The upcoming tax reform in Greece is expected to manifest itself in three continuous transaction control (CTC) initiatives.

1. The myDATA e-books initiative, which entails the real-time reporting of transaction and accounting data to the myDATA platform which will in turn populate a set of online ledgers maintained on the government portal;
2. Invoice clearance, which is clearly beneficial for the Greek Tax Authority although no roll-out date has been published yet; and
3. Online cash registers which will transmit sales data to the tax authority in real-time.

Earlier this month, new technical specifications were published for the online connection of cash registers with the government portal. From June 2020, all cash registers currently used in Greece must be updated to meet the new technical specifications (available in Greek) to be able to connect and transmit their transaction data to the government portal.

The technical specifications regulate two aspects:

1. The frequency of data transmission. The data will be reported in real-time and up to once per day in batch.
2. A QR code must be included in the receipts issued. Through a URL in the QR code, whose format and content are defined in the technical documentation, the tax authority can validate the receipts issued. The actual control process hasn’t been defined yet, but it’s understood that based on this QR code the tax authority will be able to compare the retail data from the cash register to the data registered on the myDATA platform.

These specifications are complementary to those published in late 2018, which mainly regulated the security and certification requirements of the new generation cash registers. This latest development is further proof that the Greek government is committed to moving forward with the CTC plans it initially outlined two years ago.

Certification of e-invoice service providers is an important first step and milestone ahead of the implementation of e-invoicing in Greece.  The Greek Government has now defined the regulatory framework for e-invoice service providers, their obligations, and a set of requirements needed to certify their invoicing software.  Find out what you need to know about the accreditation scheme for e-invoicing service providers in Greece.

Key details and parameters

Scope

E-invoice service providers are entities the taxpayer authorises to issue invoices on their behalf electronically for B2B in addition to B2C transactions. They’re responsible for issuing, the authenticity and integrity, and the transmission of transaction data to the tax authority in real-time. Other outsourced functions include e-invoice delivery to the buyer directly and archiving on behalf of the issuer.

Software requirements

The service provider’s software must meet a number of requirements. It must for example be able to guarantee integrity and authenticity of the invoice according to the SHA-1 algorithm, provide real-time connection with the customer’s software, and make the invoice available to the customer in electronic  (or, upon request, in paper) form. Any software which meets these criteria recieves a “Suitability Permit”, which is valid for five years.

Service provider requirements

Service providers must be a Greek registered entity or permanently established in Greece. They must also meet certain technical, security and financial criteria and the invoice data must be stored within the EU. Other obligations also include making a user manual available to the customer; notifying the tax authority of each outsourcing contract they have entered into; and addressing privacy-related matters.

Transmission method and e-invoice format

The transmission method to the myDATA will be the myDATA REST API and the format of the e-invoice exchanged between the parties is based on the EN norm, as defined by law just a few days ago. The myDATA website will publish any details and further legislation.

Through this Decision, the Greek Government is introducing the long-awaited secondary legislation, as mandated in the budget law 2020 earlier this year. Precisely how these provisions will work together with the myDATA scheme, scheduled to be fully operational on 1 April 2020, is still to be defined by the authorities. However, Greece requires further legislation, as well as a formal derogation decision from Brussels. This is if the Greek government wishes to mandate e-invoicing in the country. As such a reform would deviate from principles laid out in the EU VAT Directive.

White Paper

Your SAP S/4 Migration and ‘Always On’ VAT Compliance Are on a Collision Course – Here’s How to Manage

If you’re an SAP user and you want to better understand your options in moving to S/4 in relation to tax compliance, this story should help. Download it now.

Prepare for the SAP S/4 migration to ensure continued tax compliance

SAP users wanting to better understand their options when migrating to S/4 from a tax compliance perspective should read this e-book. Gain insight into the future of global tax, including paperless transactions, business networks and the advent of transaction-orientated indirect tax enforcement.

The e-book also provides examples that explain the options for moving to a new ERP software – an important decision spanning multiple business departments, such as tax, accounting, IT and revenue.

Download our e-book to understand:

• What are the greenfield and brownfield S/4 migration options?
• What has changed in global tax?
• What other approaches exist for S/4 migration?
• What are the criteria for a  future-proof VAT compliance solution?
• How can Sovos help?

SAP plans to discontinue support for ECC6 by 2025 and that deadline will loom closer and closer as the months pass by.

It is quite clear from market data that many companies will not be able to migrate to S/4 prior to the 2025 deadline – even 2025 will prove tight on time for many, and in some cases, companies will find this deadline near-impossible to make.

Furthermore, many SAP users are yet to automate procurement and customer interactions: a significantly large proportion of orders and invoices are still exchanged on paper, often using ample scanning and OCR software in accounts payable.

Tax digitization is a trend that continues to rise in importance, with tax authorities across the globe introducing e-invoicing and continuous transaction controls (CTCs) to close the VAT gap. Tax compliance requires processes to be updated to comply with these digital tax changes.

Legacy reporting processes, organizational structures and technologies that continue to directly interact with your ERP systems need to evolve. The transformation of indirect tax is becoming a reality: manual, decentralised or shared service centre-aided indirect tax reporting will become a peripheral activity while your organisation negotiates the transformation to ‘always-on’ compliance.

If these challenges sound familiar, our e-book is equipped to help you overcome them. Our expert team have distilled their knowledge into this easy-to-digest guide on a complex subject that is underpinned by an increasingly urgent deadline.

How Sovos can help

At Sovos our goal is to allow our SAP customers to switch to a single vendor they can entrust their data to. This seamless migration will simplify operations and ensure compliance with each country’s different periodic or continuous controls at any time.

In doing so, you decouple business and tax functionality so you can focus on the former to power your digital and finance transformation – important considerations in an increasingly digital world where widespread digitisation is the expected status quo rather than a purely innovative force.

Sovos provides certainty with a future-proof strategy for tackling compliance obligations across all markets as VAT regulations evolve toward continuous e-reporting and other continuous transaction controls requiring increasingly granular data.

Experience end-to-end handling with compliance peace of mind with Sovos.

Following India’s recent public consultation looking at the proposed introduction of an e-invoicing regime, the GST council has now released a white paper on the architecture of the new framework and also provided answers to a number of outstanding questions.

From 1 January 2020, taxpayers in India can start to use the new e-invoicing framework, which relies on connectivity to the GST system for reporting of all B2B invoice data.  The first part of the roll-out starting from this date will be voluntary for businesses.  It will only become mandatory at a later stage, the timing of which is still to be communicated by the relevant authorities.

The new e-invoicing system, considered to be not only a tax reform but also a business reform, has two key aims:

• To ease the process and format of standard reporting between taxpayers and the authorities.
• To prevent tax evasion by monitoring all B2B invoices and taxes involved within the transactions.

Under the e-invoicing system, taxpayers will be obliged to create the e-invoice in the structured JSON format and transmit it to the Invoice Registration Portal (IRP). The IRP will then check the e-invoice according to the requirements of the schema and determine if a duplicate record is already registered on the GST system.

After this check, the IRP will digitally sign the e-invoice, assign a unique number – the invoice registration number (IRN) – to the invoice and create a QR code, before submitting the invoice to the GST system. The QR code will help to authenticate the e-invoice by the seller and buyer and to confirm that the invoice is successfully registered in the GST system. Connection to the portal is needed to see all the e-invoice data and to view all the details online. A digital signature by the taxpayer is not mandatory, but it is permitted before submission to the IRP.

An IRN can also be generated by the seller with the required parameters, which would then be validated by the IRP and transmitted to the GST System if it meets the predefined criteria.

Once the e-invoice has been cleared by the IRP, it will be transmitted to both the seller and the buyer by email.

Taxpayers can use several methods to connect to the IRP including web, API, SMS, mobile app, offline tool or GSP based.

The IRP keeps the e-invoices for just 24 hours as its main function is to validate and assign the IRN. Invoices submitted to the GST system will be archived for the whole financial year by the GST system and taxpayers must keep the IRN for each invoice to ensure compliance.

The new system will simplify the preparation of Goods and Services Tax (GST) returns by auto-populating the returns with the data from the e-invoices. The GST System will update the ANX-1 of the seller (sales registers) and ANX-2 of the buyer (purchase register).

Data from the e-invoice will also be used as a basis to populate the current e-waybill (auto-generation of Part-A), where only the vehicle registration number will need to be added in Part-B of the e-waybill.

Whilst the white paper has provided some guidance for businesses ahead of the introduction of this e-invoicing framework, there are still some grey areas to be addressed in the coming months, including the timeline for submitting e-invoices.

Back in June this year, many heads were turned when the French Minister of Public Accounts and Action, Gérald Darmanin, went on record stating that the French Government has the intention of making e-invoicing mandatory also for B2B transactions. Now it seems that the Government – spearheaded on this topic by Minister Darmanin as well as by the Minister of Finance Bruno Le Maire – has moved from word to action. The French Finance Bill for 2020, formally presented after the meeting of the Council of Ministers on 27 September, codifies the plan to extend the B2G e-invoicing obligation in force today to cover also B2B e-invoices.

What’s new?

In just three short paragraphs, the draft finance law outlines the major principles for the budding reform. While much is left to be clarified by later decrees, art. 56 of the Finance Bill introduces the main rule that electronic form for invoices will be mandatory and that, as a result, paper invoices will no longer be permitted. It also introduces language that means that e-invoices most likely also will be cleared by the tax authority, or otherwise have the data transmitted to the tax authority to enable control of the VAT on the invoice. France will effectively, and not surprisingly, be joining the ranks of other countries such as Mexico, Turkey, Italy and Brazil, who have implemented measures to tackle its VAT gap through real-time VAT control mechanisms.

The timeline of the roll-out of the mandate will, just like the roll-out of the B2G mandate currently in force, be scheduled in stages; gradually becoming applicable for companies depending on the size of the business. The first stage of the mandate will begin on 1 January 2023, and according to the bill the entire economy should be up-and-running under the new e-invoicing system no later than 1 January 2025.

The Government also states that it, during the course of next year, will present a report to parliament, the Assemblée Nationale, presenting how the reform will be carried out as well as the underlying analysis of which method and what regulations constitute the most appropriate technical, legal and operational solution, particularly as regards the clearance/transmission of invoice data to the tax administration.

What’s next?

In addition to the analysis and drafting of both laws and reports that the Government announced, it’s also clear that one more critical element needs to be covered before the reform becomes a reality: Brussels.

Ever since Italy went down this same path and became the first EU country to introduce mandatory clearance B2B e-invoicing, many parallels have been drawn between the two countries. They share a similar situation in terms of VAT gap and IT infrastructures, which have made many experts (rightly) assume that France would follow down the path Italy set out. However, in order to lawfully do so, Italy had to seek and obtain permission from the EU Council to deviate from the provisions of the EU VAT Directive (2006/112/EC). The French Government has acknowledged that it will need to do the same.

As more and more countries across the world depend on VAT, GST or other indirect taxes as the single most significant source of public revenue, governments are increasingly asking themselves what technical means they can use to ensure that they maximise the collection of the taxes due under the new tax regimes. India is the most recent such example.

GST was introduced in India in July 2017, following many years of discussions and negotiations between different stakeholders in the country. The reform has entailed significant simplifications and streamlining of taxation in India. While the road to roll-out of the tax was bumpy, it was by international comparison very quick. Nearly two years down the road, the roll-out is widely viewed as a success, and it appears as if the government is ready to take the GST success story one step further by introducing real-time tax controls to the B2B e-invoicing process.

India on the road to real-time tax enforcement

Earlier this spring, the Indian GST Council announced the formation of a special committee with the purpose of investigating a potential Indian implementation of a mandatory B2B e-invoicing system: the “Committee of Officers on generation of electronic invoice through GST Portal” (CoO).

More specifically, the CoO has been tasked with analysing and comparing the South Korean clearance system to similar systems in Latin America in order to understand global best practices and also to assess to what extent the existing Indian state-controlled platform – the GST Network – can serve as the central hub in a clearance-style e-invoicing process.

In late May, the CoO formed two sub-committees to continue working on parallel tracks: one on legal and policy matters and the other on the development of technical requirements. During the past few weeks, work has progressed in these working groups as well as in public-private consultations.

The committee is getting close to concluding the initial deliberations, but its closing recommendations have not yet been published in a final report. As a result, no draft laws, draft invoice schemas or draft process frameworks have yet been made public; however, results are expected to be published this summer.

What would the system look like?

While it’s still too early to describe what the Indian e-invoicing system will look like with any real certainty, speculation has naturally already begun. The CoO was specifically asked to investigate how the current eWaybill system could be recycled into a mandatory e-invoicing system, and it is therefore very likely that the new framework will bear strong similarities to the eWaybill process.

Such similarities include the principle of real-time or near-real-time generation of invoice number ranges by a central platform, which must then be included on the invoice document in order for it to constitute a fiscally valid invoice. In other words, this type of system would not entail issuance of the invoice on a clearance portal, such as in Italy, but constitute a somewhat softer version of a clearance e-invoicing system.

What’s next?

E-invoicing has been a legal possibility and practical reality in India for a number of years now, and as a result many companies are up and running with PDF-based e-invoicing in the country. Given the size of the Indian economy and the role it plays in global manufacturing, any major e-invoicing reform will have significant impact, not just on local businesses but on international commerce as a whole.

On 21 June, the GST Council is set to discuss the general topic of tax controls and how to increase tax collection through modernised compliance requirements. It remains to be seen if the GST Council is ready to formally decide on the introduction of mandatory e-invoicing in the country, or if it is ready to publish a high-level framework for basic considerations such as scope, dates for entry force and high-level technical principles.

If not, there’s still no reason to worry that a decision will be delayed; if anything, it would be wise to expect the opposite: the government has repeatedly displayed the ability to get things done with remarkable speed. Strengthened as the prime minister is after the recent elections not even a month ago, there’s every reason to believe that this project won’t be an exception.

Italy has been at the forefront of B2G e-invoicing in Europe ever since the central e-invoicing platform SDI (Sistema di Interscambio) was rolled out and made mandatory for all suppliers to the public sector in 2014.

While a number of its European neighbours are slowly catching up, Italy is continuing to improve the integration of new technologies with the public administration’s processes. Its latest move is to make e-orders mandatory in public procurement. By leveraging the successful use of the public administrations’ Purchase Orders Routing Node platform (Nodo di Smistamento degli Ordini, or NSO) in the Emilia-Romagna region, Italy is now extending the functionality throughout the country.

E-ordering for purchases beyond healthcare products

As of 1 October 2019, all purchase orders from the Italian National Health System (Servizio Sanitario Nazionale, or SSN) must be delivered to and received by suppliers through the NSO platform. The suppliers affected by the mandate will be required to receive e-orders from public entities; the public administration will not proceed with the liquidation and payment of invoices issued by non-compliant companies. It is noteworthy that the mandate covers all purchase orders made by entities associated with the SSN, including office supplies and electronics, and not just health-related products.

In addition to mandatory receipt of e-orders, suppliers will also be able to send messages to the public administration. In cases where suppliers and the public administration have previously agreed, the supplying company may send pre-filled e-orders to the public administration buyer, which will confirm or reject the proposed supply.

Foreign suppliers and the new e-ordering mandate

Moreover, foreign suppliers must also comply with this mandate. The NSO mandate will have some impact on e-invoicing for Italian public administrations seeing as certain e-order data must be included in the e-invoices that are transmitted through the SDI.

The NSO system is built upon the existing SDI infrastructure, and as a result, the communication with the NSO requires similar channel accreditation as the SDI. Suppliers and intermediaries already performing the transmission of messages through the SDI platform are required to comply with complementary accreditation requirements, which are yet to be published. Furthermore, the technical specifications show that PEPPOL intermediaries may interact with the NSO platform through an Access Point service accredited with the NSO.

On 15 February 2019, Portugal published Decree-Law 28/2019 regarding the processing, archiving and dematerialisation of invoices and other tax related documents including:

• The mandatory use of certified invoicing software
• General requirements for paper and electronic invoices
• Dematerialisation of tax documentation
• Archiving of tax documentation (including ledgers, etc)
• Adjacent tax rules and obligations

The decree aims to consolidate rules and to promote the adoption of electronic means of dealing with tax documentation and archiving. It also aims to eliminate tax fraud by tightening controls through the identification of invoicing software, identifying where invoicing terminals are located, the mandatory obligation to include a unique document code (UUID) in the tax document and, finally, identifying the location of the transaction.

According to the Decree-Law, invoices (paper or electronic) must be processed using certified invoicing software, which must, amongst other things, complete the invoice’s content in line with the VAT law. Simplified invoices (issued for less than €100 Euro) can, however, be processed by “other electronic invoicing means” such as cash machines. The Decree-Law also regulates contingency situations where the invoice must be based on pre-printed documents.

What’s new?

Scope extended for mandatory use of certified invoicing software

Having to use invoicing software that has been certified by the tax authority is not new in Portugal. However, the changes in the new Decree-Law mean that more taxpayers must now comply with the obligation as the mandate threshold has reduced.  Previously it only affected companies (with a permanent establishment in Portugal) with a revenue in the previous year of €100K.  It now includes companies with a revenue of over €75K (applicable during 2019) and reduces to €50K from 2020.

Unique invoice code

The decree also mandates that from 1 January 2020, invoices must carry a unique invoice code (UUID) following the government’s requirements. The code will also be represented as a QR code on printed invoices. Both requirements are new and software providers will have to adapt their solutions in the future to meet these new legal requirements.

Prior authorisation of invoice series

Another new requirement set by the Decree-Law is that taxpayers must communicate to the tax authority the invoice series used by each establishment before issuing any invoice. The tax authority will assign to each series a code that must be included in the new mandatory UUID. While not the same, a similar requirement applies in many other countries, more specifically, in countries that have introduced a clearance model. In fact, Latin American countries with a clearance system often require taxpayers to either request prior invoice ranges from the tax authority, or to have an invoice series authorised by the tax authority, or to have the numeration done directly by the tax authority in connection with the clearance process. A good example of the first scenario is in Chile or Colombia, where taxpayers must request prior authorisation of an invoice range by the Chilean tax authority. An example of the second process is Mexico, where the invoice is numbered by the state agent that intervenes in the clearance process. However, such a requirement is new in the EU context, demonstrating once more that Europe is drawing inspiration from Latin America’s success in closing their VAT gap.

Guaranteeing integrity and authenticity in paper and electronic invoices

When it comes to guaranteeing the integrity and authenticity of invoices, it is worth noting that the decree deviates from the Directive 2010/45/EU as the possibility to use business controls provides a reliable audit trail (hereinafter BCAT) as a method of guaranteeing integrity and authenticity is expressly limited to paper-based invoices only. Furthermore, such controls must be properly documented.

For electronic invoices (ie those that are issued and received electronically) integrity and authenticity are guaranteed when one of the following methods is used: qualified e-signature; qualified e-seal in accordance with e-IDAS Regulation; or electronic data interexchange (EDI) with secure and documented processes to ensure integrity and authenticity. Taxpayers have until 31 December 2020 to migrate to the new methods of guaranteeing integrity and authenticity for electronic invoices.

Portugal is implementing its own vision when it comes to guarantees of integrity and authenticity putting itself, once more, closer to Latin American clearance countries where such guarantees are only achieved by digitally signing e-invoices. The distinction between methods (BCAT for paper invoices vs. e-signatures and EDI for electronic invoices) is an explicit preference of e-signatures and EDI over BCAT methods as the most efficient way to guarantee e-invoice integrity and authenticity.

New obligations

In addition to the new invoicing requirements, the Decree-Law imposes taxpayers with new obligations to notify the tax authority with additional information. This includes:

• Identification and localisation of the establishment from which invoices are issued
• Identification of equipment used to process invoices
• Invoicing software number used for each equipment
• Identification of distributors or companies in charge of deployment of the invoicing solutions

Taxpayers who have already carried out activities subject to VAT must present the above-mentioned information by 30 June 2019.

More than six months ago the Greek authorities announced their intention to introduce mandatory e-invoicing and e-bookkeeping rules, and enough information is now available to assess what the proposed rules will mean for Greece.

Although formal legislation has yet to be published, it’s expected the new e-invoicing measures by the Independent Public Revenue Authority, the Greek authority responsible for all tax matters (AADE; in Greek, “ΑΑΔΕ”), will be mandated by January 2020.

The Director of AADE recently stated that e-invoicing is incomplete without e-reporting, so the proposed rules must encompass both areas of tax compliance. By January 2020 the goal is for reporting to occur in real-time at the same time as the invoice is issued. The new rules would make e-invoicing and e-reporting mandatory, with a real-time connection from the invoicing system (by transmission of all relevant invoice data) to the electronic system (TaxisNet) of the Greek tax authorities.

Scope of reform

e-invoicing

So far, no real action has been taken regarding the implementation of the new e-invoicing system, e.g. the e-invoicing process, e-invoice format requirements and the software systems to connect to the tax authority have not yet been defined. However, the Ministry of Finance recently published a Decision establishing certification requirements and describing the certification process and responsibilities for e-invoicing service providers, who would be able to perform services of issuance, delivery and archiving on behalf of the taxable person.

Real-time reporting

By comparison, more progress has been made for implementing real-time reporting. AADE has published the technical specifications for transmission of invoice data – however, the scope of the reporting framework covers other tax as well as invoice data – e.g. income tax – to the government portal (TaxisNet) and invoice data will need to be reported on a daily basis (instead of periodically as currently). These technical specifications apply to the connection from the so-called Greek “electronic fiscal devices” – which is the most commonly used compliant method for issuing (and ensuring integrity and authenticity of) B2C invoices in Greece – to TaxisNet, as well as the data transmission software operated by e-invoicing service providers.

For B2B invoices, whose integrity and authenticity can be guaranteed by any method of the EU Directive, no technical specifications have been published yet. Further clarification and legislative action by the tax administration is required. Details about service providers’ software systems and the government infrastructure are expected to be finalised by mid-2019.

Until the implementation of the new reporting framework whereby invoice data will be reported in real-time at the same time as the invoice is issued, AADE is working on the alternative that invoice data will be reported on a regular basis by the issuer only, and not the buyer, which should minimise the overall reporting workload and ensure uniqueness of data. The buyer will be able to amend the relevant reporting field on TaxisNet where there is insufficient invoice data from the supplier.

B2G transactions

On 29 October 2018 the Government published a Bill to transpose the Directive 2014/55/EU on e-invoicing in public procurement; it however still needs to be approved. The Bill makes e-invoicing mandatory for both the supplier and the buyer/government in public procurement scenarios as of 1 April 2019.

Opportunity for structural change

AADE has clearly stated that mandatory e-invoicing would be incomplete without some type of combined transactional reporting; data should be created once and not several times as is currently the case. Therefore, we expect a type of “clearance” e-invoicing model in Greece, however at this stage it’s still too early to categorise the reform as being similar to Italy (“real” clearance e-invoicing) or more like Hungary (real-time reporting as soon as the invoice has been issued). Clearly, Greece is in line with the EU paradigm shift towards increased governmental control over transactional data and recognises the benefits of tighter tax compliance and in taking steps to close its tax gap.

Even if the new measures aren’t particularly welcomed by many individuals in Greece – much in the spirit of a well-held opposition against EU austerity measures which have led to riots and social unrest in the past – these new measures are well positioned to provide the Greek tax administration and government with an opportunity for structural change. The use of technology will enable more effective tax controls and enforcement as well as a more efficient tax environment for business, leading to a positive knock-on effect for future restructuring and rebuilding of the Greek economy.

Companies struggling to meet Italy’s electronic invoicing deadline of January 1 will get some relief from financial penalties if they can’t immediately issue invoices at the moment of supply, but it seems the Italian Tax Authority will not delay rolling out the system.

The government had stated that invoices that did not comply with the new mandate after January 1 would be subject to penalties ranging from 90 to 180 percent of the applicable tax. The tax authority will consider invoices not correctly formatted or not issued through the new SDI reporting system to be non-compliant.

But many businesses, especially smaller firms, have had trouble transitioning from their existing processes to the new e-invoicing framework that requires real-time e-invoice clearance through the state-operated Sistema di Interscambio, or SDI, platform.

In response to business concerns, the government is opening up to a grace period of sorts: Instead of postponing the e-invoicing roll-out as such, Italy will waive penalties for delayed clearance transmission. Furthermore, as of July 2019, Italy will loosen the main rule for when an invoice must be issued, which effectively will allow businesses more flexibility in the e-invoicing process.

Businesses get a grace period for Italian electronic invoicing penalties

The new rules on penalties allow for a short grace period. The tax authority will not apply penalties for e-invoices that are issued and cleared by the SDI within the VAT liquidation period to which the invoice belongs – in other words, by the 15th of the following month in which the invoice should be issued and consequently cleared (according to  Decree n. 100 from 1998, updated in 2018). For e-invoices that the SDI issues and clears by the end of the following VAT liquidation period (usually the end of the following month), the tax authority will reduce the penalty by 80 percent.

For example, if a business can’t transmit invoices in compliance on January 1, it can delay the clearance transmission of an invoice that should have been issued to February 15 without any penalties for the delay. If the business still needs more time, it can delay the clearance transmission of invoices through the SDI until March 15 and pay an 80 percent reduction of the regular penalty.

Italy eases timing of electronic invoicing issuance

Italy is also loosening its requirement for the timing of issuing an invoice. Since 1972, Italian VAT law has stated that suppliers must issue invoices to the government at the point of supply. However, beginning in July, suppliers will be able to issue invoices through the SDI platform within 10 days of supply. Invoices not cleared by SDI are not valid for fiscal purposes, so taking 10 days to issue an invoice could cause delays in receiving payment.

For companies doing business in Italy, the relief is welcome, but it is also a sign that Italian e-invoicing is moving forward on schedule. That means companies with Italian operations need to get their systems ready to comply with the new mandate or face penalties by mid-February.

Takeaways: What this means for doing business in Italy

What is also clear from the latest developments is that e-invoicing regulations in Italy can change at any time. The problem becomes exponentially more difficult to solve when businesses figure in similar changes happening all over the world. Adopting a system that automates e-invoicing and provides a single source of truth for data in both accounts payable and accounts receivable is essential.

Companies dealing with complex sales and use tax determination, VAT regulations and other tax challenges across the globe know that SAP alone is not equipped to support the varying requirements from country to country. As SAP sunsets support and updates for ECC and R3, companies must move to HANA to keep their systems up to date. With this inevitable change to S/4HANA or HANA Enterprise Cloud, now is the perfect time to step back and develop a comprehensive strategy to managing tax worldwide.

SAP users must migrate to HANA by 2025, but a majority have not yet started the process. Since the move requires major changes to ERP infrastructure, SAP users with global operations should take advantage of the unique opportunity to be more strategic in their implementation. With the right approach, companies can future-proof their solutions in a way that ensures they can keep pace with constant changes in tax regulations throughout Latin America, Europe and beyond.

Learn how to minimise business disruption during an SAP S/4HANA upgrade project in the wake of modern tax: Read Preparing SAP S/4HANA for Continuous Tax Compliance and don’t let the requirements of modern tax derail your company.

Governments around the world are implementing technology for tax enforcement. In order to keep up, companies must make the digitisation of tax a core pillar of their HANA migrations.

In the move to HANA, companies must consider the new world of tax, which includes:

• Constant change management – Companies must be able to anticipate and quickly adapt to major tax reform legislation and smaller rate and field changes while not disrupting operations or risking non-compliance.
• Internal processes – Compliance often requires changes to basic processes, procedures and technologies employed by global companies. For example, in Latin America, logistics can be impacted by VAT regulations because many countries now require e-invoices to act as a bill of lading, created before products can ship.
• Required automation – Standardisation requirements in Latin America and Europe are designed to quickly identify errors and data discrepancies by eliminating paper-based reports in favour of automated processes. Companies must automate their own operations to avoid errors and audit triggers.

The move to S/4HANA or HANA Enterprise Cloud requires companies to move all of their processes, customisations and third-party add-ons to the new platform. As such, there are several critical considerations.

What to migrate, and when

Since most companies’ SAP ERP systems have been built and customised over many years, many will benefit from a phased approach to HANA implementation. The less customised modules, such as Financial Accounting (FI) and Controlling (CO) will be easier to move than Materials Management (MM) or Sales and Distribution (SD), which will need a long-term plan for customisations.

What to do with customisations and third-party apps

Many SAP configurations have become a patchwork of customised code and bolt-on applications. This is especially true when it comes to sales and use tax determination, e-invoicing, and VAT compliance and reporting, since requirements are vastly different in every jurisdiction a company operates. The move to HANA gives companies the opportunity to consolidate, eliminating local configurations in favour of a global strategy. Companies that proactively plan can help to ensure that the next 15 years are simplified, without the constantly changing configurations needed in the previous 15 years as governments have gone digital.