rules vary so it’s important to understand your insurance policies to ensure the correct and relevant class of business is applied. Some policies may include more than one class of business which will affect the proportions of the premium that relate to each business class.
Our blog, Three Key Steps to Apply IPT on New Lines of Business is a useful resource.
3.Calculating taxes
Having determined the location of risk and the correct class of business the next step is to determine the taxes that apply and need settling.
Tax rates across the EU are fragmented and there are even more variations when you look at the varying tax rates within a jurisdiction. For example, in Spain you have an IPT rate applied at 6% yet you might also have some extraordinary risks surcharges calculated at 0.0003%.
Also consider who must carry the cost of these taxes. Is it the insured or the insurer? In most cases it’s the insurer’s responsibility, however it can fall to the policyholder.
Key to being able to determine which taxes and what rate to apply is having access to reliable software.
Register for our upcoming ‘Back to basics’ webinar, to learn more about how to calculate taxes.
4.Declaration and payment
Here again the rules vary country by country around the frequency for declaring and settling liabilities. They can be monthly, quarterly, bi-annually and annually. Failure to declare within the deadline will result in penalties and/or interest so knowing the deadlines for each return and when payment must be made are crucial.
Some tax authorities have strict rules and are quick to enforce them. Others are more lenient dealing with penalties on a case by case basis, and some (such as the UK) take a behaviour led approach where full disclosure and cooperation could lead to a far reduced penalty.
5.Additional reporting – will IPT follow where VAT leads?
Tax authorities across the world are taking a more granular approach to tax reporting to prevent fraud and reduce the tax gap. With VAT mandates in place across Latin America and more recently spreading into Europe and Asia, the VAT gap is reducing. So as governments transition to digital tax compliance wanting more data and faster, you can expect IPT will in time follow. The Spanish authorities, for example, have already started on this journey with the introduction last year of new digital reporting requirements for Extraordinary Risk Surcharges.
To stay ahead of the curve, the more prepared you are today the easier it will be to face the challenges that lie ahead as the pace of change in digitising tax compliance increases.
Keep up to date with ever changing rules by subscribing to our blogs and following us on LinkedIn and Twitter. We also host regular webinars with our in-house specialists who are on hand to help.
Progress has been made in the roll-out of the Polish CTC (continuous transaction control) system, Krajowy System of e-Faktur. Earlier this year, the Ministry of Finance published a draft act, which is still awaiting adoption by parliament to become law. Draft e-invoice specifications have been released and there has been a public consultation on the CTC system.
In June, the Ministry of Finance announced it had reviewed all comments submitted by the public and Polish ministers on the CTC system and decided to take the following actions:
In the announcement, the Minister outlined the benefits of adopting the CTC system for taxpayers. These include: quicker VAT refunds; security of the stored invoice in the tax authority’s database until the end of the mandatory storage period; certainty about the invoice delivery to the recipient through the CTC platform and therefore quicker invoice payments; automation of the invoice processing and exchange due to the adoption of a standardized e-invoice format.
In addition, as a result of the new e-invoicing rules upcoming changes in the SLIM VAT 2 package will trigger further relief measures, e.g. around the handling of duplicates and corrective invoices.
The Polish authorities are making good progress in the implementation of the Krajowy System e-Faktur. It is positive to see that the public consultation has proven useful in defining next steps and the authorities’ intent for transparency and timely documentation will hopefully continue throughout the entire CTC roll-out.
To find out more about what we believe the future holds, download Trends: Towards Continuous Transaction Controls.
For more information see this overview about e-invoicing in Poland, Poland SAF-T or VAT Compliance in Poland.
Update: 23 March 2023 by Dilara İnal
Japan is moving closer to the roll-out of its Qualified Invoice System (QIS), which will happen in October 2023.
Under QIS rules, taxpayers will only be eligible for input tax credit after being issued a qualified invoice. However, exceptions exist where taxpayers do not require a qualified invoice to take input credit.
The new system does not entail mandatory e-invoice issuance, though QIS introduces the following requirements for invoices:
While only taxpayers can register and obtain a QIIN, a supplier exempt from Japanese Consumption Tax (JCT) can register under the QIS – provided that it voluntarily applied to become a taxpayer.
In line with the implementation of the new invoicing system, the Japanese government’s 2023 Tax Reform introduces new measures for the QIS transition. It is implementing efforts to reduce the tax liability amount for three years.
The measures will also lessen the administrative burden on businesses below a specific size for six years. The government will allow companies to take an input tax deduction for book purposes, but only for small-amount transactions.
Need assistance preparing for Japan’s QIS? Our expert team is ready and waiting to speak with you.
Update: 13 July 2021 by Coskun Antal
Japan is in the middle of a multi-year process of updating its consumption tax system. This started with the introduction of its multiple tax rate system on 1 October 2019 and the next step is expected to be the implementation of the so-called Qualified Invoice System as a tax control measure on 1 October 2023.
Through this significant change, the Japanese government is attempting to solve a tax leakage problem that has existed for many years.
The Japanese indirect tax is referred to as Japanese Consumption Tax (JCT) and is levied on the supply of goods and services in Japan. The consumption tax rate increased from 8% to 10% on 1 October 2019. At the same time, Japan introduced multiple rates, with a reduced tax rate of 8% applied to certain transactions.
Currently, Japan doesn’t follow the common practice of including the applicable tax rate in the invoice to calculate consumption tax. Instead, the current system (called the ledger system) is based on transaction evidence and the company’s accounting books. The government believes this system causes systemic problems related to tax leakage.
A new system – the Qualified Invoice System – will be introduced from 1 October 2023 to counter this. The key difference when compared to an invoice issued today is that a qualified invoice must include a breakdown of applicable tax rates for that given transaction.
Under the new system, only registered JCT payers can issue qualified tax invoices, and on the buyer side of the transaction, taxpayers will only be eligible for input tax credit where a qualified invoice has been issued. In other words, the Qualified Invoice System will require both parties to adapt their invoicing templates and processes to specify new information as well as the need to register with the relevant tax authorities.
A transitional period for the implementation of the new e-invoicing system applies from 1 October 1 2019 until 1 October 2023.
In order to issue qualified invoices, JCT taxpayers must register with Japan’s National Tax Agency (“NTA”). It will be possible to apply for registration from 1 October 1 2021 at the earliest, and this application must be filed no later than 31 March 2023, which is six months in advance of the implementation date of the e-invoicing system. Non-registered taxpayers will not be able to issue qualified invoices.
The registered JCT payers may issue electronic invoices instead of paper-based invoices provided that certain conditions are met.
The introduction of the Qualified Invoice System will affect both Japanese and foreign companies that engage in JCT taxable transactions in Japan. To ensure proper tax calculations and input tax credit, taxpayers must make sure they understand the requirements, and update or adjust their accounting and bookkeeping systems to comply with the new requirements in advance of the implementation of the Qualified Invoice System in 2023.
Get in touch with our experts who can help you prepare for the Japanese Qualified Invoice System.
Turkey’s e-transformation journey, which started in 2010, became more systematic in 2012. This process first launched with the introduction of e-ledgers on 1 Jan 2012 and has since reached a much wider scope for e-documents.
The Turkish Revenue Administration (TRA), the leader of the e-transformation process, has played an important role in encouraging companies to embrace the digitalization of tax and created a successful model for following tax-related procedures.
You can read more about Turkey’s e-transformation in our e-book Navigating Turkey’s Evolving Tax Landscape.
The process was further accelerated with new requirements for e-documents.
The TRA continues to widen the scope of e-documents and the types of e-documents in use are:
Many taxpayers have voluntarily adopted the new system since the TRA launched this whole process and TRA’s latest updates for e-documents are critically important to monitor for tax-related procedures.
As e-documents become more popular, any income loss arising from tax procedures will reduce. E-documents offer additional advantages for public institutions and private businesses, such as saving time, minimising costs and improving productivity. It’s certain that the scope of e-documents in Turkey will keep expanding in the future, which will affect taxpayers and tax procedures.
Get in touch to find out how Sovos tax compliance software can help you meet your e-transformation and e-document requirements in Turkey.
Since 1993, supplies performed between Italy and San Marino have been accompanied by a set of customs obligations. These include the submission of paperwork to both countries’ tax authorities.
After the introduction of the Italian e-invoicing mandate in 2019, Italy and San Marino started negotiations to expand the use of e-invoices in cross-border transactions between the two countries. Those negotiations have finally bore fruit, and details are now available.
Italy and the enclaved country of San Marino will abandon paper-based customs flows.
The Italian and Sammarinese tax authorities have decided to implement a “four-corner” model, whereby the Italian clearance platform SDI will become the access point for Italian taxpayers, while a newly created HUB-SM will be the SDI counterpart for Sammarinese taxpayers.
Cross-border e-invoices between the countries will be exchanged between SDI and HUB-SM. The international exchange system will be enforced on 1 July 2022, and a transition period will be in place between 1 October 2021 and 30 June 2022.
HUB-SM’s technical specifications are now available for imports from Italy to San Marino, and exports from San Marino to Italy. The countries have also decided to choose FatturaPA as the e-invoice format, although content requirements for export invoices from San Marino will slightly differ from domestic Italian FatturaPA e-invoices.
The SDI and HUB-SM systems will process e-invoices to and from taxpayers connected to them, or under each country’s jurisdictions.
In other words, Italian taxpayers will send and receive cross-border invoices to or from San Marino via the SDI platform, while Sammarinese taxpayers will perform the same activities via HUB-SM.
Both platforms will deliver invoices to the corresponding taxpayers through the Destination Codes assigned by the respective tax authorities. This means HUB-SM will also assign Destination Codes for Sammarinese companies.
Inspired by the Italian methodology for fiscal controls in cross-border transactions, San Marino will require Sammarinese buyers to fill out an additional integration document (similar to a “self-billing” invoice created for tax evidence reasons) upon receipt of the FatturaPA. This document will be filled out in a new XML-RSM format created by the enclave and sent to HUB-SM.
After the larger rollout of the SDI for B2B transactions in 2019, the platform has proven capable of adapting to new workflows and functionalities.
Since last year, e-purchase orders from the Italian National Health System have been exchanged through the NSO, an add-on to the SDI platform. In January 2022, the FatturaPA replaces the Esterometro as a cross-border reporting mechanism.
SDI has already debuted in the international arena through the acceptance of the e-invoices following the European Norm, which are mapped into a FatturaPA before being delivered to Italian buyers. This integration between SDI and HUB-SM might also reveal the early steps of interoperability between both tax authorities’ platforms for cross-border trade.
Get in touch with our experts who can help you understand how SDI and HUB-SM will work together.
Download VAT Trends: Toward Continuous Transaction Controls to find out more about the future of tax systems around the world.
Norway announced its intentions to introduce a new digital VAT return in late 2020, with an intended launch date of 1 January 2022. Since then, businesses have wondered what this change would mean for them and how IT teams would need to prepare systems to meet this new requirement. Norway has since provided ample guidance so businesses can begin preparations sooner rather than later.
With this new VAT return, the Norwegian Tax Administration (Skatteetaten) seeks to provide simplification in reporting, better administration, and improved compliance.
This new VAT return provides for an additional 11 boxes, increasing the count from 19 to 30 boxes which are based on existing SAF-T codes to allow for more detailed reporting and flexibility. It’s important to note that the obligation to submit a SAF-T file will not change with the introduction of this new VAT return.
This change is for the VAT return only – with the SAF-T codes being re-used and re-purposed to provide additional information. Businesses must still comply with the Norwegian SAF-T mandate where applicable and must also submit this new digital VAT return.
Skatteetaten has created many web pages with detailed information for businesses to look through over the next few months including the following:
Norway is encouraging direct ERP submission of the VAT return where possible. However, the tax authorities have announced that manual upload via the Altinn portal will still be available. Login and authentication of the end user or system is carried out via ID-porten.
Additionally, Norway has provided a method for validation for the VAT return file, which should be tested before submission to increase the probability that the file is accepted by the tax authorities. The validator will validate the content of a tax return and should return a response with any errors, deviations, or warnings. This is done by checking the message format and the composition of the elements in the VAT return.
Businesses should begin preparations for the implementation of this new VAT return, as there will likely be challenges along the way.
In addition to the new VAT return, Norway has also announced plans to implement a sales and purchase report, which is currently in an early proposal stage in review with the Ministry of Finance. The next phase is mandatory public consultation which is when a desired launch date will be set. Skatteetaten notes that implementation time will be considered when determining an introduction date for the report.
Get in touch to find out how we can help your business prepare for Norway’s 2022 Digital VAT Return requirements. Follow us on LinkedIn and Twitter to keep up-to-date with the latest regulatory news and updates.
In Poland, the Ministry of Finance proposed several changes to the country’s mandatory JPK_V7M/V7K reports. These will take effect on 1 July 2021. The amendments offer administrative relief to taxpayers in some areas but create potential new hurdles elsewhere.
The JPK_V7M/V7K reports – Poland’s attempt to merge the summary reporting of a VAT Return with the detailed information of a SAF-T – have been in effect since October 2020. Taxpayers must submit these reports (V7M for monthly filers, V7K for quarterly filers) in place of the previously-used VAT Return and JPK_VAT files.
The JPK_V7M/V7K reports require taxpayers to designate within each file the invoices subject to special VAT treatment. For example, invoices representing transfers between related parties or invoices for transactions subject to Poland’s split payment regime.
Split payment designations are particularly complex for taxpayers to manage. Poland’s split payment regime is broadly applicable. In some cases can be exercised at the buyer’s option. This makes it difficult for sellers to predict which of their invoices should be marked.
As a result of these complexities, and in response to taxpayer feedback, the draft amendment for 1 July would abolish the split payment designation. This would significantly reduce the administrative burden on taxpayers.
The draft amendment does, however, give rise to an additional complexity in the reporting of bad debts. Under the amended rules, taxpayers need to indicate the original due date of the payment for an unpaid invoice. For which the taxpayer is seeking a VAT relief. This is intended to help the tax authority verify bad debt relief claims. This could potentially present difficulty for taxpayers who do not maintain such information or cannot easily access it in their accounting systems.
Finally, the draft amendment would modify reporting of cross-border business to consumer (B2C) supplies of goods. This is as well as similar supplies of electronic services. These supplies are at the heart of the European Union’s One-Stop Shop regime that takes effect 1 July 2021, and as such, the current invoice designations for these supplies in JPK_V7M/V7K would be consolidated into a single, new invoice designation under the amended rules.
Poland’s JPK_V7M/V7K filings are enormously ambitious in scope. It is clear from these latest proposals that the tax authority is willing to make substantial adjustments to the structure of these filings, at very short notice. In such a dynamic landscape, it is critical that businesses stay on top of regulatory developments in order to remain compliant.
Need to ensure compliance with the latest Polish VAT regulations? Get in touch with our tax experts.
For more information see this overview about e-invoicing in Poland, Poland SAF-T or VAT Compliance in Poland.
The General Authority of Zakat and Tax’s (GAZT) previously published draft rules on ‘Controls, Requirements, Technical Specifications and Procedural Rules for Implementing the Provisions of the E-Invoicing Regulation’ aimed to define technical and procedural requirements and controls for the upcoming e-invoicing mandate. GAZT recently finalized and published the draft e-invoicing rules in Saudi Arabia.
Meanwhile, the name of the tax authority has changed due to the merger of the General Authority of Zakat and Tax (GAZT) and the General Authority of Customs to form the Zakat, Tax and Customs Authority (ZATCA).
The finalised rules include a change to the go live date of the second phase from 1 June 2022 to 1 January 2023. They revealed the time limit to report B2C (simplified) invoices to the tax authority´s platform for the second phase.
According to the final rules, the Saudi Arabia e-invoicing system will have two main phases.
The first phase begins on 4 December 2021 and requires all resident taxpayers to generate, amend and store e-invoices and electronic notes (credit and debit notes).
The final rules state businesses must generate e-invoices and their associated notes in a structured electronic format. Data in PDF or Word format are therefore not e-invoices. The first phase does not require a specific electronic format. However, such invoices and notes must contain all necessary information. The first phase requires B2C invoices to include a QR code.
There are a number of prohibited functionalities for e-invoicing solutions for the first phase:
The second phase will bring the additional requirement for taxpayers to transmit e-invoices in addition to electronic notes to the ZATCA.
The final rules state the second phase will begin 1 January 2023 and will be rolled-out in different stages. A clearance regime is prescribed for B2B invoices while B2C invoices must be reported to the tax authority platform within 24 hours of issuance.
As a result of the second phase requirements, the Saudi e-invoicing system will be classified as a CTC e-invoicing system from 1 January 2023. All e-invoices must be issued in UBL based XML format. Tax invoices can be distributed in XML or PDF/A-3 (with embedded XML) format. Taxpayers must distribute simplified invoices (i.e. B2C) in paper form.
In the second phase, a compliant e-invoicing solution must have the following features:
The second stage will furthermore bring additional prohibited functionalities for e-invoicing solutions on top of requirements mentioned in the first phase:
After publishing the final rules, the ZATCA is organising workshops to inform relevant stakeholders in the industry.
Some of the details remain unclear at this point, however the Saudi authorities have been very successful in communicating the long-term goals of the implementation of its e-invoicing system, as well as making clear documentation available and providing opportunities for feedback on the documentation published for each phase. We expect provision of the necessary guidance within the near future.
Contact us to discuss your Saudi Arabia VAT requirements. In addition, to find out more about what we believe the future holds, download VAT Trends: Toward Continuous Transaction Controls.
It’s been more than a few years since Romania first toyed with the idea of introducing a SAF-T obligation to combat its ever-growing VAT gap. Year after year, businesses wondered what the status of this new tax mandate was, with the ANAF continuously promising to give details soon. Well, the time is now.
The Organization for Economic Co-operation and Development (OECD) introduced the Standard Audit File for Tax (SAF-T) in 2005. The goal of the SAF-T digital VAT return is to provide auditors access to reliable accounting data in an easily readable format. Companies can export information from their accounting systems (invoices, payments, general ledger journals in addition to master files).
As a result, audits should be more efficient and effective based on the standardized format set by the OECD. As countries can require a different format for capturing data, no two country implementations of SAF-T are exactly the same.
From 1 January 2022, the new Romania SAF-T mandate comes into effect for large taxpayers. The digital VAT return submissions are via XML with over 800 fields.
It appears Romania is looking to follow the format prescribed by the OECD (SAF-T OECD Scheme version 2.0 – OECD standard format). The technical specifications have been released and can be found on the ANAF portal.
The documents which are available include:
Now that the specifications are available, Romania will soon move into the testing phase of implementation; where taxpayers can take advantage of submitting test data to the ANAF. This is in order to become familiar with the process, understand the requirements, and if necessary, adjust their ERP systems. As a result, this should ensure full compliance for January. Details on how to participate in the test phase are forthcoming and will be available on the portal once finalized.
Sources close to the Romania SAF-T implementation project indicated the hope is to eliminate certain declarations. To possibly provide pre-filled returns based on SAF-T information once the project is in full swing. This would align with the pre-population trend that is slowly making its way across the EU; with Italy, Spain, and Hungary paving the way for pre-populated VAT returns.
Get in touch to discuss your Romania SAF-T compliance requirements. To find out more about what we believe the future holds, download VAT Trends: Toward Continuous Transaction Controls or see this overview on VAT Compliance in Romania.
The Turkish Revenue Administration (TRA) has published updated guidelines on the cancellation and objection of e-fatura and e-arsiv invoice. Two different guidelines are updated: guidelines on the notification of cancellation and objection of e-fatura and guidelines on the notification of cancellation and objection of e-arsiv.
The updated guidelines inform taxable persons about the new procedures for objection against an issued e-fatura and e-arsiv invoice. And how this must be notified to the TRA. Due to changes in the objection procedure, the e-arsiv schema has also changed. There has not yet been a change in the e-fatura schema, however it could also change in the near future. The updated guidelines state that the TRA platform can be used to notify the TRA about objection requests made against an issued e-fatura and e-arsiv invoice.
From July 2021, electronically issued documents won’t be mentioned in the so called ‘BA and BS forms’. The BA and BS forms are generated to periodically report issued or received invoices when a total invoice amount is 5.000 TRY or more. All limited liability and joint stock companies are obliged to create and submit the forms to the TRA even if they don’t have any invoices to report.
The TRA recently published a new provision stating that electronically issued documents will not be shown in BA and BS forms and instead will be reported directly to the TRA in the clearance (e-fatura) and reporting(e-arsiv) process. Considering that the TRA receives the invoice data for electronically issued invoices in real-time, relieving taxpayers from reporting invoices through BA and BS forms creates a more efficient system in which the relevant data will be collected only once from taxpayers.
At its current stage, e-documents won’t be mentioned in these forms. However, in order for the TRA to have accurate invoice data about each taxpayer, it needs to be notified which are the final invoices and disregard any objected or cancelled documents when evaluating taxpayer data.
Although the cancellation process is already performed through the TRA platform for basic e-fatura and e-arsiv, objection requests are made externally (through a notary, registered letter or registered e-mail system), meaning the TRA does not have visibility of all objections. There could therefore be a risk that the TRA considers a cancelled document (due to objection) as issued which could result in discrepancies between the taxpayer records and the data that the TRA considers relevant for tax collection.
Therefore, taxpayers must now notify the TRA about objection requests to avoid any discrepancies between their records and BA and BS forms. The final goal of this application is that the BA and BS forms will be completely auto populated by the TRA in future.
According to the Turkish Commercial Code, any objections or cancellation requests must be made within eight days. Suppliers and buyers can raise an objection request which must be made externally (through a notary, registered letter or registered e-mail system) and registered in the TRA system.
For e-arsiv application, there are two ways for suppliers to notify the TRA about the objection request. They can either use the e-arsiv schema (automated) or register the request in the TRA portal. Buyers can see this request on the TRA platform and may respond, although they are not obliged to. Because e-self-employment receipts are also reported through e-arsiv application, the same objection rules apply.
For e-fatura, since there is no change in the schema, it is not possible for suppliers or buyers to notify the TRA using e-fatura schema. Currently, they can only notify the TRA about e-fatura objections through the TRA platform. Taxpayers can also respond to objection requests only through the platform.
The TRA has taken a step towards the digitalization of cancellation and objection requests. However, there is still not an automated way to perform these actions. Before the digitized objection process becomes reality in the country, the authorities must take a more sophisticated approach towards automating the process as well as introducing or amending applicable legislation.
Get in touch to find out how Sovos tax compliance software can help you meet your e-transformation and e-document requirements in Turkey.
There are a variety of different approaches to Insurance Premium Tax (IPT) treatment for marine insurance across Europe. Before looking at how individual countries treat marine insurance, it is worth noting the challenges in determining the country entitled to levy IPT and any associated charges.
The location of risk relating to marine vessels falls within article 13(13)(b) of the Solvency II Directive. This outlines that in the case of ‘vehicles of any type’ the risk location is the ‘Member State of registration’. There is no definition provided for ‘vehicles of any type’. So there is some uncertainty as to whether this is limited to land motor vehicles or whether it extends to marine vessels and aircraft. Most EU jurisdictions adopt the latter, broader approach, but Malta limits it to motor vehicles.
Additionally, the German tax authority has been known to rely on a 2017 decision made by the Cologne Fiscal Court to levy IPT in circumstances where a P&I club member had a registered office in Germany, but no ship was registered there. This raises the possibility of double taxation. This is with IPT potentially levied in both Germany and the country of the registration of the vessel. The Law on the Modernisation of Insurance Tax passed in December last year.
Once an insurer has navigated the choppy waters of the location of risk rules, regimes across Europe vary considerably. Marine insurance is a class of business that sees a number of IPT exemptions. Some countries like Bulgaria and Ireland offer fairly broad exemptions for damage and loss to marine vessels.
Other countries adopt a more nuanced approach in distinguishing between commercial vessels and pleasure craft. Belgium offers an exemption in the case of the former, whereas they levy IPT as normal in the case of the latter. A similar distinction exists in France between vessels conducting commercial activities and those operating for pleasure.
Germany has a reduced IPT rate of 3% in relation to marine hull. Where the ship exclusively serves commercial purposes and has insurance against perils of the sea.
Denmark has an exemption for its tax on non-life insurance, but it does impose a separate tax on pleasure boats. Denmark calculates on the sum insured of the vessels themselves.
One final point of note is the extension of the regime for the reduced rate, like that in the Portuguese territory of Madeira, in April. The extension lasts until the end of this year at least. The European Commission has extended the State aid initiative which gave rise to the reduction until 31 December 2023, so it may be that this will be reflected in Portuguese legislation in due course.
It’s essential for insurers to understand the tricky location of risk rules associated with marine insurance. In addition to the various approaches taken by different countries in Europe. This ensures companies pay the correct amount of Marine Insurance Tax to the correct administration.
Get in touch to discuss your marine insurance requirements with our IPT experts.
The Colombian electronic invoicing system is reaching maturity level. Since its inception in 2018, Colombia has been steadily consolidating and expanding the mandate to make it more stable, reliable and comprehensive.
As a result of the enactment of the recent Resolution 000013/2021, the Colombian tax administration (DIAN), officially expanded the electronic invoicing mandate to also include payroll transactions. This expansion follows the pattern established by Mexico, Brazil and other countries that already expanded the electronic invoicing mandate to payroll transactions as well.
The Support Document for Electronic Payroll is known locally in Colombia as Documento Soporte de Nomina Electronica or also simply as Nomina Electronica. It is a new digital document intended to support and validate the payroll related costs and deductions of income tax and the VAT credits (if applicable) when businesses make payments resulting from labor, legal, and other similar types of relations (pensions).
In simple terms, labour cost transactions should be reported under this new digital system for them to be valid. This is whenever employers make payments for wages, salaries, reimbursements, pensions etc.
Employers paying wages under a labor relation, where payments are reported as expenses for income tax purposes or as deductible taxes for VAT, need to comply. However, there are important exceptions derived from that legal framework. For instance, public offices, non-for-profit entities or taxpayers under the simplified regime are not currently required to comply. Consequently, they do not need to use such payments for deductions of income tax or VAT.
The DIAN established an implementation schedule based on the number of employees the taxpayer has in the payroll. There are four stages or groups subject to the following deadlines:
| Group | Deadline to start the generation and remittance of the document | Number of employees | |
| From | Up to | ||
| 1 | 1 September 2021 | More than 250 employees101 | |
| 2 | 1 October 2021 | 101 | 250 |
| 3 | 1 November 2021 | 11 | 100 |
| 4 | 1 December 2021 | 1 | 10 |
As the Nomina Electronica is required to be reported monthly, the payments for each month should be reported by the 10th day of the next month as a result. The adjustment notes should be reported within the same deadline, once they have been made by the employer.
There are two basic types of reports that are parts of this mandate: the Support Document of the electronic payroll, and – when necessary – the Adjustment Note.
This electronic document contains the information supporting the payments made to employees as wages and other compensations, deductions and the difference between them made by the employer, as reported in the payroll. The employer must then generate and transmit the document to the DIAN using the XML format established in the technical documentation included in the regulation 000037/2021.
In this mandate there are no credit notes as we know them in the electronic invoice system of Colombia. However, when an employer needs to make corrections to the Support Document of Electronic Payroll reported to the DIAN, it can issue what we know as Adjustment Notes (or Notas de Ajuste) where the employer will be allowed to correct any value previously reported to the DIAN via the Nomina Electronica.
Employers must submit reports to the DIAN individualised for each beneficiary receiving payments from the employers. As a result, the report requires the provision of some mandatory information for the DIAN to validate. This includes the proper identification of the report itself, the reporting party, in addition to the employees, wages or other payments employees, date, numbering, software etc.
Another mandatory information element that is worth mentioning is the CUNE or Unique Code of Electronic Payroll Support Document. This is a unique identifier for each Electronic Payroll Support Document. It will allow exact identification of each report or the Adjustment Notes issued after it. However, there is some additional optional information that can be provided depending on the needs or convenience of the employer making the report.
From a technical perspective, neither the Support Document of the Electronic Payroll nor the Adjustment Notes are based on the UBL 2.1 structure used in Colombia for the electronic invoice. This is because the UBL standard does not include modules for payroll transactions or reports. Therefore, the DIAN has based its architecture in a different XML standard. Each report requires a digital signature. For that, the taxpayer can use the same digital certificate used for signing electronic invoices.
The current regulations do not require that the Nomina Electronica or the Adjustment Notes should be generated by a particular software solution or by a software provider authorized by the DIAN. Taxpayers have the option to generate the report using their own solution. That is a market solution or a solution that the DIAN will provide for small taxpayers. However, all reports should strictly follow the technical documentation issued by the DIAN within the Resolution 000037/2021. The remittance of those documents is electronic, using the webservices specified by the DIAN.
After making the transmission, the DIAN then validates the document. They will then report back the corresponding application response to the taxpayer, indicating its acceptance and validation. Only then, will the amounts reported in the payroll document are valid expenses for the deduction.
Non-compliance with electronic payroll in Colombia will be subject to the same fines and penalties established for not complying with the electronic invoicing mandate, as defined in Art. 652-1 of the Tax Code of Colombia (Estatuto Tributario). But the most important implication of non-compliance is that any payment not reported by the employer, will not be allowed as expenses for income tax or VAT purposes when applicable.
Speak to our experts about your tax requirements in Colombia and keep up to date with the changing VAT compliance landscape by downloading VAT Trends: Toward Continuous Transaction Controls.
Update: 24 September 2025
Insurance Premium Tax (IPT) regulations in Spain are among the most intricate within the European Union.
Compliance is particularly challenging due to the involvement of multiple tax authorities. These include the central tax administration – commonly referred to as “HACIENDA/AEAT” (Agencia Estatal de Administración Tributaria) – as well as four provincial tax offices in the Basque Country: Álava, Guipúzkoa, Navarra, and Bizkaia.
In addition to IPT, insurers are also subject to extraordinary surcharges on some of the risks. These surcharges must be paid to the Consorcio de Compensación de Seguros (Consorcio). Furthermore, fire brigade contributions are due either to GESTORA (Gestora de Conciertos para la Contribución a los Servicios de Extinción de Incendios) if the insurance company is a member of GESTORA, or to over 300 municipalities without membership. Municipal FBC (MFBC) may also be payable to certain municipalities within the Madrid region.
Given this complex landscape, navigating Spain’s IPT framework and maintaining compliance can be particularly demanding. To support insurers in this effort, SOVOS has developed this guide to address key questions and provide clarity on the nuances of Insurance Premium Taxation in Spain.
While not all taxes apply to every insurance risk, the applicable obligations vary based on the nature of the coverage. Navigating Spain’s Insurance Premium Tax (IPT) framework requires a solid understanding of more than five distinct taxes and contributions.
Below are the most encountered taxes and surcharges in Spain:
Insurance Premium Tax (IPT) in Spain must be paid to one of five different tax authorities, depending on the postcode of the insured risk location. While most liabilities are reported to the central tax administration, known as “Hacienda” (Agencia Estatal de Administración Tributaria), some Basque regions have their own tax offices.
The first two digits of the five-digit Spanish postcode determine the appropriate tax authority for IPT reporting. If the postcode begins with one of the designated codes for the Basque provinces, as listed below, IPT must be paid to the corresponding regional tax office. For all other postcodes, IPT is payable to the central tax administration.
In addition to registering with the central tax administration (Hacienda), insurers must register with the relevant provincial tax office corresponding to the location of the insured risk, where applicable.
The current IPT rate in Spain is 8% as of 2021, and it is applied to all classes of insurance, with some exemptions.
Certain classes of insurance businesses are exempt from Insurance Premium Tax (IPT) in Spain. These exemptions typically include life, health, reinsurance, export credit, suretyship, and international coverage across various sectors such as marine and aviation. Agricultural risks may also qualify for exemption, depending on the specific circumstances.
The basis for calculating Insurance Premium Tax (IPT) in Spain is the total premium amount payable by the insured. Depending on how the Fire Brigade Charge (FBC /MFBC) is levied, it may also be included in the taxable base for IPT purposes.
The insurer is responsible for calculating, collecting and remitting the Insurance Premium Tax (IPT) to the appropriate tax authority, in accordance with the filing and submission requirements established by each respective office.
Although Insurance Premium Tax (IPT) is classified as an indirect tax, insurance companies are not currently required to submit real-time transactional data through Spain’s Immediate Supply of Information (SSI) system, which is already in use for VAT reporting. However, future developments are expected to move IPT submissions toward greater automation, aligning more closely with VAT processes. At present, IPT reporting involves both monthly and annual declarations:
IPT filings in Spain are submitted online and may require varying levels of detail, such as a breakdown by covered risks.
CCS or Modelos are administered by Consorcio de Compensación de Seguros (Consorcio). One of the Consorcio’s primary responsibilities is to compensate policyholders when the Spanish government officially declares an extraordinary risk event.
Extraordinary risks generally fall into the following categories:
Each Modelo is subject to its own tax rate and calculation methodology. Below is a high-level summary:
Returns must be submitted on a monthly basis via a dedicated online portal that requires detailed policy-level information. Payment is made through direct debit, which is automatically triggered upon submission of the return.
The Fire Brigade Charge (FBC) is a surcharge applied to insurance premiums that include fire coverage. Depending on the nature of the policy, the tax may be levied on the full premium or only on the portion attributable to fire risk.
Provided that the insurance company is a member of Gestora de Conciertos para la Contribución a los Servicios de Extinción de Incendios (GESTORA), the collection of FBC is centralized by this body. This body operates under the umbrella of UNESPA—the Spanish Association of Insurers and Reinsurers—and represents over 96% of insurance companies in Spain.
However, in the absence of membership, the insurance company should deal with 300+ municipalities in Spain because FBC amounts must be paid individually to the respective municipalities based on the postcode of the insured risks. Therefore, it is strongly recommended to become a member of GESTORA, as this significantly reduces the administrative burden associated with FBC payments.
Two standard rates apply:
Joining GESTORA is administratively challenging, as new members are accepted only once per year. Insurers must submit a formal application during a limited registration window – typically one month in the spring.
FBC settlement spans five years and consists of four phases:
In addition to the National FBC, insurance companies may be subject to a Municipal Fire Brigade Charge (MFBC) if the insured risks are located in the Region of Madrid, because some Madrid Councils have implemented a municipal levy (MFBC). MFBC rates vary by municipality and coverage type, ranging from 5% to 30%, and may be structured as either fixed or variable. The declaration period is typically annual.
Need more information? Our team of tax experts are ready to help. Get in touch today.
An amendment in the General Communiqué No. 509 has announced healthcare service providers and taxpayers providing medical supplies and medicines or active substances must use the e-invoice application from 1 July 2021.
Published in the Official Gazette the implementation will cover healthcare service providers who have signed contracts with the Social Security Institution (SSI) and all taxpayers providing medicines and active substances and medical supplies.
This includes:
Within this scope, organisations must use the e-invoice application as of 1 July. Organisations signing contracts with SSI after this date must use e-invoice prior to their issue of invoices to SSI.
From 1 January 2020 all organisations included in the e-invoice application scope have to apply the e-arşiv invoice on the date of e-invoice application. Any healthcare organisations included in the amendment will then have to apply the e-arşiv invoice on 1 July.
The digitisation process will minimise physical contact, a significant benefit following the Covid-19 outbreak. Furthermore, organisations will no longer have to prepare or store physical documents as they are stored electronically.
For organisations that issue invoices to SSI, transactions such as payment terms will become faster and more efficient via the e-invoice and e-arşiv invoice applications. In addition to the transfer of all invoice-related processes to the digital environment.
Organisations that carry out the e-issuance process via the TRA Portal or via a third-party integrator will benefit from easy access to documents, improved efficiency, and business continuity as a result.
Get in touch to find out how Sovos tax compliance software can help you meet your e-transformation and e-document requirements in Turkey.