Understanding European VAT Compliance

Your guide to making VAT compliance simple

There are many elements to understanding European VAT compliance; our tax experts continually review regulations, compliance rules and tax authority updates to understand VAT requirements across Europe and beyond. This e-book is the result of their research and is ready for you to download. It’s ideal for anyone involved in VAT compliance who is keen to learn more.

  • Helps you to understand VAT
  • Covers over 40 jurisdictions within and outside the EU
  • Download for free

Navigating cross-border and understanding European VAT compliance can be complicated. With requirements varying from country to country it’s important to be prepared for any upcoming changes to ensure continued compliance. The digitization of VAT continues, and our guide will help you understand and be ready for changes including SAF-T, e-invoicing and continuous transaction controls (CTCs).

Quick Links

  1. What this Guide to understanding European VAT Compliance covers
  2. What is VAT compliance?
  3. What is a VAT number in Europe?
  4. Need help with VAT compliance now? Get in touch
  5. More VAT compliance resources

Minimise compliance risks

Essential VAT Guide

Including latest VAT trends

What this guide to understanding European VAT compliance covers

The guide provides information on understanding European VAT compliance including some of the biggest trends in VAT – CTCs and e-invoicing. We also look at some of the more complex VAT requirements including Intrastat, supply chain management, the EU e-commerce VAT package and VAT for events – all in one easy to understand e-book:

  • What is VAT?
  • The global tax landscape
  • VAT reporting
  • What is SAF-T?
  • What are CTCs?
  • Optimising supply chain management
  • The EU E-Commerce VAT Package
  • What is Intrastat?
  • VAT for events
  • Global and Europe VAT reporting requirements
  • How Sovos can help

What is VAT compliance?

VAT compliance means ensuring that VAT is applied and submitted in the correct format and by the relevant deadline to the relevant tax authority.

Each Member State has its own VAT invoicing and reporting requirements. Member States have been introducing e-invoicing, continuous transaction controls and SAF-T, all requiring specific data and formats to submit to the tax authority.

VAT requirements continue to change so it’s important to be aware of upcoming regulations and prepare in advance to remain compliant with the latest requirements.

Understanding European VAT compliance
VAT is a tax on final consumption, therefore it should not represent a cost to most businesses. VAT is more efficient and less detrimental to economic growth and competitiveness than other taxes

What is a VAT number in Europe?

To obtain a VAT number a company must register for VAT in the EU. Registering for VAT in the EU remains a complicated task, with each Member State having bespoke processes and procedures to obtain a VAT number. VAT reporting includes many elements, from registration to fiscal representation and filing returns. This guide explains the VAT reporting process, as well as upcoming changes that organisations should be aware of to remain VAT compliant.

Need help with VAT compliance now? Get in touch

End-to-end, technology-enabled VAT Managed Services ease your compliance workload and mitigate risk wherever you operate today while ensuring you’re ready to handle the VAT requirements in the markets you intend to dominate tomorrow.

Sovos Managed Services can help with a range of VAT compliance requirements, including:
  • Registration – guidance on country-specific registration requirements to avoid delays
  • Audits – minimise management time, fees and exposure to penalties or interest
  • Filing VAT returns – ensure VAT returns are in the correct format and include information required by tax authorities
  • Managing VAT changes – navigate changes to minimise risk and ensure continued compliance with the latest regulations and updates
  • Consultancy services – always on-hand to advise and help with queries of any complexity
Understanding European VAT compliance

Give yourself VAT compliance peace of mind.

Ease your VAT compliance workload and mitigate risk wherever you trade with Sovos’ complete end-to-end offering, enabled by our comprehensive software, helping you stay up to date and reducing the burden on your team.

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SAF-T: An Introduction to the International Standard

Understanding the flexible SAF-T international standards adopted by Austria, France, Lithuania, Luxembourg, Norway, Portugal and Romania

SAF-T (Standard Audit File for Tax) is an international standard for the electronic reporting of accounting data from organisations to a national tax authority or external auditors used by tax administrations to gather granular data from businesses either on demand or periodically.

The SAF-T standard has been adopted in mostly European countries, alleviating the need for tax authorities to physically visit companies to extract and review wide-ranging corporate data.

This e-book includes:

  • What is SAF-T? – an exploration of the standard and its origins
  • A deeper dive of the SAF-T format – the current datasets and data requirements
  • The challenges of SAF-T for businesses – the flexibility and wider use of the standard
  • The future of SAF-T – what’s next?
  • How Sovos can help

Get the SAF-T International Standards e-book

Countries that have introduced legislation to enforce SAF-T requirements include Austria, France, Lithuania, Luxembourg, Norway, Poland, Portugal and Romania. SAF-T requirements are continuing to be adopted in a number of EU Member States and countries in other regions are actively considering introducing it.

The latest SAF-T standard includes accounting, accounts receivable, accounts payable, fixed assets and inventory datasets. In most cases authorities request a text file on an XML structure.

The SAF-T guideline is flexible, enabling governments to freely adapt SAF-T to suit their tax filing and audit systems, to perform audits, or as a basis for prefiling periodic tax declarations such as VAT returns or inventory statements.

This e-book discusses the introduction of SAF-T back in 2005 and how the standard has evolved since then, as well as the challenges of SAF-T for both businesses and governments.

How Sovos can help with SAF-T compliance

Sovos helps customers manage their SAF-T requirements across multiple jurisdictions through software solutions that automate the processes to seamlessly extract required data, map data accurately to SAF-T structures in the latest legal formats and perform deep analysis on the SAF-T output generated.

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. Sovos’ solution for SAF-T combines extraction, analysis and generation providing our customers with the certainty they need.

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

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Compliance Mandates Around the World Have Elevated the Importance of Tax

Sorting out indirect tax issues was not traditionally at the top of any IT organisation’s to-do list. Today that’s changed and new VAT compliance mandates being introduced at an increasing rate around the world have elevated its status.

It’s more important than ever that IT decision makers and in-house tax and finance professionals engage and have meaningful, strategic discussions about how – and also why – to accelerate their digital transformation. This will enable them to not only respond but also to prepare for invasive new tax mandates.

Each time a product or service is sold in a new country or under the watchful eye of evolving national tax regimes, enterprises must respond. They must ensure their VAT recognition and reporting processes are aligned to new and evolving mandates for continuous controls on e-invoicing and other critical sales and purchase processes and documents.

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A cascade of tax compliance mandates

Multinational companies continue to leverage new technologies to optimise borderless supply chains. The spectacular growth of e-commerce and a new generation of technologies is opening global markets for even the smallest of micro-enterprises.

Global businesses and supply chains increasingly intersect new national mandates. Many of these mandates impose sophisticated real-time controls on business transactions and make compliance more complex than it’s ever been before. And the cost of non-compliance can be high.

Non-compliance can affect an organisation in many ways – financial, operational, employee productivity, customer experience, legal, and even brand perception.

IT, tax and finance teams need to communicate and collaborate effectively to fully understand their compliance obligations in each of the markets where they operate. If they can’t companies will likely find their digital transformations inhibited by disparate local point solutions that can be so entrenched, they can become impossible to replace.

With better collaboration between functions and alignment on tax, your entire organisation can achieve real operational efficiencies.

Download our e-book and read about

  • The opportunities that exist when tax and IT work together
  • How joined up thinking can reduce risk and uncover opportunities
  • A shared vision and modern tax solution
  • How better conversations drive a better compliance process

As  tax compliances becomes increasingly interconnected with core business processes, organisations must make all aspects of tax reporting central to, and integrated with, core business activities.

A modern tax compliance solution must be engineered from the ground up to handle modern regulatory mandates. This especially applies to global manufacturers and retailers that do business in numerous countries around the world and must comply with mandates established by hundreds of tax authorities.

Read more and download the e-book

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Simplify EU VAT with IOSS

The EU E-Commerce VAT Package came into effect on 1 July 2021. And with it, the need for operational change, business disruption and plenty of accounting complexity.

A key component of the package is the Import One Stop Shop (IOSS) – a new way for companies to meet their EU VAT obligations when trading cross-border. 

In this e-book we explain IOSS’s key concepts and common use cases so you can better understand and take advantage of IOSS and how you apply it to your business.

IOSS is expansive, complicated and rewrites the rules for companies selling into and within Europe. This e-book aims to simplify that for you. We cover:

  • The basics
  • Intermediary requirements
  • Key considerations for your business
  • How to ensure IOSS compliance
  • How we can help

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We spend ample time on each of these topics so that you feel confident understanding whether IOSS is the right option for your business.

Our e-book starts with an easy-to-understand primer on IOSS. This includes how IOSS operates, its many rules and what has happened. The e-book also explains more on IOSS intermediaries as well as their purpose and when they can be used.

Find out more about the IOSS registration process, including its effects on:

  • Customer experience
  • VAT registration
  • VAT simplification
  • Record keeping
  • Data collection and invoicing
  • Contingency planning
  • Commercial matters

We answer some important questions you should consider about IOSS registration:

  1. Will you need to appoint an intermediary?

  2. How will you appoint one?

  3. How will you get set up for IOSS registration – will you do this yourself or search for help?

  4. How will you submit monthly returns and pay the VAT or use a partner?

  5. How can you ensure record keeping data is in the right format and up to date?

  6. How will you respond to tax authority audits?

Whatever your eventual IOSS decision is, our e-book will help you make an informed decision for the good of your business.

Compliance peace of mind with a complete, global VAT Managed Service from Sovos

Whatever your VAT implications, Sovos has the expertise to help you navigate your global events and the complexities of cross-border VAT obligations.

Our VAT Managed Services ease your compliance workload while mitigating risk wherever you operate today. In addition, we ensure you’re ready to handle the VAT requirements in the markets you intend to lead tomorrow.

How Tax Compliance Impacts Supply Chain Globalisation: The VAT Effect in Europe and Beyond

VAT compliance throughout a global supply chain is paramount. It has never been more important to get right.  

165 countries worldwide levy a form of VAT. Each has its own set of rules for both compliance and reporting. 

Some governments are also now placing increased emphasis on indirect tax and changes to their tax regulations, with technology-enabled enforcement efforts.

Download this e-book for an in-depth look at the vital elements needed for today’s VAT compliance. There’s guidance to help with your tax strategy so you can maximise the benefits from an efficient global supply chain.

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Your VAT compliance strategy   

Tax shouldn’t impede growth, and it doesn’t have to if you have a proactive tax compliance strategy. So to minimise risk, VAT needs to be a critical factor in supply chain planning.  

In this e-book, we take a detailed look into crucial elements of VAT compliance, with clear explanations to inform your tax strategy and to also help you reap the full benefits of an efficient global supply chain. In detail, we look at: 

  • What factors should you consider in VAT compliance planning? These include import VAT, local supply of goods, intra EU deliveries, chain transactions and triangulation, VAT reverse charge, in addition to zero-rated vs exempt goods.
  • What are the impacts of these types of tax and transactions? How these types of tax and transactions affect your business, when they apply, and what you need to do to avoid noncompliance. 
  • What are the new and changed regulations and what do they mean for businesses? Many governments have dramatically changed their tax regulations, introducing continuous transaction controls (CTCs) and the Standard Audit File for Tax (SAF-T) so tax authorities can better detect errors in tax reporting, and also look for discrepancies. 

 The cost of getting it wrong 

Failure to comply creates both risk and consequences for businesses such as: 

  • Disrupting operations. Noncompliance can disrupt operations, putting supplier relationships and supply chain stability on the line. Consequently, goods may be delayed at customs borders goods may be delayed at customs borders if formalities are not complied with. 
  • Delays in VAT refunds. Businesses could have their VAT refunds delayed, tying up significant sums of money that could instead be put toward paying suppliers or investing in innovations. 
  • Fines and penalties. Errors can result in penalties or fines of up to 200% of VAT owed. This directly impacts the bottom line and also transforms VAT from a neutral to a hard cost. 

The right technology for the job   

VAT is becoming more complex and governments are digitizing indirect taxes. Therefore, businesses need to be armed with the right technology to simplify and streamline global tax obligations. 

In the ever-changing legislative environment, businesses must also be able to maintain both control and visibility of their global tax obligations effectively. They need to use insights to predict what will change next. 

With standardisation, automation and new levels of data, Sovos combines unparalleled regulatory expertise with technology that supports compliance by enabling:

  • Complete, continuous management of VAT determination and reporting, as well as business-to-government reporting in every country in which your business operates. 
  • Comprehensive functional and geographic coverage of VAT reporting, CTCs, compliance archiving, and determination around the globe. 
  • Integration with complex ERP, billing systems, POS, P2P and EDI systems as CTC and other VAT requirements create a much broader footprint on transactional and record-keeping systems. 

Contact us now and let Sovos help you reap the full benefits of an efficient global supply chain. 

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eBook: IPT Compliance – A Guide for Insurers

Keeping up to date with the latest rates, rules, and regulation of Insurance Premium Tax (IPT) is a challenge for insurers. Not to mention this is especially complex for insurers writing across multiple territories.

Written by Sovos’ team of regulatory specialists, IPT Compliance – A Guide for Insurers provides everything you need to know about the IPT regulatory landscape.

A mix of deep dive country-by-country information in addition to guidance on IPT and the digital tax landscape, this guide is for any insurer wanting to know more about IPT compliance.

Despite its focus on Europe, our guide also explores other jurisdictions in Asia, Australia, North and South America. This guide is your trusted source of information wherever in the world you write business.

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The IPT Compliance Guide for Insurers includes:

  • The evolving digital tax landscape
  • Tax compliance intensifies – the cost of getting it wrong
  • Technology disconnect and why IPT needs prioritising
  • The changing landscape for European captives and the challenges ahead
  • Easing the stress of IPT filings
  • The complexities for insurers when writing insurance through third parties
  • Indirect tax rules for insurance across the world
  • European country deep dives
  • How Sovos can help

The digital future of IPT

The tax landscape is changing. Governments across the globe are looking to technology that helps to fill tax revenue gaps and also speed up tax collection. As a result, tax authorities are increasing their focus on the insurance industry. They are ensuring IPT and parafiscal taxes are collected correctly, accurately, and on time.

In light of the rise of digital tax regimes and granular reporting, IPT compliance should be a priority for insurers. Incorrect filing or reporting can lead to costly penalties and reputational damage otherwise.

Our IPT Compliance Guide for Insurers e-book provides guidance on the many elements of IPT compliance. This includes tax point, tax rates, currency, filing, submission and the importance of accurate data.

Owing to the recent changes in IPT across Europe, including Spain’s complex and detailed reporting requirements and Portugal’s Stamp Duty reporting, this guide will help you navigate the ever-changing IPT landscape.

The IPT Compliance Guide for Insurers takes an in-depth look into some of the more complex and unique IPT jurisdictions across Europe. This includes Italy, Slovakia, Portugal, France, Germany, Spain, Finland, Denmark, and the UK.

Europe is the third largest insurance captive domicile in the world. Around 15% of companies are established within the continent. This e-book also contains relevant IPT rules, applicable charges, and guidance for captives.

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EU E-Commerce VAT Package: New Rules for 2021

Easing cross-border transactions

From 1 July 2021, the existing Mini One Stop Shop (MOSS) scheme transitions to a new framework. This is the 2021 EU e-commerce VAT package.  This e-book guides you through the EU’s OSS, IOSS and the new VAT rules for e-commerce.

The growth of e-commerce and cross-border trade is having a radical effect on VAT. Companies large and small are caught up by sweeping changes. With more change on the horizon, now is the time to prepare.

The introduction of the new EU VAT e-commerce package, in addition to the UK’s recent changes to the rules regarding overseas goods sold to customers in the UK, means businesses across the world should implement new systems. Now is the time to familiarise themselves with how the new frameworks affect their operations, commercial position and liabilities in both the EU and the UK.

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The goal of the EU VAT e-commerce package is to simplify cross-border B2C trade in the EU, ease the burden on businesses, reduce the administrative costs of VAT compliance and ensure that VAT is correctly charged on such sales. EU businesses will be able to compete on an equal footing with non-EU businesses that charge VAT.

Moving forward there will be:

  • Import One Stop Shop (IOSS) for goods delivered from outside the EU
  • One Stop Shop (OSS) for intra EU B2B deliveries of goods and for services provided B2C by EU established suppliers
  • Non-Union One Stop Shop (non-Union OSS) which replaces and extends the current MOSS 

This e-book answers questions about the upcoming EU e-commerce package helping businesses ensure they prepare for the change and make informed decisions.

  • How will the One Stop Shop work?
  • What are the benefits of the One Stop Shop?
  • When will the One Stop Shop changes come into effect?
  • How do I register for the One Stop Shop?
  • What do I need to do to prepare for the One Stop Shop?
  • Is the One Stop Shop right for my business?
  • I am a business established in the EU, what do I need to consider?
  • I am a business established outside the EU, what do I need to consider?

As well as providing practical advice for EU and non-EU established businesses, the e-book also includes OSS and IOSS examples. We provide an in-depth view of the potential iterations that apply to direct to consumer businesses and those that sell via online marketplaces.

Download the e-book to understand the implications of the 2021 EU e-commerce VAT package and ensure your business is ready by 1 July 2020 for the significant changes ahead.

Location of Risk Rules

Navigating Location of Risk can be quite daunting. This ebook is your compass, helping you sail smoothly to IPT compliance. With use cases and examples to follow, this ebook will help you successfully navigate one of the more complex elements of insurance premium tax.

  • Understand how to determine Location of Risk

  • Minimise compliance risk

  • Written by IPT experts

What this ebook about Location of Risk covers

This ebook will help you navigate Location of Risk and the rules that apply in the 27 member countries of the European Union (EU), the European Economic Area (EEA) and the UK.

It guides you through the countries where the rules apply, the legal framework that prompted the rules, examples of the criteria used to determine Location of Risk, local implementations that differ from the norm and how premium allocation works in practice.

  • Geopolitical background

  • Legal framework

  • Solvency II Directive 2009/138/EC, Article 13(13) including examples of the four criteria to determine Location of Risk

  • Solvency II Directive 2009/138/EC, Article 157(1)

  • Local implementation of Location of Risk rules – Switzerland, Liechtenstein, United Kingdom and Germany

  • Key takeaways

  • Premium allocation

  • How Sovos can help

How to determine Location of Risk

Following the Solvency II Directive 2009/138/EC, Article 13(13) enables insurers to identify the correct Location of Risk. This directive, amongst other things, defines the four criteria to determine which territory the risk is deemed to be located in and where it should be taxed.

After identifying Location of Risk, Solvency II Directive 2009/138/EC, Article 157(1) outlines that the Member State can tax that premium.

Consider these three points when determining Location of Risk:

1

IPT is not harmonised
Consider local IPT law when determining Location of Risk

2

Risk determines the criterion
Assess the risk to know what criterion to use: e.g. property, vehicle, holiday or travel, other

3

Non-EU / EEA region
Local rules typically differ from EU/EEA Location of Risk rules

If you need more information, use our chat box to chat with our experts right away.

Need help with IPT compliance? Get in touch

IPT is complex and getting it wrong can have serious implications.

At Sovos, we take care of the detail, giving you the peace of mind you need. We’re global tax compliance specialists and we solve tax for good. Our team of regulatory specialists monitor and interpret regulations around the world, so you don’t have to.

Whether it’s meeting the demands of specific country insurance premium tax declarations or providing dedicated fiscal representation and payment solutions: easing your IPT compliance burden is our business.

Sovos is a market leader for IPT compliance in Europe filing up to 30,000 tax returns annually valued at €600m+ for our insurance clients. We do this in over 100 countries and 19,000+ jurisdictions around the world.

Ease your IPT compliance burden

Whether it’s meeting the demands of specific country IPT declarations or providing dedicated fiscal representation and payment solutions, our combined approach of people, skills and software can help you stay ahead of the constantly changing filing requirements.