There are many taxes (IPT) and parafiscal charges levied on insurance premiums throughout Europe. As a consequence of the lack of tax harmonisation, no general rules can be applied to establish which taxes exist in which countries and how to calculate the correct IPT amounts.

Some insurers do not have a dedicated IPT team; this is usually the case with smaller insurers. This could lead to IPT miscalculation and can trigger penalties. Without the proper and up-to-date knowledge, it is easy to be lost in the rules and regulations.

IPT amount calculation methods

There are two basic tax calculation methods in the European IPT world

  1. Percentage of the premium
  2. Fixed amounts

In the first instance, there is a tax rate. For example in Bulgaria (2%) businesses can easily determine the tax amount by multiplying the taxable basis with this tax rate. Fortunately, several IPT calculations are based on this so-called basic rate model.

While in the second case, the local regulations determine the tax amount which needs to be settled on the insurance policies. Irish Stamp Duty can be mentioned as an example.

One can say that this is not rocket science. Furthermore, it is easy. These calculation models are just the basics. IPT regulations are built on these basic models adding several specific rules making the IPT calculations fairly complex.

Rules for IPT amount calculation

Here are some examples of these specific rules:

Reverse tax calculation

To add further colour to this topic, we can mention that reversing a policy line in the calculation does not always result in the same tax amount in a negative position. The best example is Malta, where the same amount of Stamp Duty is not refunded when the policy is cancelled after the cooling-off period. Instead of getting back the same stamp duty paid, an additional EUR 2.33 Stamp duty is triggered if certain conditions are met.

Check the rules before IPT amount calculation

Although this is a unique regulation this highlights that when it comes to reversing a policy line, it is strongly recommended to check the rules beforehand and clarify whether or not the negative IPT can be offset or reclaimed and adjust the calculation method accordingly.

Take Action

IPT amount calculation requires detailed knowledge of the rules and regulations. Sovos has a dedicated team of IPT compliance experts to walk you through even the most challenging calculations.

Contact our team today to learn more about how we can help with calculating IPT correctly or take a look at our comprehensive guide about Insurance Premium Tax.

Update: 13 December 2023 by Dilara İnal

Implementation waves of Phase 2 of E-invoicing in Saudi Arabia

Implementation of Phase 2 of Saudi Arabia’s e-invoicing initiative started in January 2023 with the first wave of taxpayers. Subsequent waves – which are announced by Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) – are based on the generated revenue subject to VAR in Saudi Arabia.

In addition to announcements on ZATCA’s website, ZATCA notifies taxpayers at least six months before the enforcement date of their new e-invoicing requirements.

Current timeline for Phase 2 waves

Waves dictate when taxpayers of particular revenue statures are required to take part in Saudi Arabia’s e-invoicing program. The table below details the waves, revenue threshold and applicable dates for the initiative’s second phase.

 

Waves Threshold (Annual taxable revenue) Integration date
Wave 1 3 billion Riyals (approx. USD 800m) for 2021 1 January 2023
Wave 2 500m Riyals (approx. USD 133m) for 2021 1 July 2023
Wave 3 250m Riyals (approx. USD 66m) in 2021 or 2022 1 October 2023
Wave 4 150m Riyals (approx. USD 39m) in 2021 or 2022 1 November 2023
Wave 5 100m Riyals (approx. USD 26m) in 2021 or 2022 1 December 2023
Wave 6 70m Riyals (approx. USD 18m) in 2021 or 2022 1 January 2024
Wave 7 50m Riyals (approx. USD 13m) in 2021 or 2022 1 February 2024
Wave 8 40m Riyals (approx. USD 10m) in 2021 or 2022 1 March 2024
Wave 9 30m Riyals (approx. USD 8m) in 2021 or 2022 1 June 2024

 

Read our overview for more information regarding Saudi Arabia’s push towards e-invoicing.

 

Update: 20 January 2023 by Dilara İnal

Voluntary participation in Phase 2

Taxpayers now have the option to start complying with the Phase 2 requirements on a voluntary basis before the integration enforcement date arrives.

Companies were previously not allowed to voluntarily start the implementation of Phase 2. ZATCA changed its approach to voluntary participation in December 2022.

Looking for further clarification on Phase 2 of Saudi Arabia’s e-invoicing system? Contact our experts now.

 

Update: 24 October 2022 by Dilara Inal

Upcoming phase 2 requirements for e-invoicing in Saudi Arabia

Phase 2 of Saudi Arabia’s e-invoicing system rollout is fast approaching. See below for details about the timeline and the requirements for the integration stage of implementation.

Rollout and timeline of Phase 2

Implementation will begin in January 2023 and taxpayers will need to issue and submit e-invoices in a specific format.

Phase 2 is planned as a gradual implementation. The first wave of implementation covers taxpayers with an annual turnover of 3 billion riyals (approximately 800 million USD) or more for the 2021 period.

Taxpayers who are in the scope of the first wave are notified by the tax and customs authority (ZATCA) about their obligations under Phase 2 – these obligations start six months after this notification, even though the official date has been announced as 1 January 2023.

The second wave of taxpayers are businesses with revenue subject to VAT which exceed half a billion riyals during 2021. Taxpayers in this group will be notified during the first six months of 2023 and their Phase 2 obligations start six months after this notification. The second wave of Phase 2 will be implemented during the period of 1 July 2023 to 31 December 2023.

Integration phase requirements

Firstly, all invoices must be issued in UBL 2.1 format. B2B invoices are subject to a CTC clearance regime, whilst B2C invoices are reported to the tax authority within 24 hours.

Under the new regime, B2B invoices can only be sent to the buyer after the tax authority’s approval which gives legal validity to invoices.

Each invoice must be generated in a single sequence and include a hash value computed from previous invoices’ elements. This hash function ensures that invoice data isn’t modified or tampered with.

Also, an invoice counter value and a globally unified identification number (UUID) must be included. The QR code is generated by ZATCA during the clearance of an invoice, and it must be shown in case B2B and B2G invoices are sent to the buyer in human-readable form. For B2C invoices, the QR Code is generated and applied by the taxpayer during issuance of the invoice. In addition, self-billing is permitted for domestic B2B transactions and the invoice must contain a statement declaring it is self-billed.

Taxpayers who are yet to be notified by ZATCA for phase 2 implementation should continue to comply with phase 1 requirements without any change.

How to prepare for the changes

We advise all taxpayers to follow upcoming updates to ensure they are prepared for phase 2’s complex requirements. Considering the impact of this CTC regime, other e-invoicing initiatives are expected to be implemented in the Gulf region in the near future

Still have questions about Saudi Arabia’s e-invoicing phase 2 implementation? Speak to our tax experts.

 

Update: 30 May 2022 by Selin Adler Ring

ZATCA launches e-invoicing developer portal for e-invoicing phase 2

Saudi Arabia´s e-invoicing system is being rolled out in two phases; the second phase’s requirements differ from the first phase. The first phase started as of 4 December 2021 for all resident taxable persons. The second phase will go live on 1 January 2023, and the impacted taxpayer group has not yet been announced. However, the Zakat, Tax and Customs Authority (ZATCA) has made considerable progress in kicking off phase 2.

Launch of the e-invoicing portal

Phase 2 will introduce a Continuous Transaction Controls (CTC) regime in which e-invoices, electronic credit and debit notes will be transmitted to the ZATCA platform in real-time. A clearance regime is prescribed for B2B invoices, while B2C invoices must be reported to the tax authority platform within 24 hours of issuance. Therefore, ZATCA was expected to introduce its e-invoicing platform well in advance of the launch of phase 2.

As expected, the ZATCA recently announced the launch of an E-Invoicing Developer Portal (Sandbox). Users will use the Sandbox to simulate the integration with ZATCA’s platform and can access details on the APIs and other requirements through this platform upon registration.

Proposed changes to e-invoicing rules

ZATCA has proposed specific changes to e-invoicing rules. The proposed changes are under public consultation and interested parties may submit their feedback until 10 June 2022.

The changes aim to clarify some requirements (e.g. Cryptographic Stamp, hash, counter etc.) rather than introducing new ones.

The next steps

The last clarifying changes to the e-invoicing rules are underway, and the developer portal has been launched. We’re now expecting ZATCA’s announcement of the taxpayer groups in the scope of the mandate and expect it to happen at least six months before the go-live date. As the ZATCA plans to roll out phase 2, there will be different timelines for different taxpayer groups. We expect this information within the coming months.

Take Action

Need to ensure compliance with the latest CTC requirements in Saudi Arabia? Get in touch with Sovos’ team of tax experts.

Eastern European countries are taking new steps concerning the implementation of continuous transaction controls (CTC) systems to reduce the VAT gap and combat tax fraud. This blog provides you with information on the latest developments in several Eastern European countries that may further shape the establishment of CTC systems in other European countries and beyond.

Poland

Previously announced on 1 January 2022, taxpayers have been able to issue structured invoices (e-invoices) using Poland’s National e-Invoicing System (KSeF) voluntarily, meaning electronic and paper forms are still acceptable in parallel. On 30 March 2022, the European Commission announced the derogatory decision from Article 218 and Article 232 of Directive 2006/112/EC. The decision will apply from 1 April 2023 until 31 March 2026, after receiving the last approval from the EU Council. Moreover, on 7 April 2022, the Ministry of Finance published the test version of the KSeF taxpayer application that enabled the management of authorisations issuing and receiving invoices from KSeF. The mandatory phase of the mandate is expected to begin the second quarter of 2023, 1 April 2023.

For more information see this overview about e-invoicing in Poland or VAT Compliance in Poland.

 

Romania

The Romanian CTC system is one of the fastest developing in Eastern Europe, with the E-Factura system being available for B2G transactions since November 2021. Based on the Government Emergency Ordinance no. 41, published in the official gazette on 11 April 2022, the use of the system will become mandatory for transporting high fiscal risk goods domestically as of July 2022.

Moreover, Draft Law on the approval of the Government Emergency Ordinance no. 120/2021 on the administration, operation, and implementation of the national e-invoicing system (Draft Law) on 20 April 2022 was published by The Romanian Chamber of Deputies. According to the Draft Law, the National Agency for Fiscal Administration (ANAF) will issue an order in 30 days following the derogation decision from EU VAT Directive and establish the scope and the timeline of the B2B e-invoicing mandate. As derived from the proposed amendments, B2G e-invoicing will become mandatory as of 1 July 2022, and mandatory e-invoicing for all B2B transactions is in the pipeline.

For more information see this overview about e-invoicing in Romania or VAT Compliance in Romania.

Serbia

Serbia has introduced a CTC platform called Sistem E-Faktura (SEF) and an additional system to help taxpayers with the processing and storage of invoices called the Sistem za Upravljanje Fakturama (SUF).

To start using the CTC system Sistem E-Faktura (SEF) provided by the Serbian Ministry of Finance, a taxpayer must register through the dedicated portal: eID.gov.rs. SEF is a clearance portal for sending, receiving, capturing, processing and storing structured electronic invoices. The recipient must accept or reject an invoice within fifteen days from the day of receipt of the electronic invoice.

The CTC system became mandatory on 1 May 2022 for the B2G sector, where all suppliers in the public sector must send invoices electronically. The Serbian government must be able to receive and store them from 1 July 2022. Additionally, all taxpayers will be obliged to receive and store e-invoices, and from ​1 January 2023, all taxpayers must issue B2B e-invoices​.

Slovakia

The Slovakian government announced its CTC system called Electronic Invoice Information System (IS EFA, Informačný systém elektronickej fakturácie) in 2021 through draft legislation.

The CTC e-invoicing covers B2G, B2B and B2C transactions and will be conducted via the electronic invoicing information system (IS EFA).

The official legislation regulating the e-invoicing system has not been published yet although it is expected to be published soon. However, the Ministry of Finance has recently posted new dates concerning the implementation of the electronic solution:

The second phase will follow for B2B and B2C transactions.

Slovenia

Slovenia has not progressed in introducing its CTC system. Due to the national elections in April 2022, the CTC reform was not expected to gain much traction until at least the summer of 2022. Nevertheless, there are still ongoing discussions around the CTC reform, which intensified soon after the Slovenian parliamentary elections.

The fast pace of the developments happening within Eastern European countries brings challenges. The lack of clarity and last-minute changes makes it even harder for taxpayers to stay compliant in these jurisdictions.

Take Action

Staying compliant with CTC changes throughout Eastern Europe is easier with help from Sovos’ team of VAT experts. Get in touch or download the 13th Annual Trends report to keep up with the changing regulatory landscape.

Events and conferences typically take a long time to organise and in the early part of 2020 several events that were scheduled to take place were impossible because of the various Covid-19 restrictions. Looking at a loss of revenue, and not knowing how long restrictions would last, many hosts went online and hosted virtual events. This changed both the nature and the place of the supply.

Where there is physical attendance at an event then the place of supply is the place where the event takes place for all delegates.

For B2B delegates the current rules mean that virtual admission will be classified as a general rule service so VAT is due where the customer is established.

For B2C delegates the current rules depend on whether the virtual attendance can be considered an electronically delivered service or a general rule service. For electronically delivered services supplied the place of supply is where the customer normally resides and for other services the place of supply is where the supplier is established.

An electronically delivered service is one which can be delivered without any human intervention such as downloading and watching a pre-recorded presentation. Where a service requires human intervention, this is not considered to be electronically delivered.

Online conferences and events typically have a host or compere and will normally also allow delegates to ask questions in real-time via live chat or similar. The human dimension excludes the possibility of this being classified as an electronically delivered service which means that for B2B the place of supply is where the customer is established and for B2C the place of supply is where the host is established.

Future tax position regarding events with virtual attendance

The changes are being introduced to ensure taxation in the Member State of consumption. To achieve this, it is necessary for all services that can be supplied to a customer by electronic means to be taxable at the place where the customer is established, has his permanent address or usually resides. This means that it is necessary to modify the rules governing the place of supply of services relating to such activities.

The changes apply to “services that can be supplied by electronic means” but this is not defined. It would appear, from the following to be wider than “electronically delivered”.

To achieve this the current law governing attendance by B2B delegates which results in VAT being due where the event is held will specifically exclude admission where the attendance is virtual.

This suggests that “supplied to a customer by electronic means” occurs when attendance is virtual and has the effect of removing the distinction of “human intervention” in respect of electronically delivered services.

The law governing B2C sales will state that where activities are “streamed or otherwise made virtually available”, the place of supply is where the customer is established.

These changes suggest that “supplied to a customer by electronic means” occurs when the service is streamed or made virtually available. The possibility of streaming (which can be live or recorded) does not appear in the amendment to the B2B rule.

The law governing Use and Enjoyment has also been updated to reflect these additions.

Summary of virtual attendance of events – implications for VAT compliance

For events that are attended virtually the place of supply for both B2B and B2C will be where the customer is established, although this can be amended by application of the Use and Enjoyment rules.

For B2B attendees, the host will not charge local VAT as the reverse charge will apply unless the host and attendee are established in the same Member State.

For B2C attendees the host will charge local VAT according to the location of the attendee. The Union and non-Union OSS will be available to assist reporting where the attendee is in the EU.

Transposition

Member States are required to adopt and publish the required laws, regulations and administrative provisions by 31 December 2024 and must apply these from 1 January 2025.

In our next blog we will consider some practical issues that may arise from these changes and how they impact VAT compliance.

Take Action

Get in touch to discuss your VAT compliance needs or download our guide, Understanding VAT Obligations: European Events.

CLIENT MONEY IPT

Settling Your IPT Liabilities For You

Insurance Premium Tax (IPT) can be complex with fragmented rules and requirements levied by the many different tax authorities in the jurisdictions where this tax applies. This only adds to the challenges faced by finance teams when calculating and settling IPT accurately and on time.

Failure to do so can result in penalties, fines and unwelcome audits – all of which will have an adverse effect on profitability.

Unlike other IPT compliance service providers, at Sovos we provide a complete end-to-end service for our customers providing complete peace of mind and allowing them to focus on what they do best while leaving the IPT compliance to us. 

We not only produce and file IPT and parafiscal reports for our customers, but we also make the necessary payments and settle liabilities to the relevant tax authorities using cleared funds held in segregated client bank accounts.

We recognise that IPT is niche and not always a core function for finance teams which is why we offer a client money service for our IPT customers. The funds are held in a segregated bank account for our customers with reconciled statements being provided on a monthly basis.

A STREAMLINED PROCESS TO SETTLE IPT LIABILITIES

Based on data uploaded we let our customers know in advance the exact amount needed to settle each of their local IPT liabilities as they become due so there’s plenty of time to ensure the funds are available ahead of tax authority deadlines.

Once the funds have been received, we can then ensure the correct payments are made directly to the tax authorities in line with local legislation.

All receipts and payments with the segregated client bank accounts are reconciled with the submitted returns and monthly reports are provided.

COMPLIANCE PEACE OF MIND FOR IPT

  • No need to tackle IPT alone, lean on our expertise
  • Advance notice of IPT liabilities due
  • Flexible currency options in line with the reporting currency of each territory
  • Payments made in line with local legislation
    – The right amount
    – To the right account
    – In the right currency
    – And, always on time
  • Fully reconciled monthly statements provided
ebook

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.

Download the e-book

Last updated: 19 July 2023

Insurance Premium Tax in Croatia

Under the Freedom of Services (FoS), Croatia currently levies an Insurance Premium Tax (IPT), Compulsory Health Insurance Contributions (CHIC) and Fire Brigade Charge (FBC) on the premium amounts of insurance policies written by EU and EEA insurance companies.

In Croatia, IPT only applies to selected classes of business such as motor coverage, which includes the mandatory Motor Third Party Liability insurance policies. Only the latter policies are subject to CHIC. FBC is applicable only to fire premium amounts.

Read on to understand the different IPT requirements and classes of business in Croatia.

Insurance Premium Tax (IPT)

There are currently two different IPT tax rates in force for motor insurance policies in Croatia:

Motor vehicle IPT is an insured-borne tax that is required to be reported monthly and payable within 15 days following the end of the month. There is an annual Motor IPT Report obligation too, which must be submitted on 31 January following the end of the reporting year.

Compulsory Health Insurance Contributions (CHIC)

This contribution is payable to the Croatian Institute of Health Insurance but must be disclosed quarterly to the Croatian Tax Office. In addition, the annual return must be submitted to the Tax Office by 30 April.

Until 31 March 2023 the rate of the contribution rate was 4%. The rate was raised to 5% as of 1 April 2023.

Fire Brigade Charge (FBC)

The Act on Firefighting governs the fire brigade regime in Croatia. The FBC rate on fire insurance premiums is 5%.

The law does not include a definition for the fire premium. Sovos gained clarification on the definition of the fire premium from the Croatian Financial Services Supervisory Agency (HANFA), the body which supervises FBC. HANFA indicated there is no specific definition of the fire premium, but the insurance company should determine this amount on a case-by-case basis.

The declaration on the fire premium is due annually, by the end of February following the payment year. The return should be submitted to the Croatian Firefighter Association.

There is no set date in the law for the payments, but payments are said to be due at least quarterly.

5% FBC payments should be split and sent to:

If you would like to settle this tax compliantly:

Firstly: You need to know the postcode of the property. But what is the postcode of an immovable property?

Secondly: You need to match a county with a postcode. This would not be too challenging as the first two digits of the five-digit Croatian postcode reveal the county’s name if you search Croatian postcodes online.

Thirdly: You need to know your local firefighting organisation’s name and bank account number or, if these organisations have established an association, the association’s name and bank account number. That is difficult but not impossible if you know where to look.

Finally: In the annual return you need to list each payment you made in the previous year.

Following the complaint method might be time-consuming if the insurance firm has written multiple fire businesses in Croatia. Because there is no minimum contribution threshold, even EUR 0.01 cent FBC should be paid to the local firefighter’s organisation or association (i.e., 40% of FBC)

Sovos has developed a robust system to settle your Croatian fire brigade charges. We have also established a constructive relationship with the Croatian Firefighters Association and HANFA.

Please contact our representative for information, or if you would like to appoint Sovos as your IPT representative in Croatia.

Update: 05 January 2023 by Andres Landerretche

More taxpayers join the Electronic Invoicing System of Paraguay (SIFEN)

Since Paraguay started implementing its National Integrated System of Electronic Invoicing (SIFEN) plan in 2017, the Undersecretary of State for Taxation of Paraguay (SET) has carried out the process.

The different phases are:

  1. Pilot plan
  2. Voluntary phase
  3. Mandatory implementation

Due to the arrival of SET resolution 105/21, numerous companies have been voluntarily incorporated into the system. This is to prepare for mandatory electronic invoicing in 2023. SET resolution 105/21 provides measures for the issuance of electronic tax documents and an implementation calendar for 10 groups of taxpayers.

More than 80 million electronic documents have been issued since the system started operating. With resolution 105/2021 coming into force, it is expected that over 5,000 taxpayers must issue their receipts electronically by 2023.

How the SIFEN Works

The SIFEN is oriented towards large and medium-sized invoice issuers, whether they join voluntarily or are mandatorily designated by the Sub-Secretary of State for Taxation (SET).

The system contemplates two moments in its operation flow:

  1. Commercial operation with electronic documents
  2. Transmission of electronic documents to the SET

In the first moment, because of the commercial operation, the obliged taxpayer issues the digitally signed electronic document and sends it to the buyer or receiver in XML format. The issuer must make available a graphic representation of the document (KuDE) that supports the transaction in a physical or digital format if the buyer or recipient is not operating under the SIFEN.

The second moment comprises taxpayers’ transmission of the digitally signed XML document to the SET for its approval process.

SIFEN’s operating model is deferred, meaning that the issuer of an electronic invoice must transmit the electronic documents in an XML file for their respective validation. This needs completing within 72 hours of the electronic document’s signature – any later and it will be considered as extemporaneous transmission and subject to penalties.

Electronic documents acquire the nature of Electronic Tax Documents (DTE) with legal validity and tax incidence once signed and authorised by the Tax Administration by means of an approval transaction number.

Mandatory and Voluntary Adoption

Resolution 105/2021 expands the list of those required to advance with the mass use of electronic invoicing, establishing the dates from which 10 groups of taxpayers must electronically issue all tax documents.

In accordance with the calendar established by the resolution, the companies participating in the pilot phase and voluntary adhesion became mandatory for electronic invoicing as of 1 July 2022.

The other taxpayers made up of groups 3 to 10 must implement electronic invoicing according to the schedule that begins with group 3 on January 2 January 2023, and ends with Group 10 on 1 October 2024.

More information on the taxpayer groups is available on the SIFEN web portal.

Voluntary adoption is possible for all taxpayers who wish to issue invoices electronically via the SIFEN. The minimum requirements are for companies to use software that integrates with the SIFEN and holds a valid Digital Signature certification.

Still have questions about Paraguay e-invoicing? Speak to our team of experts.

 

Update: 25 March 2022 by Victor Duarte

Paraguay’s New E-invoicing System to Gradually Become Mandatory From July 2022

The electronic invoicing system in Paraguay has been in development since 2017 according to the plan carried out by the Undersecretary of State for Taxation (SET) to modernise and improve tax collection and minimise the incidence of tax fraud.

The introduction of the Integrated National Electronic Invoicing System (Es. Sistema Integrado de Facturación Electrónica Nacional -SIFEN –) meant the introduction of a new e-invoicing regime in the country. The adoption of this new system is currently in its voluntary adhesion phase, which began in 2019, and has allowed entrepreneurs, merchants, and companies to issue e-invoices optionally. However, from July 2022, the use of the system will gradually become mandatory for certain taxable persons.

Electronic Tax Document types

Taxpayers in Paraguay can use the SIFEN to issue Electronic Tax Documents (Es. Documento Tributario Electrónico – DTE). The DTE is a digital version of the invoice and other traditional documents, which has tax and legal validity. The DTE has become a modern, effective, secure and transparent form to issue and manage e-invoices for distinct types of business operations.

The DTEs are validated upon issuance by the SAT to support the VAT deductions and transactions related to income tax. Among the distinct types of DTE in Paraguay, we find:

The DTE issuance process

The e-invoices issued by the taxable persons that have adhered to the SIFEN are generated in XML format. The authenticity and integrity of each document are guaranteed through the digital signature and the control code that DTEs include. Each document must be sent electronically to the tax administration for its clearance.

The SIFEN is responsible for verifying and validating each document. Once it is established that the DTE meets all the requirements, it becomes a legal e-invoice. The taxable persons issuing the e-invoice then receive the verification results through the web service system.

After the e-invoice is cleared, suppliers can send the DTE to their buyers via email, data messaging or other means.

Paraguay E-invoicing mandate roll-out

The Paraguayan Undersecretary of State for Taxation recently published a General Resolution providing administrative measures for the issuance of DTEs. This resolution also established a phased schedule of implementation, in which certain taxable persons will be required to issue e-invoices and other DTEs using the SIFEN.

The implementation schedule consists of ten stages starting on 1 July 2022 with all taxpayers who joined the pilot program to adopt the SIFEN. From January 2023, the mandate will include more taxpayers. However, it is not yet defined which companies will start in that stage. The SET aims to cover all taxpayers carrying out economic activities in the country by October 2024.

What’s next

Companies in Paraguay must get ready to issue e-invoices under the requirements of the SIFEN. From 1 July 2022, all companies in the country will be able to use this system voluntarily. The list of taxpayers required to comply with the mandate will be available on the SIFEN website and on the SET website (www.set.gov.py). The SET will notify affected taxpayers via the Paraguayan Tax Mailbox known as “Marandu.”

Take Action

Get in touch with our team of experts today to ensure compliance with the latest Paraguayan e-invoicing regulations.

Many businesses will now be involved in “cross border” transactions meaning that a business in one territory will sell and, often, deliver goods to a customer located within another territory. The existence of two or more tax territories in the transaction, and the possibility that there may be a customer in the EU and a supplier in a third country such as the UK, will inevitably lead to VAT challenges with varying degrees of complexity.

Different challenges will be faced by suppliers involved in B2B transactions compared to B2C transactions – although there will also be some common issues. This article will focus on B2B transactions.

Let’s consider a UK supplier with a contract to supply goods manufactured in the UK to customers within the EU.

Importing goods into the EU

The first point to recognise is that to deliver the goods to the EU customer the goods must pass through an EU customs border.  And here is the first point for supply chain management.

Who will import the goods into the EU and what are the considerations?

The customer’s starting point is likely to be that they will want the supplier to import the goods and a salesperson, eager to please their customer, is likely to agree.  Is this a problem for the supplier?  OH YES!

Customs considerations

A salesperson returns triumphant with an order with Incoterms of DDP (Deliver Duty Paid) – but is this a cause for celebration?

Deliver Duty Paid means that the supplier must deliver the goods to the territory of the customer from which, for VAT purposes, a local sale will be made.  This will require the UK supplier to import the goods into the EU and this creates the first issue.

Under the Union Customs Code (UCC) the person presenting the goods to the customs authority (the declarant) must be established within the EU.  An EU established business importing goods can be both the importer and the declarant.  A business established outside the EU can be the importer but not the declarant.  In this case the non-EU importer must appoint an EU established business to act as its “indirect customs agent”.  This agent is jointly and severally liable for the import duties that are due and there are not too many businesses which provide such a service because of the risk.  So the seller could find itself unable to satisfy a contractual obligation because it cannot find someone to act as its indirect customs agent in time to make the required delivery – or at all.

Understanding local VAT issues

If a supplier successfully manages to overcome this hurdle then there is the issue of dealing with local VAT on the sale – must the supplier register for VAT and apply it to the sales invoice – or does the reverse charge apply?   And will the customer pay the non-refundable duty costs incurred by the supplier at the border?

The takeaway here is that a contract concluded under DDP terms may be much easier for the sales team to achieve but it can create serious issues down the line.  UK suppliers should seek to agree any Incoterm other than DDP wherever possible.

EU warehouse facilities

To reduce the possibility of delays some UK suppliers have set up warehouse facilities within the EU from which deliveries can be made.  One issue which can affect both VAT and direct taxes is whether the warehouse creates a permanent or fixed establishment.  For the purposes of this article we assume no – although creating a permanent establishment could avoid the need to appoint an indirect customs agent.

How to deal with import VAT

Once the UK supplier has successfully brought the goods into an EU warehouse it will make deliveries to customers. One big consideration here is how the import VAT is dealt with. Several Member States offer the possibility to postpone import VAT to the VAT return via a reverse charge.  In such circumstances import VAT deduction is guaranteed so long as the formalities are followed and the business is able to fully recover VAT.  Where goods are imported into a Member State where import VAT must be first paid and then deducted consideration as to how this will happen is important.  Where there is a VAT registration in place, the VAT can normally be recovered via the VAT return.  However, where the Member State of import has a reverse charge mechanism for domestic sales, a non-EU supplier will need to make 13th Directive claims to recover import VAT.  One Member State where this will arise is Spain which has reciprocity rules in place so not all businesses are able to make 13th Directive claims.

Therefore if a supplier is considering utilizing an EU warehouse or making sales on a DDP basis, they should first map out all of the likely flows and then determine the VAT treatment to understand if any negative VAT issues will arise.  The planning opportunities and potential pitfalls that arise from such a warehouse will be considered in a later article.

Take Action

Get in touch with our tax experts to discuss your supply chain VAT requirements or download our e-book Protecting Global Supply Chains.

IPT in Ireland reflects the dynamic shifts in the global tax landscape. With an increasing number of tax jurisdictions adopting electronic filings, Ireland has joined this progressive movement. The Irish tax authority has announced changes to how Stamp Duty, Life Levy, Government Levy and the Compensation Fund are declared and paid from the Quarter 1 2022 submission period (i.e. 25 April 2022).

What is changing for Ireland’s Insurance Premium Tax  (IPT) requirements?

From Q1 2022, businesses will be required to file all returns via the Irish online portal and pay taxes due via direct debit.

The Irish Revenue issued notification of the filing requirement changes in December 2021. The Irish Revenue has an online service with a digital pay and file facility for Stamp Duty on insurance levies which will be available via Revenue Online Services (ROS).

What happens next?

Registered insurers will have an individual ROS account. By the end of February 2022, insurers will be issued new ID numbers (TRN numbers), and the 4-digit file reference number will be discontinued. Insurers will need a TRN number to register for a ROS account to file declarations online via ROS. Payments made online are required to be via direct debit instruction.

Although many authorities still rely on paper returns, online filing and payment systems are becoming more common place.  In Europe alone, Spain, Finland, Portugal, Hungary, Italy and the UK are just a few who have adopted digital tax approaches.

More tax authorities are now adapting to online submissions to fill the gap for further transparency and accuracy in collecting taxes, causing increased challenges for insurers when ensuring premium tax compliance.

This change in Ireland is just another example in the list of tax authorities requesting additional information on a more frequent basis to increase efficiency, minimise tax gaps and boost revenue. We don’t see this trend disappearing and recommend that insurers stay abreast of the latest regulations to be prepared for more countries who will undoubtedly follow this approach. Insurers need to be aware of compliance responsibilities by keeping pace with this heightened degree of complexity, scrutiny and change. This will result in system and process changes and any digitisation will inevitably impact IT systems and budgets.

Take Action

Keeping up to date with changing tax rates, different filing formats and deadlines and understanding interpretations of local rules can be challenging especially when writing across multiple territories. If you have questions about IPT in Ireland, get in touch with us and we’ll be happy to help.

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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Preparing for France’s E-invoicing and E-reporting Mandate

France is now moving towards continuous transaction controls (CTCs), introducing mandatory e-invoicing coupled with e-reporting.

The trend towards CTCs is global, and France is one of many countries to join this journey. As with previous CTC reforms in other countries, fiscal and economic gains are expected for both the government and businesses, such as:

  • Fighting fraud and bridging the VAT gap (€10 – 15 billion per year in France)
  • Reducing invoice processing costs for companies
  • Monitoring the economic activity in the country
  • Increase efficiency
  • Automating part of the VAT reporting process

Along with this, France is implementing an e-invoicing and e-reporting mandate. This is alongside the B2G e-invoicing obligation that is already mandatory.

The new French framework foresees a public platform as the recipient of data from e-invoices and e-reports. On top of this, a central directory will keep track of the invoice lifecycle, including payment status.

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Rollout dates

From September 2026, France will implement mandatory e-invoicing via a central platform and connected service providers as well as a complementary e-reporting obligation.

With these comprehensive requirements, alongside the B2G e-invoicing obligation that is already mandatory, the government aims to increase efficiency, cut costs, and fight fraud.

This extended timeline is welcomed by many companies, providing more time to better understand and prepare for the far-reaching consequences of this reform for their business processes, IT systems and tax compliance strategy.

However, businesses should start preparing now. Here are the key dates:

From 1 September 2026
All companies headquartered or with established operations in France will have to accept e-invoices through the CTC system from their suppliers.

Issuing e-invoices according to the CTC regime will become mandatory for the largest enterprises (some 300 entities) and will apply also to a further 8,000 mid-sized companies – “Entreprises de taille intermédiaire”

The e-invoicing mandate does not apply to B2C and cross-border invoices though there is  an obligation to report those transactions.

From 1 September 2027
All remaining medium and small companies will be in scope of the mandate.

How can businesses prepare for the mandate?

The mandate presents challenges for businesses. There is a lot to consider, and most businesses current IT and manual processes aren’t equipped to handle this change.

The French e-invoicing mandate is still evolving and there are many elements remaining before the scheme is introduced.

In this e-book, we will cover in depth how business can achieve compliance:

  • An overview of the French mandate
  • The latest update to the timeline
  • Partner Dematerialization Platform (PDP) registration requirements
  • What’s on the horizon for the French Mandate
  • Challenges for your organisation – what buyers and suppliers need to consider to prepare their business processes
  • How Sovos can help businesses prepare for France’s e-invoicing mandate

Many businesses will need help to achieve compliance with the new mandate.

Sovos has unmatched experience with continuous transaction controls and e-invoicing mandates all over the world. Our scalable global platform has evolved to encompass new mandates, handling the needs of today, and the future.

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Insurance is a dynamic sector in constant flux to accommodate with insured’s needs. An increase in holidays abroad following WWII saw the need for Assistance insurance for any unforeseen events that occurred away from the insured’s home country. Council Directive 84/641/EEC regulated Assistance insurance for the first time, and a new class of insurance was created. This was in addition to the 17 previously regulated classes outlined in Directive 73/239/EEC of non-life insurance and was called Assistance (Class insurance 18).

Travel insurance evolution

Initially, the insured was covered by a policy that provided aid for any event travelling abroad (loss of passport, assistance with any problem in the car etc). The insurer created a range of support with call centres, supplier networks and additional services to help solve difficulties when travelling abroad.

Subsequently, following the insured’s requirements, insurance companies and travel agents created travel insurance that includes a wide range of services. These consist of several protections within different classes of business. This is where the tax complexity of travel insurance policies begins. It’s an amalgamation of coverages, and the application of the correct fiscal treatment needs to be analysed in each territory.

Correct tax treatment in travel insurance

When weighing the correct application of tax for travel insurance, businesses must consider the following: location of risk (LoR), class of businesses and the correct tax approach.

Location of risk: Directive 2009/138/EC Article 13 must be followed in the following circumstances:

Class of business affected: As mentioned previously, one of the complexities of travel insurance is determining the classes of business affected. It’s common to see, in these policy types, multiple coverages such as medical assistance cover, loss or damage to baggage, travel delays or cancellations, loss of documents or money, personal accident, repatriation etc. Insurers must adequately identify these coverage details to ensure the compliant tax treatment is used.

Taxability: This step is crucial. The correct treatment of the policies could vary the liabilities to be paid, the different taxes and/or levies and parafiscal charges to be included in the tax calculation. This means that the tax treatment can change by country. It’s necessary to identify the tax liability or exemption based on the class of business and the geographical location.

Insurers must understand the importance of the vital details associated with travel insurance. Determining LoR, class of business affected and taxability ensures the correct amount is paid and submitted to the proper jurisdictions.

Take Action

Download our IPT Compliance Guide to find out more about how to stay compliant or get in touch with our IPT experts.

Managed Services for VAT Compliance

Many multinational companies find VAT compliance challenging, especially when trading cross-border. With the increase in real-time reporting across Europe and differing VAT registration and reporting requirements, VAT compliance now requires significant resources and specialist knowledge to ensure compliance and avoid costly penalties. As your business expands, so do your VAT obligations. This is why many organisations, turn to managed service providers to ease the burden of VAT compliance, audits and fiscal representation. This e-book discusses the many elements of VAT compliance including:
  • VAT registration
  • Fiscal representation
  • How to determine VAT obligations
  • Filing VAT returns
  • Preparing for an audit
  • Managing VAT changes
  • VAT compliance advice from JD Sports’ Indirect Tax Manager
Download a copy of the VAT managed services e-book

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How JD Sports manage VAT compliance with Sovos’ Managed Services

John Dowd, Indirect Tax Manager at sport-fashion retailer JD Sports discusses how he managed cross-border VAT compliance with the help of Sovos’ managed services

“For us at JD Sports and me personally I’m looking for a partnership, something long term, as it takes time and costs money to change advisors. I’m looking for a long-term relationship over a number of years with a VAT service provider.

“I want my advisor to have specialist knowledge, for us that’s retail and cross-border supply chains, overseas tax authorities, and I want to see new talent joining the team. I prefer a single point of contact to make it easier to move things along and of course, competitive pricing, and Sovos ticked all of these boxes for us.”

John Dowd, Indirect Tax Manager at JD Sports

The many elements of VAT compliance

VAT compliance has many elements, beginning with an understanding of place of supply rules to determine where VAT registration is required. Fiscal representation might be required to register in EU Member States.

Once VAT registration is underway, the next step is to determine EU VAT obligations by mapping the supply chain for the country of registration. There are also additional requirements to consider including exemptions, recovering VAT, Intrastat and varying continuous transaction controls (CTCs) mandates.

Submitting VAT returns to ensure compliance is a never-ending process. Each country has its own VAT return regulations and additional declaration requirements.

The VAT compliance cycle also includes preparation for VAT audits. Tax authorities can carry out audits for a variety of reasons so it’s important businesses prepare for audits and ensure they are able to manage the process successfully.

How Sovos VAT Managed Services can help with VAT compliance

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

Download the VAT managed services e-book

ebook

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.

The Tax Bureaus of Shanghai, Guangdong Province and Inner Mongolia Autonomous Region have all issued announcements stating they intend to carry out a new pilot program for selected taxpayers based in some areas of the provinces. The pilot program will involve adopting a new e-invoice type, known as a fully digitized e-invoice.

Introduction of a new e-invoice type

Many regions in China are currently part of a pilot program that enables newly registered taxpayers operating in China to voluntarily issue VAT special electronic invoices to claim input VAT, mostly for B2B purposes.

The new fully digitized e-invoice is a simplified and upgraded version of current electronic invoices in China. The issuance and characteristics of the fully digitized invoice are different from other e-invoices previously used in the country.

Characteristics of the fully digitized e-invoice

Verification of fully digitized e-invoices

Relying on the national unified electronic invoice service platform, tax authorities will provide selected taxpayers for this pilot program with services such as issuance, delivery, and inspection of fully digitized e-invoices 24 hours a day. Taxpayers will be able to verify the information of all electronic invoices through the electronic invoice service platform or the national VAT invoice inspection platform.

What’s next for e-invoicing in China?

This new pilot program has been effective in Shanghai, Guangzhou, Foshan, Guangdong-Macao Intensive Cooperation Zone, and Hohhot since 1 December 2021. Despite the lack of an official timeline for implementation, it’s expected that the scope of this pilot program will be extended in 2022 to cover new taxpayers and regions in China, paving the way for nationwide adoption of the fully digitized e-invoice.

Take Action

To find out more about what we believe the future holds for VAT, download the 13th edition of Trends. Follow us on LinkedIn and Twitter to keep up-to-date with regulatory news and updates.

Indirect Tax Rules for Insurers Across Europe

IPT is a complex thing to deal with.

Many tax authorities are increasing their focus on the insurance industry in an effort to close tax revenue gaps, with many introducing Insurance Premium Tax (IPT) and other indirect taxes for insurance. Globally, IPT is fragmented across over 200+ countries and achieving compliance can be a complex process requiring specialist knowledge.

Insurers, especially those operating across multiple territories, can find keeping up to date with the latest IPT rates, rules and regulations to ensure compliance challenging.

This guide provides a helpful snapshot of the indirect tax rules that apply to insurance premiums across Europe.

Download the Indirect Tax Rules for Insurance Across Europe guide

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The guide provides a useful reference of indirect rules across Europe including:

Albania, Andorra, Austria, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaca, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Switzerland, United Kingdom.

Insurance Premium Tax compliance

The digitization of tax is a trend that will undoubtedly continue. Organisations need to prepare for any changes to reporting as this will impact compliance obligations for the countries they operate in.

Tax authorities have increased their focus on the insurance industry to ensure IPT and parafiscal taxes are collected correctly, accurately, and on time.

Operating in multiple countries inevitably means also having to comply with many local regulations in line with IPT statutory and parafiscal filing. Compliance regimes can be simple or complex, but the difficulty is that they’re varied.

Download our guide to ease this burden.

A new year has arrived, marking an excellent opportunity to continue our blog series addressing Insurance Premium Tax (IPT) compliance in different countries.

You can read other blogs in this series by visiting our Denmark, Finland, and the UK entries or by downloading Sovos’ Guide on IPT Compliance. Written by our team of IPT and regulatory specialists, this guide is packed full of insight to navigate the ever-changing regulatory landscape.

How does IPT operate in Slovakia?

To start, IPT in Slovakia became effective on 1 January 2019, with the default IPT tax rate of 8%.

There are three tax points for IPT in Slovakia:

  1. Booked date – when the premium receivable is booked into the system
  2. Cash received date – when the premium payment is received
  3. Payment due date – when the premium is due to be paid

Insurers are not required to separately notify or request permission to use one tax point over another but an insurer must notify on the quarterly tax return which tax point they’re using. It’s important to note the choice of tax point must be used for eight consecutive calendar quarters.

Interestingly, Slovakia’s approach to tax points provides flexibility for insurers when choosing to pay tax, giving the option to pay upfront or spread out IPT payments in instalments across multiple returns.

Slovakian IPT is due on a calendar quarterly basis (e.g. January to March return declared in April). This is the same for the payment due at the end of the month. It’s worth noting that all returns are filed electronically so there are no paper returns.

An issuance of a premium is treated according to the relevant class of business and is placed in the corresponding section on the return. A renewal would be treated in the same manner.

For treatment of mid-term adjustments, in the case whereby a premium or part thereof, is increased, reduced or cancelled, there is a separate box on the return used for submission (Box 19). This is unusual in comparison to other countries, predominantly because an increase in premium results in a different treatment.

What happens with the treatment of error corrections?

A correction error can be categorised in two ways.

Mistakes can happen and typos can occur in the supply chain. Maybe there was a multi global risk covering multiple countries and apportionment was incorrectly allocated in the first instance.

In the case of a correction of an error a supplementary declaration must be submitted for the appropriate period affected.

For example, if in the first quarter EUR 1,000 was declared for a particular risk based on apportionment produced. Later down the line in Q3, on further review it should have been EUR 1,200. In this case, the additional EUR 200 cannot be submitted on the Q3 declaration. An amended return would need to be considered for Q1 and submitted separately – this is true for both increases and decreases.

Overall, negatives are allowed and the Slovakian tax authority should refund the money back to the insurer. Therefore, the credit cannot be carried over to the next reporting period. There are no limits regarding how much the insurer can regularise but a degree of caution is advised.

Whilst there’s no official guidance, it would be wise to keep any documentation as evidence if a large amount needs to be reclaimed.

Historicals need to be submitted as a supplementary return (i.e. outside the current return). The Slovakian tax authority can impose penalties between EUR 30.00 and EUR 32,000.00.

Take Action

Download our IPT Compliance Guide for help navigating the changing regulatory landscape across the globe.