Norway announced its intentions to introduce a new digital VAT return in late 2020, with an intended launch date of 1 January 2022. Since then, businesses have wondered what this change would mean for them and how IT teams would need to prepare systems to meet this new requirement. Norway has since provided ample guidance so businesses can begin preparations sooner rather than later.
With this new VAT return, the Norwegian Tax Administration (Skatteetaten) seeks to provide simplification in reporting, better administration, and improved compliance.
This new VAT return provides for an additional 11 boxes, increasing the count from 19 to 30 boxes which are based on existing SAF-T codes to allow for more detailed reporting and flexibility. It’s important to note that the obligation to submit a SAF-T file will not change with the introduction of this new VAT return.
This change is for the VAT return only – with the SAF-T codes being re-used and re-purposed to provide additional information. Businesses must still comply with the Norwegian SAF-T mandate where applicable and must also submit this new digital VAT return.
Technical specifications of Norway’s digital VAT return
Skatteetaten has created many web pages with detailed information for businesses to look through over the next few months including the following:
Implementation Guide – this guide was created to assist developers and businesses in assessing the technical requirements needed to implement upcoming changes
Validation Rules – this list will be continually updated with more validation rules as needed
XSD for VAT Return – contains the technical specifications (XSD) for the new VAT return as well as example files and descriptions of the fields contained in the return
API Submission – contains information on submission and validation of the VAT return including error messages
Questions and Answers – FAQ page for businesses to understand answers to common questions that may come up including registration, submission method, and additional files
Submission method for Norway’s digital VAT return
Norway is encouraging direct ERP submission of the VAT return where possible. However, the tax authorities have announced that manual upload via the Altinn portal will still be available. Login and authentication of the end user or system is carried out via ID-porten.
Additionally, Norway has provided a method for validation for the VAT return file, which should be tested before submission to increase the probability that the file is accepted by the tax authorities. The validator will validate the content of a tax return and should return a response with any errors, deviations, or warnings. This is done by checking the message format and the composition of the elements in the VAT return.
What’s next?
Businesses should begin preparations for the implementation of this new VAT return, as there will likely be challenges along the way.
In addition to the new VAT return, Norway has also announced plans to implement a sales and purchase report, which is currently in an early proposal stage in review with the Ministry of Finance. The next phase is mandatory public consultation which is when a desired launch date will be set. Skatteetaten notes that implementation time will be considered when determining an introduction date for the report.
Take Action
Get in touch to find out how we can help your business prepare for Norway’s 2022 Digital VAT Return requirements. Follow us on LinkedIn and Twitter to keep up-to-date with the latest regulatory news and updates.
VAT in Norway: All you need to know about Norway’s SAF-T Requirements
Norway’s SAF-T reporting requirements are evolving as tax continues to digitize
Reform Designed to reduce the compliance burden and administrative costs associated with audits, while giving tax authorities greater visibility of company’s tax and financial data, SAF-T has continued to gain popularity across a growing number of European countries.
Initially introduced in 2017 on a voluntary basis, Norway’s tax authority made SAF-T reporting compulsory in January 2020.
At present, the Norwegian SAF-T must only be submitted on demand in connection with an audit. However, it is expected to be extended to areas such as corporation tax.
On 1 January 2022, the tax authority introduced digital submission of its VAT return, which was also enhanced to capture other data that’s already required whenever a SAF-T submission is needed. However, as SAF-T doesn’t yet need to be submitted regularly in Norway, the completion of these new summary boxes creates a challenge for companies who are unfamiliar with SAF-T.
Have questions? Get in touch with a Sovos expert on Norway SAF-T.
Norway SAF-T Quick facts
Norway’s SAF-T requirements apply to businesses with bookkeeping obligations who use electronic accounting systems including registered foreign bodies.
Businesses with a turnover of less than NOK 5 million who aren’t subjected to mandatory bookkeeping are exempt unless they have electronic bookkeeping information available.
Enterprises with less than 600 vouchers annually that hold accounts in spreadsheets or a text editor program are exempt.
Norwegian SAF-T is submitted on request and doesn’t currently have periodic submission requirements.
SAF-T is a standardised XML format containing exported accounting information.
Norwegian SAF-T files will be submitted primarily by upload via the Altinn internet portal.
Testing is available and recommended by the tax authority.
Mandate rollout dates
1 October 2016: The first version of the SAF-T Financial was published on the Norwegian tax authority website.
9 June 2017: The administrative body on Norwegian SAF-T standards met for the first time to manage standards to suit both public and private sectors. The body meets at least once a year.
1 January 2017: Voluntary adoption of SAF-T began.
1 January 2020: Norway introduced mandatory SAF-T reporting on demand.
1 January 2022: Norway updated its VAT Return to allow for more detailed reporting and flexibility, as the new return structure removes numbered boxes and instead requires users to map their transactions to Norway’s existing tax codes that are currently utilised in the SAF-T mandate. The submission frequency of the VAT return remains the same, but users can now directly submit returns from their ERP system to allow for a more efficient process; where this is not possible, users may still upload XMLs or manually populate data via a portal.
INFOGRAPHIC
Norway’s SAF-T Requirements
Understand more about Norway SAF-T including when to comply, submission deadlines and filing requirements and how Sovos can help.
It’s a challenge to extract data from the ERP, map to the correct SAF-T format and ensure it meets tax authority requirements without triggering the need for further scrutiny. Sovos software takes care of this by extracting the data, performing a full analysis and generating the submission-ready SAF-T file.
Our experts continually monitor, interpret and codify regulatory changes into our software, reducing the compliance burden on your tax and IT teams.
Learn how Sovos’ solution to address the changing VAT compliance requirements in Serbia can help companies stay compliant.
The UK government introduced Making Tax Digital (MTD) with the aim of making filing VAT returns easier and more efficient for businesses. The regulation requires businesses to keep digital records and submit VAT returns via compatible software.
More than 1.8 million businesses are already benefitting from the service, and more than 19 million returns have been successfully submitted through Making Tax Digital compatible software so far.
Understanding MTD
Making Tax Digital is part of the UK government’s plans to reduce errors and make managing tax affairs easier with the use of digital tools.
Businesses must digitally file VAT returns using one of the HMRC approved compatible software solutions that connect to HMRC’s API. Using software to keep digital records of specified VAT related content is compulsory.
MTD requires every VAT registered business to record and submit VAT returns electronically using ‘functional compatible software’.
Companies must use software to keep digital records of specified VAT-related documents.
Stored records must include designatory data and summary VAT data for the period.
Use of multiple pieces of software is allowed.
The format of the VAT return is a 9-box summary, filed via the HMRC’s JSON API platform, which must be digitally linked between the customer’s source data and the submitted digital return. Businesses receive and send information to HMRC via API.
Each business must set up a new digital tax account and should follow a new authentication process.
Submission of digital records can be in a range of digital formats, including XML, CSV, and Excel, provided they are API enabled.
Making Tax Digital (MTD): Roll out dates
1 April 2019: MTD for VAT introduced to UK VAT registered businesses exceeding annual gross sales of £85,000.
1 October 2019: MTD applies for businesses eligible for deferral.
1 April 2021: The ‘soft landing’ for digital links ended. Starting with that tax period, all MTD users must meet digital link requirements. HMRC may consider deferrals for taxpayers with complex legacy systems.
1 April 2022: Mandate expanded to include all businesses registered for UK VAT, regardless of size.
1 November 2022: Businesses filing VAT returns can no longer submit via an existing online VAT account unless HMRC has agreed to an exemption from MTD. Businesses that file annual VAT returns will still be able to use their VAT online account until 15 May 2023.
January 2023: Any VAT registered businesses that fail to sign up for MTD and file returns through MTD-compatible software will incur a default surcharge or late submission penalty and interest.
Penalties for not complying with Making Tax Digital (MTD)
A default surcharge of up to 15% for any late payments of VAT due.
Up to 100% of any VAT understated or over-claimed if a VAT return contains a careless or deliberate inaccuracy.
Up to 30% of an understated assessment of VAT due if HMRC isn’t informed within 30 days that it’s incorrect.
£400 for submitting a paper VAT return without an exemption.
Making Tax Digital for VAT
Making Tax Digital applies to all VAT registered businesses in the UK. Electronic submission of VAT returns, digital record keeping and digital links are all requirements of the regulation.
Digital link requirement
One of the MTD requirements is ‘digital links’ – the electronic exchange of data between software programs, products or applications without manual intervention.
A digital link is required whenever a business is using multiple pieces of software to store and transmit its VAT records and returns in-line with MTD requirements.
A digital link can be:
XML, CSV import and export, and download and upload of files.
Automated data transfer.
API transfer.
Transfer of data and subsequent import of data into software by means of email or tangible digital media (i.e. flash drive).
Making Tax Digital for Corporation Tax
MTD doesn’t currently apply for corporation tax but HMRC published results of its consultation and there are plans for a pilot scheme. A potential mandate is likely in 2026. Bookmark this live blog about updates for MTD or follow us on LinkedIn to stay up to date.
How to set up Making Tax Digital with Sovos
Sovos can help you with MTD in two ways:
You can use Sovos Advanced Periodic Reporting software to streamline your compliance workload with one solution, or
You can use Sovos’ Compliance Services Portal to access expert VAT compliance services and get full visibility of how each obligation is being handled, every step of the way.
FAQ
Can I use Excel for Making Tax Digital?
Excel is an approved digital format to submit digital records as part of Making Tax Digital, as long as the file is API enabled or the spreadsheet is digital. Using Excel can prove inefficient and error prone in comparison to other digital record software options.
How do I setup MTD?
There are a few steps involved in setting up Making Tax Digital for your business:
Check the permissions in the software– filing VAT returns is easy once a business has allowed it to work with Making Tax Digital.
Keep digital records for current and future VAT returns– a business can find out what records need keeping here.
Sign up for Making Tax Digital and file future VAT returns using MTD-compatible software – Sovos’ Advanced Periodic Reporting solution streamlines periodic reporting obligations including MTD and other global VAT and SAF-T reporting requirements.
Who needs to register for Making Tax Digital?
All UK VAT-registered businesses need to register for Making Tax Digital. New businesses will be automatically signed up for MTD when registering for VAT through HMRC’s new VAT Registration Service (VRS).
What is the threshold for Making Tax Digital?
Since April 2022 Making Tax Digital is mandatory for all VAT registered businesses, regardless of annual turnover.
Do sole traders have to make tax digital?
If a sole trader is a VAT registered business they will have to comply with the Making Tax Digital requirements. In the UK, businesses with an annual turnover of less than £85,000 can opt to register their business for VAT but it is not compulsory.
In an effort to modernise its tax systems and close the VAT gap, Poland’s tax authority, the Krajowa Administracja Skarbowa (KAS), continues to advance its implementation of VAT reform with changes to SAF-T and the introduction of continuous transaction controls (CTCs).
Get the information you need
Poland’s SAF-T evolution
Poland introduced its version of the Standard Audit File for Tax (SAF-T) known as Jednolity Plik Kontrolny (JPK) in 2016. This incorporated multiple regulated JPK structures, of which two, JPK_VAT and JPK_FA, were relevant for VAT.
The requirement for monthly submissions of JPK_VAT was extended to all taxpayers on 1 January 2018. JPK_VAT was combined with the VAT return during 2020 and the consolidated JPK_VAT with the declaration is submitted per the frequency of the VAT Return (monthly or quarterly).
JPK_VAT with the declaration has two variants:
JPK_V7M for taxpayers settling VAT monthly
JPK_V7K for taxpayers who settle VAT quarterly
The remaining JPK structures are submitted upon request of the tax authority in event of an audit.
SAF-T quick facts
There are eight Polish JPK structures that taxpayers should be prepared for. Most are required on demand, but the JPK_V7M/K must be submitted periodically (monthly or quarterly).
JPK_V7M/K declaration for records of VAT purchases and sales combined
JPK_FA for VAT and VAT invoices
JPK_WB for bank statements
JPK_PKPIR for revenue and expense ledger
JPK_EWP for revenue account
JPK_KR for accounting books
JPK_MAG for warehouses
JPK_FA_RR for flat rate VAT invoices
Poland’s CTC reforms
Aiming to combat fraud and improve tax collection capabilities, Poland’s first Continuous Transaction Controls (CTC) legislation, the Krajowy System e-Faktur (KSeF), was published in Poland in early 2021.
Adoption of the proposed CTC reform occurred on 18 November 2021, following consultation with industry representatives. The implementation process is ongoing, with the voluntary phase having begun in January 2022 and the mandate due to go-live on 1 July 2024.
CTC quick facts
Participants who wish to get ahead of the mandate can now opt to use the Polish electronic invoice in structured XML format the FA-VAT, to submit supplier invoices to the KSeF (Krajowy System e-Faktur) electronically.
Other considerations for businesses include:
During the voluntary phase, buyer acceptance of e-invoices is necessary to receive invoices via KSeF (otherwise supplier will still need to issue invoices in the agreed form/format, such as PDF, paper or via EDI)
Refund period reduced from 60 to 40 days
Incentives provided to businesses to issue invoices through the KSeF portal during voluntary phase
Outsourcing using third-party service provider will be permitted
All invoices will be archived in KSeF for ten years
A qualified electronic signature or seal (QES), trusted profile or token will be required to authenticate access to the portal
Mandate rollout dates for JPK and CTCs in Poland
Poland SAF-T
1 July 2016: SAF-T introduced in Poland in the form of JPK files
1 January 2018: Poland mandated JPK_VAT for all taxable persons
1 July 2018: Taxpayers must be able to produce accounting documents in JPK structures
1 October 2020: JPK_VAT with declaration consolidates the VAT Return and JPK_V7M/K
1 July 2021: Amendments to the mandatory JPK_V7M/K adopted
1 January 2022: Amendments to the JPK_V7M/K structure including changes to better align it with the EU VAT e-Commerce package
1 January 2025: Reporting of JPK EWP, JPW PKPIR, and JPK_KR becomes a periodic reporting obligation
Poland CTC
29 October 2021: Legislation for a Continuous Transaction Control (CTC) e-invoicing system adopted; draft specifications released and test system made available
1 January 2022: Voluntary phase begins for the CTC system. There is no obligation to use the e-invoicing system in B2B transactions though there are several benefits if businesses chose to do so, including quicker tax refunds and exemptions from submitting the report of invoices, JPK-FA
10 June 2022: The Council of the European Union published the Council Implementing Decision authorizing the Republic of Poland to apply a special measure derogating from Articles 218 and 232 of Directive 2006/112/EC, based on the European Commission proposal published on 30 March 2022. The decision will be granted from 1 January 2024 until 31 December 2026, after being published in the Official Journal of the European Union.
1 July 2024: The CTC system will become mandatory
1 January 2025: The mandatory e-invoicing expands to the VAT-exempted taxpayers
1 January 2025: The end of the grace period for the application of the penalties
Penalties
The new SAF-T structure, like the JPK_VAT and VAT returns, must be submitted monthly, or quarterly. Failure to submit accurately and on time may result in penalties. The Polish tax authority will react quickly to inconsistencies detected in SAF-T files and use data analysis algorithms to identify fraudulent transactions.
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Poland's SAF-T Requirements
Understand more about Poland SAF-T including when to comply, penalties, requirements and how Sovos can help.
Need help to ensure your business stays compliant with the evolving reporting and emerging SAF-T and CTC obligations in Poland?
Keeping up with VAT compliance obligations has become more difficult as Poland continues to take steps to reduce its VAT gap and modernise the system.
Our experts continually monitor, interpret and codify complex legal and technical changes into our software solutions, keeping you up-to-date and reducing the compliance burden on your tax and IT teams.
Learn how Sovos’ solution for JPK_V7M/K, CTC reforms and other VAT compliance changes can help companies stay compliant in Poland and around the world.
SII Spain is an electronic VAT system that affects thousands of large companies across the country. It can seem complicated, but it doesn’t have to be.
The mandate is demanding, with the impacted groups having to stay on top of the four-day reporting period. If your business meets the criteria of SII Spain, you will likely be feeling the pressure of having to comply.
Sovos is here to help, breaking down Spain’s SII system into:
How companies can comply (and what to expect if they don’t)
Key details about the mandate and how it’s developed over time
How Sovos can ease the burden for you at every stage
SII Spain is only one of the country’s tax compliance obligations. Our Spain VAT Compliance overview can help you stay on top of other mandates and obligations you may be subject to.
The mandate affects Spanish companies above an annual turnover threshold of over €6 million. It’s also applicable to VAT business groups, companies that participate in the monthly tax refund system known as REDEME and other businesses that voluntarily sign up.
Where is SII applicable in Spain?
Spain’s compliance obligations are further complicated by the country being divided into regions. Depending on where your business is based, you may well be subject to a specific combination of tax mandates.
The distinct areas where SII is applicable include:
Mainland Spain
Canary Islands
Bizkaia
Gipuzkoa
Alava
Quick facts about SII Spain
The Spanish mandate applies to companies with an annual turnover above €6 million, companies that are part of VAT groups, and companies using the REDEME system.
The following records must be sent to the tax authority:
Registered book of issued invoices
Registered book of received invoices
Registered book of investment goods
Registered book of certain intra-community operations
The transmission of the information must be via web services available to exchange XML messages.
Some formal obligations are reduced as taxpayers will no longer be required to file the information returns form 347 (third-party information), form 340 (transactions in register books) and form 390 (VAT annual summary).
In 2020 the Spanish tax administration introduced a service to pre-populate the periodic VAT return (Modelo 303) using the information taxpayers supplied via the SII.
Spain: Rollout dates
2 January 2017: The immediate supply of information on a voluntary basis for taxpayers in Spain begins.
1 July 2017: The mandatory phase of the immediate supply of information for taxpayers under the scope of the mandate begins.
1 January 2018: The period to supply information was reduced from 8 days to 4 days. The mandate also extended to other Spanish territories (Basque Provinces and Canary Islands).
1 January 2020: Introduction of a ledger to record operations related to the sale of goods in consignment.
4 January 2021: Introduction of new validations and fields that record the sales of goods in consignment
Penalties: What happens if you don’t comply
Omissions or inaccuracies in the information reporting obligation have a penalty of up to 1% of the total amount missed, with a maximum of €6,000.
Late reporting of real-time electronic VAT ledgers will trigger a penalty of 0.5% of the total amount reported, with a minimum of €300 and a maximum of €6,000 per quarter.
Errors or omissions in the Registered book of certain intra-community transactions and Registered book of Investment goods have a fixed penalty of €150.
Sovos Helps Companies Stay Compliant with Spain’s SII
Sovos serves as a true one-stop shop for managing all VAT compliance obligations in Spain and across the globe.
Sovos supports the Suministro Inmediato de Información (SII) platform, ensuring our customers remain compliant with the legal and technical framework developed by the Spanish tax authority (AEAT).
Sovos experts continually monitor, interpret, and codify these changes into our software, reducing the compliance burden on your tax and IT teams.
Spain B2B E-invoicing: Businesses are under varying obligations where e-invoicing is concerned, largely depending on the nature of transactions. Mandatory B2B e-invoicing is anticipated to be implemented from 2024.
Bizkaia Batuz: Batuz is a tax control strategy governed by the government of Bizkaia which applies to all companies and taxpayers that are subject to the province’s regulations.
TicketBAI: TicketBAI is an e-invoicing mandate from the numerous tax authorities in the Basque Country which covers Álava, Biscay, and Gipiuzkoa. It outlines obligations for both individuals and companies to use software to report invoice data to the Tax Administration in real-time.
The Suministro Inmediato de Información (SII) is a platform to submit invoice data to the tax authority in Spain. Taxable persons who are in scope must report invoice data within four business days following the date of issue.
In 2020 the tax administration announced a new version of the SII, introducing a ledger to record operations related to the sale of goods in consignment. This came into effect on 1 January 2021.
The Suministro Inmediato de Información (SII) was introduced on 2 January 2017 on a voluntary basis, extending to a mandatory basis on 1 July 2017. Since then, there have been changes and additional requirements
SII applies to multiple regions in Spain, including Mainland Spain, the Canary Islands, Álava, Biskaia, and Gipiuzkoa.
This was not the case when the legislation originally came into effect, as it excluded the likes of the Canary Islands, Ceuta, Melilla, Basque Country and Navarra.
The Immediate Supply of Information (Suministro Inmediato de información) SII is a system for keeping the Value Added Tax record books in the local Tax Authority’s electronic headquarters by supplying VAT-relevant information on a near-real-time basis.
Tax in Hungary: All you need to know about RTIR Hungary
RTIR Hungary
In 2018, Hungary established a legal framework requiring taxpayers to use a designed schema to report invoice data to the tax authority (NAV) in real-time for domestic transactions above a minimum VAT amount.
Due to the success of this measure, the scope of the mandate has been extended to include a wider range of transactions, and the earlier thresholds have been abolished. The impact of the mandate is now broadly felt in Hungary where all transactions between domestic taxable persons must be reported to the NAV, regardless of the amount of VAT accounted.
Have questions? Get in touch with a Sovos expert on RTIR Hungary.
Hungary VAT mandate quick facts
Immediate disclosure of data from all invoices issued under the scope of the mandate.
Once an e-invoice is issued, transmission of data must occur automatically using a machine-to-machine interface and must be done without human intervention
The transmission must include identification data and the obligatory data content as required under the Hungarian VAT Act.
VAT returns are filed monthly or quarterly and are due on the twentieth of the month after the end of the tax period.
The VAT return contains several appendices requiring additional information on transactions such as supplies of new means of transport and metals subject to the domestic reverse charge.
Alongside the VAT return, taxpayers must submit a summary report on all domestic purchases for which they’re claiming an input tax deduction.
Mandate rollout dates
1 July 2018: Mandate applies to all taxable persons to report invoice data in real-time to the National Custom and Tax administration of Hungary for domestic transactions with a minimum VAT amount of 100,000 HUF.
1 July 2020: The VAT threshold was abolished and all domestic transactions between taxable persons in Hungary must be reported regardless of the VAT accounted.
1 January 2021: Reporting obligations include B2C invoice issue and B2B intra-community supplies and exports.
1 January- 31 March 2021: The Ministry of Finance granted a sanction-free three-month grace period to comply with new reporting obligations and to give businesses time to transfer from the current version (v 2.0 XSD) to the new version v3.0 XSD.
1 April 2021: Mandatory usage of the new version (v3.0 XSD) begins.
RTIR Penalties
Failure to report the invoices in real-time could lead to an administrative penalty of up to 500,000 HUF per invoice not reported.
Additional penalties would apply for non-compliance with the invoicing software requirements.
Infographic
Hungary’s CTC Requirements
Understand more about Hungary’s NAV system, how to file invoices, when businesses are required to comply and how Sovos can help.
Sovos helps companies stay compliant with Hungary Real Time Reporting Requirements
As Hungary edges ever closer to CTC e-invoicing invoice clearance, Sovos enables businesses to stay up to date with the latest requirements and technical specifications so they can effectively connect with the NAV and honour their VAT compliance obligations.
Note: The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. Our blog, France: B2B E-Invoicing Mandate Postponed, is promptly updated whenever there are changes to the rollout of the French mandate.
France’s e-invoicing mandate, combined with the e-reporting obligation, provides the tax authorities with access to transaction data. This is to increase efficiency, cut costs and fight fraud.
Whether you are a buyer or supplier, the mandate’s effect on businesses and their operational processes, financial systems and people is extensive.
The France e-invoicing guide will explain:
How e-invoicing in France works
Who needs to comply and when
Key information about penalties and non-compliance
Have questions? Get in touch with a Sovos France e-invoicing expert.
Quick facts: E-invoicing in France for B2B and e-reporting
The e-invoice mandate is a model based on registered certified service providers connecting taxpayers to a centralised platform (Chorus Pro). There is also an option for taxpayers to connect directly to Chorus Pro.
When directly transmitting to the centralised platform, the structure of the e-invoices can be UBL, CII or Factur-X (a mixed format). E-invoices exchanged between two registered service providers can use any other structured format. Also, during a transitional period (up until December 2027), taxpayers may submit their invoices in an unstructured PDF format.
E-invoices must contain all existing tax mandatory fields as well as those required by commercial laws, including line-item details (and for line-item data from January 2026). The invoice must mention the operation type (goods, services, mixed) and the VAT payment option. The inclusion of additional mandatory fields in e-invoices is a requirement. Accepted formats include structured and hybrid (image + structured data).
Exchanging e-invoices directly between trading parties is not allowed. Either registered service providers or the centralised platform transmits the e-invoice to the buyer party.
Payment status data for each service invoice is shared.
E-reporting frequencies are based on the VAT regimes that taxpayers are subject to.
E-invoicing and e-reporting in France: Rollout dates
September 2026: first phase of mandate
Inbound e-invoicing for all companies. Outbound e-invoicing (+ e-reporting) for Large & Mid-Size businesses
September 2027: second phase of mandate
Outbound e-invoicing (+e-reporting) for any other companies
*The e-invoicing mandate does not apply to B2C and cross-border invoices. However, there is an obligation to report those transactions so the tax administration has full visibility.
Penalties: What happens if you don’t comply
E-invoicing: €15 per invoice, capped at €15,000 per year
E-reporting: €250 per transmission, capped at €45,000 per year
Register for e-invoicing in France with Sovos
Sovos can help your business comply with the French mandate with a range of services:
Tax compliance services – to control, sign, archive and format invoicing data according to the legal requirements as well as create SAF-T (FEC) reporting for both suppliers and buyers
Connectivity services – through Sovos or via our partners to deliver e-invoice, e-reporting and lifecycle status data
France’s e-reporting requirements are alongside the new e-invoicing mandate, with the reporting frequency based on the taxpayers’ VAT regime requirements.
France’s e-invoicing requirements come into effect during 2024-2026, depending on business size. All companies must be able to receive e-invoices under the new rules that come into effect on July 2024.
Transmission of all domestic B2B invoices must be through the central platform (Portail Public de Facturation – PPF) or via registered service providers connected to the platform (Partner Dematerialization Platforms – PDP).
There are a growing number of tax authorities that have implemented e-invoicing globally, including France, Italy, Saudi Arabia and India. There are also many countries working on implementing e-invoicing including Germany and Spain.
Italy was the first country in the region to introduce a clearance e-invoicing model with the Sistema di Interscambio (SdI) platform. Seeking to close one of Europe’s most significant VAT gaps, the government has steadily improved its Continuous Transaction Controls (CTC) system.
Beginning with B2G e-invoicing in 2014 and extending to cover domestic B2B and B2C e-invoices in 2019, Italy became the first EU country to make B2B e-invoicing mandatory through a clearance process.
This page will:
Explain how Italy’s e-invoicing works
Help you understand how to comply with the e-invoicing regulations
Answer your questions about the Sistema di Interscambio
Have questions? Get in touch with a Sovos Italy e-invoicing expert.
Issuing e-invoices requires creation in a structured format and transmission is via the Sistema di Interscambio
The Fattura PA – the tax authority’s XML schema format – is the required format for issuing e-invoices
For B2B e-invoices, businesses can choose how to ensure the integrity and authenticity of invoices, but there is a strong market preference for Qualified Electronic Signatures. However, B2G e-invoices must be electronically signed.
Exchange of National Health Service purchase orders is through the NSO platform and referenced accordingly in the e-invoice.
E-archiving invoice requirements include the obligation to:
Execute a signing and time stamping process for e-invoices in an archive
Maintain a documented description of the archive and the archiving process (Manuale della Conservazione)
Put in place a clear delegation plan setting up the responsibilities around the archiving process
Since 1 July 2022, all cross-border transactions must be reported through the SdI in the FatturaPA format. Taxpayers can continue to exchange cross-border invoices in any agreed way.
Scope of e-invoicing in Italy
B2B e-invoicing in Italy applies to:
Domestic B2B transactions between Italy resident/established taxpayers
Almost all Italy resident/established taxpayers
Included in 2022: Taxpayers who adopt the flat-rate tax regime (regime forfettario) and amateur sports associations and third sector entities with revenue up to EUR 65,000
From 1 Jan 2024: Microenterprises with revenues or fees up to EUR 25,000
B2G e-invoicing in Italy applies to:
All taxpayers supplying goods/services to public administration entities
E-invoicing in Italy: Mandate Rollout Dates
6 June 2014: Phased roll-out of mandatory B2G e-invoicing starts in Italy
1 July 2018: Clearance mandate goes into effect for manufacturers and distributors of petrol and diesel intended for use as a motor fuel in cars and road vehicles
1 September 2018: Mandate starts for tax-free sales to non-EU individuals acting as final customers
1 January 2019: Mandate becomes a requirement for domestic B2B and B2C transactions in Italy, with minor sector-specific exceptions
1 February 2020: Exchange of purchase orders for the supply of goods to entities associated with the National Health Service through the NSO platform becomes compulsory and reference in the e-invoice becomes a requirement
1 January 2021: Introduction of pre-populated VAT returns and enforcement of new FatturaPA schema
June 2021: Enforcement of the new requirements for the creation and archiving of electronic documents
October 2021: Voluntary transition phase for e-invoicing between Italy and San Marino began
1 July 2022:
Italian businesses must report information on cross-border transactions to the SDI in the FatturaPA format. As a result, Esterometro was abolished on 30 June 2022
E-invoicing using the FatturaPA format becomes mandatory between Italy and San Marino, with the Italian SdI as the access point for Italian taxpayers and the HUB-SM platform as the SdI counterpart on San Marino’s side
Scope of the B2B e-invoicing mandate in Italy broadened to include:
Taxpayers who adopt the flat-rate regime (regime forfettario)
Amateur sports associations and third sector entities with revenue up to EUR 65,000
January 2024: E-invoicing scope to include microenterprises with revenues or fees up to EUR 25,000
Penalties: What happens if you don’t comply
Failure to issue an invoice or issuing an invoice that doesn’t meet the XML format will result in a penalty between 90-180% of the associated VAT amount.
Issuing a purchase invoice to a client without adhering to mandate requirements will result in a penalty of 100% of the associated VAT amount.
After a grace period (expired for the supply of goods and services), there will be no payment for invoices issued to entities associated with the National Health Service if no prior purchase order has been transmitted through the NSO platform and referenced in the e-invoice
Register for e-invoicing in Italy with Sovos
Sovos ensures compliance with all SdI e-invoicing and VAT requirements in Italy including CTC e-invoicing, reporting and e-archiving. All you need to do is work with us and you can use our solution that connects directly with the SdI.
E-invoicing in Italy is mandatory for the majority of the B2B, B2C and B2G invoices. Suppliers performing activities classified as “Commercio al minute e attivitá assimilate” are exempt from the obligation of issuing e-invoices, unless their customers so request them; on the other hand, those suppliers are required to electronically transmit a daily aggregate report (It.: Scontrino Elettronico). Reporting of cross-border transactions through the SDI in the FatturaPA format is also mandatory.
How does e-invoicing work in Italy?
The tax authority requires all invoices in the Fattura PA XML schema format. Transmission of e-invoices happens through the Sistema di Interscambio. E-invoices must be cleared by the tax authority. The Italian tax authority delivers the legal cleared e-invoice to the recipient.
How do you securely connect with the SdI to issue invoices?
With ease. Our solution connects securely with the SdI, freeing you from the burden of knitting together different systems and platforms.
How do you comply with Conservazione sostitutiva?
The term conservazione sostitutiva refers to a long-term preservation process required for compliant archiving of e-invoices in Italy. E-invoices must be preserved after being archived by grouping them together in a so-called ‘package’, and providing that e-invoice package with a qualified digital signature or seal and a time reference.
This process must be completed no later than three months after the deadline for the submission of the annual fiscal declaration at the end of the fiscal year. E-invoice preservation is an integral feature of Sovos eArchive for invoices stored under Italian law.
While many governments and tax authorities are now on an e-Transformation journey, this trend began in Latin America in the early 2000s. Turkey followed suit a decade later when it began the digitization of its tax system.
Turkey is further along in its e-Transformation journey than most countries – including EU Member States, which are working towards digitization in their own way with the overarching VAT in the Digital Age initiative.
From e-invoicing to electronic self-employment receipts, Turkey now has a fully-fledged, established digital tax system with many moving parts. To understand Turkey’s e-Transformation, bookmark this page then read on.
CTC Type E-invoice clearance with both parties registered on the portal
Network Centralised – e-Fatura Portal delivers the e-invoices to Buyers for B2B transactions
Format UBL-TR format
eSignature Requirement Required – fiscal stamp or qualified electronic signature
Archiving requirement 10 years
E-arşiv Fatura Turkey
CTC Type E-invoice reporting (daily basis)
Network Decentralised – e-Fatura Portal does not deliver e-arşiv invoices; it’s the taxpayers’ responsibility
Format UBL-TR format or in a free format such as PDF and must also be available in paper form
eSignature Requirement Required – fiscal stamp or qualified electronic signature
E-Transformation in Turkey
Turkey stepped up its tax system through digitization in 2012 to help important information be gathered and transmitted with ease and accuracy. It’s further ahead than many other countries, with a variety of electronic systems and documents mandated for many taxpayers – all starting with its e-Ledger obligation.
Turkey joined the eEurope+ initiative and moved fast to ensure it was keeping up with tax digitization efforts, relieving its entire economic ecosystem where information is concerned. The aims of such changes are to reduce VAT fraud, increase governmental access to and control of data, standardise financial and accounting processes and reduce errors.
Now effectively utilising electronic versions of invoices, ledgers, delivery notes, self-employed receipts and more, there are a lot of challenges for taxpayers to overcome to remain compliant amidst Turkey’s e-Transformation.
Turkey’s ambition to electronically transform its tax ecosystem required the development and implementation of many products and services. This presented taxpayers with new requirements and, subsequently, new challenges.
Here are the products and services in Turkey’s e-Transformation system:
e-Fatura
e-Fatura is Turkey’s e-invoicing initiative. Mandated for companies with turnovers of over TRY 5 million, this obligation came into effect on 1 April 2014. There are also sector-based parameters for the nation’s e-invoicing mandate, ignoring the turnover threshold, qualifying the following for an electronic invoice obligation:
Companies licensed by the Turkish Energy Market Regulatory Authority
Middlemen or merchants trading fruits or vegetables
Online service providers facilitating online trade
Importers and dealers
Turkey’s e-invoicing initiative is a clearance model and two-way application, with issued invoices needing to be in the UBL-TR format and archived for 10 years. Sovos’ e-invoice solution enables compliance with e-Fatura requirements.
e-Arşiv Fatura
e-Arşiv Fatura is Turkey’s e-arşiv invoice initiative. Taxpayers registered in the e-Fatura system must also issue e-Arşiv invoices, either in the UBL-TR format or in a free format such as PDF.
Real-time clearance is not conducted for the issuance of these invoices, though an e-Arşiv report must be submitted electronically to the tax authority by the end of the following day. e-Arşiv invoices are always created electronically but must be available in paper form unless the buyer agrees to receive the document electronically.
e-İrsaliye is Turkey’s e-WayBill initiative. The use of e-İrsaliye documents became obligatory for taxpayers that surpass the TRY 10 million revenue threshold on 1 July 2023, though those outside of the scope can voluntarily switch to electronic WayBill documents.
There are two types of paper waybills, namely shipment and transportation. e-İrsaliye largely replaces the shipment waybill.
Information required in this type of e-document includes:
Supplier information
Issue date and document number
Buyer information
Type and quantity of the transported goods
Shipment date and time
Legally, there is no difference between paper waybills and eWayBills, though the electronic version requires both parties to be registered in the national system.
e-Defter
e-Defter is Turkey’s e-Ledger initiative. The Turkish tax authorities made the e-Ledger application mandatory for e-invoice users and taxpayers, subject to independent audit, in 2015.
These e-documents must be prepared in XBRL-GL format and include specific information in standard XML format – all signed with a financial seal. In addition to producing e-ledgers, taxpayers are required to create a ledger summary which is to be sent monthly to the TRA and archived for 10 years.
Electronic ledgers reduce the time it takes to collect data, save costs associated with the notarization process and ensure compliance with tax processes.
e-Mutabakat
e-Mutabakat is Turkey’s e-Reconciliation initiative. Reconciliation is the communication between accounts to mutually agree on the debit and credit between companies that are part of an agreement.
Turkey’s tax authority has ruled that companies are obliged to make reconciliations at particular times. The last day of the year is typically the day when the account between two parties will be closed unless an agreement or legal requirement states otherwise.
The BA-BS web application developed by the TRA for e-Reconciliation enables taxpayers to compare current agreements and unbalanced agreements before electronic submission of the BA-BA forms.
e-Müstahsil Makbuzu
e-Müstahsil Makbuzu is Turkey’s e-Producer Receipt initiative. This commercial e-document is issued by farmers or wholesalers to keep a record of the products they buy from farmers that don’t bookkeep.
Taxpayers that are obliged to issue producer receipts have had to issue electronic versions of the document, known as e-Müstahsil Makbuzu, since 1 July 2020. However, fruit and vegetable brokers or merchants have been required to issue e-Producer Receipts since 1 January 2020.
Those obliged to utilise e-Producer Receipts may be outside of the scope of e-Fatura, e-Arşiv Fatura and e-Defter requirements.
e-Serbest Meslek
e-Serbest Meslek is Turkey’s e-Self-Employed Receipt (e-SMM) initiative. This obligation came into effect on 1 February 2020 and applies to all self-employed individuals, including:
Architects
Engineers
Financial advisors
Lawyers
Screenwriters, writers, composers and painters
Self-employed doctors, dentists and veterinarians
e-SMM receipts can be created, submitted and reported electronically and carry the same legal weight as paper Self-Employment Receipts. They must be archived for 10 years.
While all the above are prominent e-documents, there are even more electronic documents in Turkey that you should know about. To learn more, read our e-documents overview.
Who is affected by e-Transformation?
E-Transformation includes many documents, each subject to specific thresholds and criteria based on their type. Additionally, certain documents are mandatory for particular sectors without any threshold criteria. E-invoicing is now mandatory for the majority of taxpayers, but it is important to understand which documents are required to be submitted to the tax authorities.
The TRA continues to announce new taxpayer groups in scope of the different document types, so it’s important that businesses stay up to date with the latest information to ensure they remain compliant.
What are the benefits of e-Transformation?
Turkey’s tax transformation aimed to deliver benefits to both the government and taxpayers.
The e-Transformation initiative aims to produce the following benefits:
Real-time collection of financial data
Reduce VAT fraud and the circulation of fake invoices
Increased standardisation to automate accounting processes
Improved efficiency and reduction of manual errors through data auto-population
Tax compliance and e-Transformation
Turkey’s e-Transformation has impacted tax compliance, successfully implementing real-time transmission of important financial data.
With data automatically being populated in documents, it reduces the possibility of error via manual input and fraudulent invoices being submitted. The reduction of the VAT gap has been a driving force for many countries, including Turkey.
Eliminating paper, cartridge, shipping and archiving costs associated with paper invoices is also an advantage to businesses and government.
With over 16 document regulations, Turkey’s e-transformation system requirements are extensive and complex. Understanding which regulations apply and keeping up with the latest tax compliance guidelines is key.
How Sovos can help with your e-Transformation journey
Sovos provided the first global e-Transformation solution suite, helping businesses of all shapes and sizes to meet the demands of Turkish tax mandates. Our platform meets all the requirements, standards and formats defined by the Turkish Revenue Authority.
Organisations choose Sovos as their global compliance partner, partly due to the convenience of having a single vendor to aid compliance wherever and however they do business.
A special integrator is an intermediary service provider authorised by the Turkish Revenue Administration. Special integrators have the authority to create electronic records on behalf of taxpayers.
Sovos recently sponsored a benchmark report with SAP Insider to better understand how SAP customers are adapting their strategies and technology investments to evolve their finance and accounting organizations. This blog hits on some of the key points covered in the report and offers some direct responses made by survey respondents, as well as conclusions made by the report author. To get the full report, please download your complimentary copy of SAP S/4HANA Finance and Central Finance: State of the Market.
In this year’s benchmark report, research found that most companies are focused on reducing complexity and cost as a primary driver of their overall finance and accounting, including tax, strategies. With this reduction, they are working to solve their biggest pain point which continues to be a lack of visibility into financial transactions and reporting.
The survey revealed several key strategies and investments that SAPinsiders are prioritizing to evolve their finance and accounting processes and organizations. The number one driver of finance and accounting strategy in 2021 is to reduce cost and complexity. This was named by 57% of our audience as the top driver of their finance and accounting strategy. This jumped 24% from last year. To support their top drivers, a majority (56%) of the finance and accounting teams in the study plan to increase their use of automation in 2021.
Clean and harmonized data and a centralized single point of truth are the most important requirements that SAPinsiders are prioritizing. 83% of survey respondents report that clean data is important or very important, while 80% highlight the significance of the Universal Journal in centralizing critical information.
How do technology and tax intersect?
Continued complexity within core financial and accounting systems is limiting organizations’ ability to adapt rapidly to changing business conditions and provide real-time visibility into operations. That is why the number one driver of finance and accounting strategy based on this year’s survey is the pressure to cut both cost and complexity.
Survey responses and interviews with customers about their largest sources of pain consistently mention system and process complexity as one of their most significant challenges. Respondents are focused on addressing this obstacle in a variety of ways such as through investments in analytics, automation, centralization, and system consolidation.
This directly impacts how companies approach tax as rapidly changing global tax laws and mandates often have organizations playing catch up to ensure they are charging and remitting the proper amounts of tax to each country in which they operate. Failure to do this can lead to costly audits, potential fines and penalties and damage to brand reputation.
Why move to SAP S/4HANA Finance?
Simplicity, speed, and easy access to data were among the top benefits cited by survey respondents who have completed or nearly completed their move to SAP S/4HANA Finance. Several mentioned the ease with which they can go from high-level reports and drill down to the document or line-item level, making it easier to understand the numbers and perform in-depth analysis quickly. This directly aligns with the pain points that were identified in the benchmark report survey.
Why now?
What is clear from this survey and subsequent report is that complexity across all layers of finance is having a direct impact on a companies’ ability to function at the highest operational level possible and is threating to impact the bottom line.
Accounting for tax early in your migration strategies and technology upgrades is a key component to ensuring that you are prepared to handle the challenges of modern tax on an international scale. For companies that operate on a multi-national basis, having a centralized approach to tax with enhanced visibility and reporting capabilities is imperative to achieving and remaining compliant no matter how many changes to tax law are introduced every year.
Please download the full report for a more detailed explanation of these critical areas of focus.
Six months after Brexit there’s still plenty of confusion. Our VAT Managed Services and Consultancy teams continue to get lots of questions. So here are answers to some of the more common VAT compliance concerns post-Brexit.
How does postponed VAT accounting work?
Since Brexit, the UK has changed the way import VAT is accounted for. Before January 2021, you had to pay or defer import VAT at the time the goods entered the UK. Because of the volumes of trade between the UK and the EU, the government have understandably changed this. So, now rather than having to pay import VAT you can choose to postpone it to the VAT return. In practice, this effectively means it’s paid and recovered on the same VAT return. This is a significant cash flow benefit. It’s common among many EU Member States and it was allowed in the UK many years ago. The UK reintroduced it from the start of this year.
There’s no need to be approved to use postponed VAT accounting but an election to use it must be made when completing each customs declaration. It doesn’t happen automatically and the reality is that businesses can choose whether they want to use it or not. The import VAT is then accounted for in box 1 of the UK VAT return and then recovered in box 4. If you’re a fully taxable business and the VAT is recoverable, this will mean that there is no need to make any payment of the import VAT. There are no costs involved in using postponed VAT accounting. The business will have to download a monthly statement from the Customs Declaration Service. The statement shows the postponed amount of VAT.
There are also import VAT accounting mechanisms in place in the EU but they vary from country to country. If you’re a UK business and you’re going to be the importer of the goods into the EU, there is the ability to use postponed accounting in some other countries but the rules on how it applies can vary. In some countries it’s like the UK, so no permission required.
In others you’ll need to make an application and meet the conditions in place. If there is no postponed VAT accounting, there may be the opportunity to defer import VAT which can still provide a cash flow benefit. It’s really important that companies understand how it works in the Member State of import, and if it’s available to them as it can have a big impact on cash flow. It’s good news that the UK have reintroduced postponed VAT accounting as it’s certainly a benefit and applies to all imports, not just those that come from the EU.
I’m shipping my own goods to a third party logistics provider in the Netherlands. I will ship the goods to customers around the EU. How do I value the goods for customs purposes as they remain in my ownership? They’re not of UK origin so customs duty may apply.
This question comes up a lot as customs valuation, like the principle of origin has not arisen for many years for UK companies who have only traded with the EU.
The rules on customs valuation are complex. In this scenario, there is no sale of the goods. So it’s not possible to use the transaction value which is the default valuation method. As customs duty is not recoverable, it’s essential that the correct valuation method is used. This minimises the amount of duty paid and also to remove the possibility of the customs and VAT authorities challenging a valuation. We would recommend seeking specialist advice.
If I sell B2C to customers in the EU do I need to register for VAT in each Member State?
When goods go from Great Britain to the EU, we’re currently in the transition period between Brexit and the introduction of the EU e-commerce VAT package which comes into play on 1 July 2021. Until then, whether you need to be registered or not in an EU country depends on the arrangements in place with your customer. If you sell on a Delivery Duty Paid (DDP) basis, you’re undertaking to import those goods into the EU. So if you do that, you’ll incur import VAT on entry into each country and then make a local sale. If you do that in every Member State country, you’ll have to register for VAT in every Member State.
It should be noted that these are the rules for GB to EU sales and not those from Northern Ireland. This is because the Northern Ireland protocol treats NI to EU sales under the EU rules. The distance selling rules that were in force before the end of 2020 still apply.
Going forward, the EU has recognised that this isn’t really a manageable system. There has been significant abuse of low value consignment relief. LCVR relieves imports of up to €22 from VAT. So they’re introducing a new concept – the Import One Stop Shop (IOSS). IOSS will be available from 1 July 2021 as part of the EU E-Commerce VAT package. From this point, the principle is that for goods with an intrinsic value of below €15. you can use the IOSS. IOSS accounts for VAT in all the countries to which you deliver. You only need a VAT registration in one country where you then pay all your VAT. You submit one return in that country on a monthly basis. This should simplify VAT compliance and ease the admin burden.
There will also be a One Stop Shop (OSS) for intra-EU transactions. So the simplifications ahead will reduce the burden to businesses. What’s important is making sure you review your options. Make an informed decision as to which is the right scheme for your business. Ensure you can comply with VAT obligations to avoid VAT compliance problems in the future.
In Poland, the Ministry of Finance proposed several changes to the country’s mandatory JPK_V7M/V7K reports. These will take effect on 1 July 2021. The amendments offer administrative relief to taxpayers in some areas but create potential new hurdles elsewhere.
Poland JPK_V7M and V7K Reports
The JPK_V7M/V7K reports – Poland’s attempt to merge the summary reporting of a VAT Return with the detailed information of a SAF-T – have been in effect since October 2020. Taxpayers must submit these reports (V7M for monthly filers, V7K for quarterly filers) in place of the previously-used VAT Return and JPK_VAT files.
The JPK_V7M/V7K reports require taxpayers to designate within each file the invoices subject to special VAT treatment. For example, invoices representing transfers between related parties or invoices for transactions subject to Poland’s split payment regime.
Split payment designations are particularly complex for taxpayers to manage. Poland’s split payment regime is broadly applicable. In some cases can be exercised at the buyer’s option. This makes it difficult for sellers to predict which of their invoices should be marked.
As a result of these complexities, and in response to taxpayer feedback, the draft amendment for 1 July would abolish the split payment designation. This would significantly reduce the administrative burden on taxpayers.
The draft amendment does, however, give rise to an additional complexity in the reporting of bad debts. Under the amended rules, taxpayers need to indicate the original due date of the payment for an unpaid invoice. For which the taxpayer is seeking a VAT relief. This is intended to help the tax authority verify bad debt relief claims. This could potentially present difficulty for taxpayers who do not maintain such information or cannot easily access it in their accounting systems.
Poland and EU One Stop Shop
Finally, the draft amendment would modify reporting of cross-border business to consumer (B2C) supplies of goods. This is as well as similar supplies of electronic services. These supplies are at the heart of the European Union’s One-Stop Shop regime that takes effect 1 July 2021, and as such, the current invoice designations for these supplies in JPK_V7M/V7K would be consolidated into a single, new invoice designation under the amended rules.
Poland’s JPK_V7M/V7K filings are enormously ambitious in scope. It is clear from these latest proposals that the tax authority is willing to make substantial adjustments to the structure of these filings, at very short notice. In such a dynamic landscape, it is critical that businesses stay on top of regulatory developments in order to remain compliant.
In the old world of paper-based trade and commerce, the enforcement of tax borders, between or within countries, was mostly a matter of physical customs controls. To ease trade and optimise resources, many countries have historically applied ‘de minimis’ rules. These set specific limits (e.g. EUR 10-22 applied in the European Union) below which imported goods had an exemption from VAT.
Cross-border services, which couldn’t, or not easily, be checked at the border would often escape VAT collection altogether or be taxed in the country of the service provider. There has been a huge increase in cross-border trade in low-value goods and digital services over the last decade. As a result, tax administrations are taking significant measures to tax these supplies in the country of consumption/destination.
VAT treatment of B2C digital/electronic supplies by foreign suppliers
Since the 2015 publication of the OECD/G20’s Base Erosion and Profit Shifting (BEPS) Project Action 1 Report on Addressing the Tax Challenges of the Digital Economy, most OECD and G20 countries have adopted rules for the VAT treatment of B2C digital/electronic supplies by foreign suppliers. The International VAT/GST Guidelines issued in conjunction with the Project Action 1 Report recommend the following approaches for collecting VAT/GST on B2C sales of electronic services by foreign suppliers:
The country of the customer will have the right to levy VAT on the supply
The foreign seller must register for VAT in the customer’s country under a simplified registration and compliance regime, and
The foreign seller must collect and remit VAT
Many industrialised and emerging countries have since passed laws on this OECD guidance; most apply to B2C transactions only, although some of these jurisdictions have imposed obligations that apply or could apply to both B2B and B2C transactions.
For low value goods, the OECD has made similar recommendations providing for both a vendor and an intermediary-based collection model. The destination-based taxability trend affects many different areas of consumption tax, including the following examples.
US sales and use tax – the South Dakota v. Wayfair decision
The European Commission’s 2018 proposals for a ‘definitive’ VAT system
EU e-commerce package and digital services
Latin America
EU E-Commerce VAT Package and Digital Services
The EU has been gradually introducing new rules for VAT on services. This is to ensure more accurately accrues to the country of consumption. From 1 January 2015, and as part of this change, where the supply of digital services is taxed changes. It will be taxed in the private end customer’s EU location, has their permanent address or usually resides. These changes sit beside the introduction of the One Stop Shop (OSS) system which aims to facilitate reporting for taxable persons and their representatives or intermediaries. Under the EU e-commerce VAT package scheduled to take effect from 1 July 2021, all services and all goods including e-commerce based imports are subject to intricate regulations that include changes to the way customs in all Member States operate.
With this shift toward destination taxability for certain cross-border transactions it’s key that companies fully understand the impact. That is not only on their business processes but also comply with changing rules and regulations.
Incoterms® - VAT Implications for Cross-Border Trade
Find out what Incoterms are and how they affect VAT in the EU in our latest infographic.
Cross-border businesses need to ensure VAT compliance to meet the requirements of each country. The complexity of international VAT affects different elements of the supply chain. The potential risks, fines and costs can cause headaches for businesses.
VAT determination for goods requires an understanding of when goods move across a border and also if the supplier or customer is responsible for this movement.
So complications around who is responsible for VAT can arise. The International Chamber of Commerce (ICC) introduced a set of international commercial terms – otherwise known as Incoterms. This set of internationally recognised rules define the responsibilities of buyers and sellers in international transactions.
The 11 Incoterms define who is responsible for each element of the sale of goods. This includes documentation and customs clearance, shipment, and insurance.
In a Post-Brexit environment, businesses with EU and UK trade no longer trade intra-EU and are therefore subject to import and export rules. Contracts for the supply of goods within the EU usually mention Incoterms. Although they don’t determine the correct VAT treatment of a movement of goods, they’re helpful in understanding the intentions and responsibilities of both buyers and sellers.
Failure to understand how VAT relates to Incoterms within international contracts can cause delivery delays, possible penalties and interest for late registration and late payment of VAT as a result.
Our Incoterms infographic provides insight into the VAT implications for cross-border business and covers topics including:
What are Incoterms?
Which Incoterms affect VAT in the EU
In addition to examples of Ex Works (EXW) and Delivered Duty Paid (DDP) scenarios
There are obligations, costs and risk associated with the transport of goods and who is responsible for VAT at each stage. Ex Works and Delivered Duty Paid apply to all modes of transport – road, rail, air and sea.
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 Incoterms and the complexities of cross-border tax 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.
On 25 September 2023, the Tax Authority in Mexico (SAT) published Version 3.0 of the Carta Porte Supplement on its portal with some adjustments.
The use of Version 2.0 of the Carta Porte became mandatory as of 1 January 2022 in accordance with the Fourth Resolution of modifications to the Miscellaneous Tax Resolution of 2021.
However, the authority established 1 January to 31 December 2023 as a grace period to correctly issue said supplement, without sanctions or fines for non-compliance with any requirement.
Main changes of Carta Porte V3.0
One of the adjustments announced is the introduction of seven catalogues:
RegimenAduanero
RegistroISTMO
SectorCOFEPRIS
FormaFarmaceutica
CondicionesEspeciales
TipoMateria
DocumentoAduanero
There was also the introduction of fields for foreign trade operations, such as:
TypeMatter
DescriptionSubject
The Customs Document replaces the Pedimento Section with the addition of fields to identify the type, Tax ID of the Importer and ID custom document.
Through the anticipated version of the 8th RMRMF, the SAT has modified Rule 2.7.1.7 relating to the requirements of the printed representations of the CFDI, indicating that in the case of the CFDI to which the Carta Porte is incorporated, the structure of the supplement allows the printed representation of the CFDI and the Carta Porte to be displayed separately.
Likewise, Rules 2.7.7.1.1. and 2.7.7.1.2 for the CFDI of the income type and the transfer type to which the Carta Porte is incorporated, respectively, will serve to prove the legal stay and/or possession of the goods and merchandise of foreign origin during their transfer in national territory, providing the number of the customs request or custom document in said receipt in terms of the applicable customs provisions.
Transition and mandatory terms for Carta Porte 3.0
Carta Porte Version 3.0, published on 25 September 2023 on the SAT Portal, must be used as of November 25, 2023
Taxpayers obliged to issue CFDIs to which the Bill of Lading complement is incorporated, may continue to issue the complement in Version 2.0, until 31 December 2023.
From 1 January 2024, the only valid version of the Bill of Lading supplement will be 3.0
Printed representation
The printed representation introduces a new two-dimensional barcode that will accompany the printed representation of the Carta Porte.
Technical documentation about the latest changes to Carta Porte is available at:
For historical information on the initiative, read our dedicated Carta Porte 2.0 blog.
Key information about the Carta Porte Supplement
Update: 31 July 2023 by Maria del Carmen
Updates to the Scope and Definitions of the Carta Porte Supplement
Mexico’s Carta Porte supplement was introduced in May 2021 to ensure the traceability of products moved within the country. Use of the supplement became mandatory on 1 January 2022 but there have been many changes and additions to its requirements.
Taxpayers in scope of the Carta Porte
Section 2.7.7 of the Miscellaneous Tax Resolution (RMF) 2023 regulates the Carta Porte Supplement which specifies that the following must issue a CFDI of Income to which they must incorporate the Carta Porte supplement:
Taxpayers, intermediaries or transport agents dedicated to the transport service of general and specialised cargo, who circulate by land, rail, air, or navigate by sea.
Those who provide the parcel and courier service, of towing cranes, towing and salvage cranes and deposit of
Those who provide transport of funds and values or dangerous materials and waste, among other services that involve the transportation of goods or merchandise.
Owners of goods transporting its own assets via its own transport methods in national territory, including the use of towing cranes and vehicles for the transport of funds and values, can provide proof of transport through the printed or digital representation of the CFDI of Transfer issued by themselves, to which they must incorporate the Carta Porte supplement.
Transport of imported goods
For those within the scope mentioned above, the RMF indicates that the carrier must prove the legal stay and/or possession of foreign goods and merchandise during their transport in national territory. This can be done using the CFDI of Income or Transfer as appropriate, to which the Carta Porte supplement is incorporated if the CFDI contains the import request number.
Types of transport in scope of the Carta Porte
The current RMF includes a specific section for Maritime Transport and Motor Transport, which also establishes the rules for exported goods.
It also establishes specific rules for:
The provision of dedicated services
The provision of services for the transport of funds and values
The provision of services for the transportation of goods by carriers who are resident abroad and without permanent establishment in the national territory
Exceptions to the Carta Porte obligation
The exceptions are applicable to:
Taxpayers who provide land transport services of general and specialised cargo when the transportdoes not imply transit through any stretch of federal jurisdiction.
Owners of goods transporting their own assets, when the transport does not imply transit through any stretch of federal jurisdiction.
These taxpayers must prove transport with the printed or digital representation of either the CFDI of Income or Transfer as appropriate without Carta Porte. The CFDI must include the product and service key according to the CFDI Filling Instructions to which the Carta Porte supplement is incorporated. Transport of medicines is not included in this exception, among others.
There is also an exception for the provision of parcel or courier services and consolidated transport of goods, following the corresponding rules.
On 1 May 2021, the Mexican tax administration (SAT) released one of the most important updates to the electronic invoicing system of the country since 2017.
The update was about the new Bill of Lading Supplement (locally known as Suplemento de Carta Porte) that should be added as an annex to the electronic invoice (CFDI) of Transfer (CFDI de Traslado) or to the CFDI of Revenues (CFDI de Ingresos) that are issued for hauling services.
This supplement is based on the provisions of Articles 29 and 29-A of the Fiscal Code of Mexico, and the rule 2.7.1.9 of the Miscellaneous Fiscal Resolution. The articles of the tax code grant the tax administration the power to define the documents to be used for supporting the legal transportation goods inside that country via specific rules. The mentioned rule describes the specific requirements of the Supplement of Carta Porte.
Why has Mexico introduced the Carta Porte supplement?
Latin American countries have a serious problem with tax evasion, usually made possible by smuggling goods without paying the corresponding taxes. According to the information provided by the SAT, 60% of the goods transported in Mexico have an illegal origin.
Therefore, the purpose of enforcing the use of the Carta Porte supplement, whether as an annex to the CFDI of Transfers or the CFDI of Revenues, is to ensure the traceability of the products moved inside the Mexican territory by requiring the provision of additional information about the origin, location, precise destination and routes of transport of the products transferred by roads, rail, water or air in Mexico.
Once this change comes into effect, transporters of goods by road, rail, water or air must have a copy of the Supplement of Carta Porte in the vehicle that proves lawful compliance with this mandate.
Who is required to issue the Carta Porte supplement?
The owner of goods transporting its own assets:When the owner is moving assets from one location to another without making a sale (i.e. from a warehouse to retail store) or when such owner is shipping the goods on consignment. The same obligation to issue the Carta Porte supplement applies when the seller ships the goods to their customer using their own means of transport or when they are shipping those goods for export. In those cases the Carta Porte supplement will come as part of the CFDI of Transfers.
The intermediaries and agents of transport:These agents of transport are known in Mexico as ‘Agentes de Carga’ and they act as intermediaries between the owners of the goods and the hauling companies controlling the logistics, legal documentation and other issues necessary for the delivery of products. In these cases, they will be required to issue the Carta Porte supplement as part of a CFDI of Transfers. The same obligation applies to those that provide intermediation services on behalf of the owner of the goods being transported.
The hauling companies:When they supply services of transportation of goods by whichever means: water, air, road or rail. The suppliers of transportation services should issue a CFDI of Revenues with the Carta Porte supplement.
When will the supplement become mandatory and when should it be issued?
The new Carta Porte supplement became effective on 1 June 2021, but its use will become mandatory 120 days counted from that effective date (30 September 2021). The Carta Porte supplement, whether as part of a CFDI of Transfer or a CFDI of Revenues, should be issued by any of the three parties indicated above, before the transportation of goods begins.
The transporter of the product should have with him a copy of the digital CFDI of Transfer or the CFDI of Revenues, properly validated with the SAT via the corresponding authorised provider of certification services (PAC). The tax and transportation authorities will enact random verification checks on the roads, airports, waterways, train stations, and other transportation means, to ensure compliance with this mandate.
The Carta Porte as a supplement of the CFDI of Transfers or the CFDI of Revenues
As we know, the new regulations require the Carta Porte supplement to be added to the CFDI of Transfers or to the CFDI of Revenues, depending on who is transporting the goods.
The Carta Porte supplement will be added to the CFDI of Transfers when the transport of goods is made by the owner (i.e. internal distributions between warehouses and stores, consignment, etc.) or when the seller assumes the shipment of the products to the purchaser.
The Carta Porte supplement will also be added to CFDI of Transfers when the shipping of the goods is made by an intermediary or by an agent of transport as explained before. In such cases the current regulations provide that the CFDI should have zero as a value of the products and the RFC key to be used is the generic key established for transactions carried out with the public. In the field for description, the object of the transfer should be specified.
When the Carta Porte supplement is issued as part of the CFDI of Revenues (CFDI de Ingresos) as a result of the goods being transported by a haulage company, the haulage company should issue the CFDI of Revenues with the Carta Porte supplement. However, different to the previous case where the CFDI had a value of zero, the value to be included in the CFDI of Revenues will be the price of transportation services charged by the haulage company to the client.
It is important to mention that Carta Porte supplement does not substitute other documents necessary to prove the legitimate origin or ownership of products. Other additional documents will be required for this purpose.
Documents accompanying the Carta Porte supplement
While the Carta Porte supplement provides clear information about the transportation of goods being transferred, that document alone does not prove the lawful status of the goods being hauled. That status should be proven by whoever is providing the transportation, with the corresponding documents proving the origin of those hauled products, such as import documents, CFDI of Pagos, registrations and licenses etc.
In the case of transportation of petroleum products, the lawful status of the product will be proven with the printed representation of the supplement established for that type of products (the Complemento de Hidrocarburos y Petroliferos).
Structure of the Carta Porte supplement
According to the technical documentation released by the SAT, the information provided via the Carta Porte supplement will be conveyed via a number of fields (around 215) that will contain optional and mandatory information about the product being transported, type of packaging used, weight, quantity, insurance, the permit of transportation provided to the hauling company by the Secretary of Public transportation, plate and registration of the motor vehicle used, driver, as well as information about the recipient of the products being transported within Mexico.
The information of those fields will be filled via direct input by the taxpayers or in some cases via the specific choices available in a set of catalogs established by the SAT.
Such catalogs can be grouped as follows:
Catalog of transport: Contains the keys for choosing the means of transport used to move the goods (01 transport by land, 02 Maritime transport, etc.)
Catalog of station: Describes the place from where merchandise was shipped
Catalog of waterways ports, airports and train stations: Lists all the ports, airports and stations across Mexico
Catalog of units of measurements and packaging: Informs the choices about the type of container and the measurements related to the goods being transported.
Catalog of products and services: Indicates the different codes used to identify the products being transported.
Catalog of dangerous materials: Lists the options to describe and identify the products considered dangerous, when they are being transported.
Other catalogs included in this supplement are those related to the type of transport and trailers used to transfer the products by land, packaging, the types of permits, the municipalities, neighborhoods, and locations, among others.
Penalties and sanctions
Once the use of the Carta Porte supplement becomes mandatory, noncompliance with this requirement will have several immediate consequences for the violators.
Seizure of Hauled Goods:The Authority of Roads and Transportation enacts random verification checks of the goods being hauled on public roads in Mexico. If the vehicles transporting goods do not have the proper documentation proving the lawful transportation and origin of those goods, the authority will proceed to seize them until they comply with these requirements.
Fines:both the haulage company and the owner of the goods will be subject to fines by the SAT. In this case, the sanctions will be applied in proportion to the severity of the infraction. Most of the infractions are contained in Articles 84 and 85 of the Federal Fiscal Code and in Annex 5 of the Miscellaneous Fiscal Resolution. In addition to this, the transportation authority may suspend or cancel the driving permissions of the haulage company.
Non-Deductible VAT:When the CFDI of Revenues does not have the corresponding Carta Porte supplement, the VAT charged by the hauling company will not be deductible for the owner of the goods being transported.
Additional clarifications about the scope of the Carta Porte supplement:
When the SAT released the new Miscellaneous Fiscal Resolution for 2021 there were several doubts about the scope of this mandate. This was because for the case of land transportation, the rule established that the use of the supplement would be required only when the goods were transported via federal roads. That original release of the Miscellaneous Fiscal Resolution also established compliance with this mandate would be required to owners of national goods that are part of their assets when they haul those assets in Mexico.
To remove those misunderstandings and limitations, the SAT has recently released a new modification specifying that the mandate will be required for all movement of goods, regardless of the road used. The new resolution also excluded the reference to “national goods that are part of their assets”, so that it is clear now that it applies to any goods being transferred, regardless of its origin.
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The General Authority of Zakat and Tax’s (GAZT) previously published draft rules on ‘Controls, Requirements, Technical Specifications and Procedural Rules for Implementing the Provisions of the E-Invoicing Regulation’ aimed to define technical and procedural requirements and controls for the upcoming e-invoicing mandate. GAZT recently finalized and published the draft e-invoicing rules in Saudi Arabia.
Meanwhile, the name of the tax authority has changed due to the merger of the General Authority of Zakat and Tax (GAZT) and the General Authority of Customs to form the Zakat, Tax and Customs Authority (ZATCA).
The finalised rules include a change to the go live date of the second phase from 1 June 2022 to 1 January 2023. They revealed the time limit to report B2C (simplified) invoices to the tax authority´s platform for the second phase.
According to the final rules, the Saudi Arabia e-invoicing system will have two main phases.
Saudi Arabia E-Invoicing System: The First Phase
The first phase begins on 4 December 2021 and requires all resident taxpayers to generate, amend and store e-invoices and electronic notes (credit and debit notes).
The final rules state businesses must generate e-invoices and their associated notes in a structured electronic format. Data in PDF or Word format are therefore not e-invoices. The first phase does not require a specific electronic format. However, such invoices and notes must contain all necessary information. The first phase requires B2C invoices to include a QR code.
There are a number of prohibited functionalities for e-invoicing solutions for the first phase:
Uncontrolled access
Tampering of invoices and logs
Multiple invoice sequences
Saudi Arabia E-Invoicing System: The Second Phase
The second phase will bring the additional requirement for taxpayers to transmit e-invoices in addition to electronic notes to the ZATCA.
The final rules state the second phase will begin 1 January 2023 and will be rolled-out in different stages. A clearance regime is prescribed for B2B invoices while B2C invoices must be reported to the tax authority platform within 24 hours of issuance.
As a result of the second phase requirements, the Saudi e-invoicing system will be classified as a CTC e-invoicing system from 1 January 2023. All e-invoices must be issued in UBL based XML format. Tax invoices can be distributed in XML or PDF/A-3 (with embedded XML) format. Taxpayers must distribute simplified invoices (i.e. B2C) in paper form.
In the second phase, a compliant e-invoicing solution must have the following features:
Generation of a Universally Unique Identifier (UUID) in addition to the invoice sequential number
Tamper-resistant invoice counter that increments for each invoice and electronic note issued
Contain some functionalities which enable taxpayers to save e-invoices and electronic notes and archive them in internal and external archive
Generation of a cryptographic stamp for each e-invoice or electronic note
Generating a hash for each generated e-invoice or electronic note
Generation of a QR code
The second stage will furthermore bring additional prohibited functionalities for e-invoicing solutions on top of requirements mentioned in the first phase:
Time change
Export of stamping key
What’s next for Saudi Arabia’s e-invoicing system?
After publishing the final rules, the ZATCA is organising workshops to inform relevant stakeholders in the industry.
Some of the details remain unclear at this point, however the Saudi authorities have been very successful in communicating the long-term goals of the implementation of its e-invoicing system, as well as making clear documentation available and providing opportunities for feedback on the documentation published for each phase. We expect provision of the necessary guidance within the near future.
It’s been more than a few years since Romania first toyed with the idea of introducing a SAF-T obligation to combat its ever-growing VAT gap. Year after year, businesses wondered what the status of this new tax mandate was, with the ANAF continuously promising to give details soon. Well, the time is now.
What is SAF-T?
The Organization for Economic Co-operation and Development (OECD) introduced the Standard Audit File for Tax (SAF-T) in 2005. The goal of the SAF-T digital VAT return is to provide auditors access to reliable accounting data in an easily readable format. Companies can export information from their accounting systems (invoices, payments, general ledger journals in addition to master files).
As a result, audits should be more efficient and effective based on the standardized format set by the OECD. As countries can require a different format for capturing data, no two country implementations of SAF-T are exactly the same.
How is Romania implementing their SAF-T?
From 1 January 2022, the new Romania SAF-T mandate comes into effect for large taxpayers. The digital VAT return submissions are via XML with over 800 fields.
It appears Romania is looking to follow the format prescribed by the OECD (SAF-T OECD Scheme version 2.0 – OECD standard format). The technical specifications have been released and can be found on the ANAF portal.
The documents which are available include:
SAF-T_Romania_SchemaDefinitionCodes.xlsx – describes in a tabular organization format the structure of the SAF-T scheme for Romania SAF-T tax reporting
Romanian_SAF-T_Financial_Schema.xsd – describes the SAF-T scheme to be used in Romania for SAF-T reporting. The description format is XML Scheme Definition (XSD) and is useful for companies that develop applications for automatic generation of SAF-T reports
Annex SAF-T – Structura_D.docx – contains the annex of the declaration and describes all validation rules in ANAF’s own format
SAF-T OECD Scheme version 2.0 – standard OECD format
Now that the specifications are available, Romania will soon move into the testing phase of implementation; where taxpayers can take advantage of submitting test data to the ANAF. This is in order to become familiar with the process, understand the requirements, and if necessary, adjust their ERP systems. As a result, this should ensure full compliance for January. Details on how to participate in the test phase are forthcoming and will be available on the portal once finalized.
What’s next?
Sources close to the Romania SAF-T implementation project indicated the hope is to eliminate certain declarations. To possibly provide pre-filled returns based on SAF-T information once the project is in full swing. This would align with the pre-population trend that is slowly making its way across the EU; with Italy, Spain, and Hungary paving the way for pre-populated VAT returns.
The Turkish Revenue Administration (TRA) has published updated guidelines on the cancellation and objection of e-fatura and e-arsiv invoice. Two different guidelines are updated: guidelines on the notification of cancellation and objection of e-fatura and guidelines on the notification of cancellation and objection of e-arsiv.
The updated guidelines inform taxable persons about the new procedures for objection against an issued e-fatura and e-arsiv invoice. And how this must be notified to the TRA. Due to changes in the objection procedure, the e-arsiv schema has also changed. There has not yet been a change in the e-fatura schema, however it could also change in the near future. The updated guidelines state that the TRA platform can be used to notify the TRA about objection requests made against an issued e-fatura and e-arsiv invoice.
Why are the updated guidelines important?
From July 2021, electronically issued documents won’t be mentioned in the so called ‘BA and BS forms’. The BA and BS forms are generated to periodically report issued or received invoices when a total invoice amount is 5.000 TRY or more. All limited liability and joint stock companies are obliged to create and submit the forms to the TRA even if they don’t have any invoices to report.
The TRA recently published a new provision stating that electronically issued documents will not be shown in BA and BS forms and instead will be reported directly to the TRA in the clearance (e-fatura) and reporting(e-arsiv) process. Considering that the TRA receives the invoice data for electronically issued invoices in real-time, relieving taxpayers from reporting invoices through BA and BS forms creates a more efficient system in which the relevant data will be collected only once from taxpayers.
At its current stage, e-documents won’t be mentioned in these forms. However, in order for the TRA to have accurate invoice data about each taxpayer, it needs to be notified which are the final invoices and disregard any objected or cancelled documents when evaluating taxpayer data.
Although the cancellation process is already performed through the TRA platform for basic e-fatura and e-arsiv, objection requests are made externally (through a notary, registered letter or registered e-mail system), meaning the TRA does not have visibility of all objections. There could therefore be a risk that the TRA considers a cancelled document (due to objection) as issued which could result in discrepancies between the taxpayer records and the data that the TRA considers relevant for tax collection.
Therefore, taxpayers must now notify the TRA about objection requests to avoid any discrepancies between their records and BA and BS forms. The final goal of this application is that the BA and BS forms will be completely auto populated by the TRA in future.
How will the new process work?
According to the Turkish Commercial Code, any objections or cancellation requests must be made within eight days. Suppliers and buyers can raise an objection request which must be made externally (through a notary, registered letter or registered e-mail system) and registered in the TRA system.
For e-arsiv application, there are two ways for suppliers to notify the TRA about the objection request. They can either use the e-arsiv schema (automated) or register the request in the TRA portal. Buyers can see this request on the TRA platform and may respond, although they are not obliged to. Because e-self-employment receipts are also reported through e-arsiv application, the same objection rules apply.
For e-fatura, since there is no change in the schema, it is not possible for suppliers or buyers to notify the TRA using e-fatura schema. Currently, they can only notify the TRA about e-fatura objections through the TRA platform. Taxpayers can also respond to objection requests only through the platform.
What’s next?
The TRA has taken a step towards the digitalization of cancellation and objection requests. However, there is still not an automated way to perform these actions. Before the digitized objection process becomes reality in the country, the authorities must take a more sophisticated approach towards automating the process as well as introducing or amending applicable legislation.
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