Sovos SAF-T Generation

Produce Full Range of SAF-T Reports Compliant with Different Jurisdictional Requirements

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Keep pace with evolving SAF-T schemas

Generate SAF-T reports, ready for timely submission

The Organization for Economic Co-operation and Development (OECD) first introduced the Standard Audit File for Tax (SAF-T) in May 2005. Since then, a growing number of tax authorities have embraced it as a way to get a broad view of companies’ tax affairs. Many of the countries that have introduced SAF-T so far have also applied their own individual interpretation of the original, or subsequent 2010 version, of the SAF-T structure. However, the quantity of diverse data required by these unfamiliar, jurisdiction-specific SAF-T schemas makes it challenging for companies to meet their obligations. A tax authority’s request also leaves a relatively short window for companies to collate the data and present it in the prescribed format, especially if they need to do this across jurisdictions and in different formats.

Sovos SAF-T generation maps data into the correct schema, ensuring that format requirements are met. There is also the value of our complementary SAF-T analytics to ensure the final SAF-T generated comprises robust data and is truly submission-ready. This powerful combination of modules in the Sovos SAF-T solution provides peace of mind that the SAF-T reporting sent to the tax authority will satisfy its requirements for more detailed information, without need for additional scrutiny.

Consolidate and present data in country-specific, legal XML structures

Used together with Sovos’ SAF-T Analysis module, with its application of data accuracy and fraud inference rules, this ensures appropriate action can be taken to address any anomalies and correct or explain errors. It also provides greater assurance that SAF-T submission will not result in further tax authority scrutiny.

Learn more about how Sovos alleviates the burden associated with SAF-T generation.

Our SAF-T Triple Play solution streamlines the end-to-end process of preparing SAF-T reports.

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Luxembourg VAT Requirements

VAT in Luxembourg

Luxembourg is one of many European countries to implement SAF-T and e-invoicing to provide greater visibility into a wide range of business, accounting and tax data.

Luxembourg introduced SAF-T requirements in 2011. In 2019 the country introduced an e-invoicing legislation.

Luxembourg is part of the EU single market economy and falls under the EU VAT regime. The EU issues VAT Directives laying out the principles of how the VAT regime should be adopted by Member States. These Directives take precedent over any local legislation.

VAT law within the country is administered by the Administration de l’Enregistrement et des Domaines and is contained within the General Tax Code.

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Quick facts

Just like in any other EU Member State, e-invoicing is permitted in Luxembourg, subject to the buyer accepting the exchange of electronic invoices.
Businesses must ensure integrity of invoice content and authenticity of origin for their invoices. Integrity and authenticity can be proved using Advanced Electronic Signatures, ‘proper EDI’ with an interchange agreement based on the EC 1994 recommendation, and Business Controls-based Audit Trail.
In May 2019, Luxembourg adopted legislation about e-invoicing in public procurement following the EU Directive 2014/55/EU. The Directive states that e-invoices will continue to be exchanged voluntarily by suppliers to the government and the centralised PEPPOL access point will continue to be used.
Prior authorisation is required before outsourcing to a service provider – written authorisation is recommended.

Invoices stored in electronic form must have evidence of their integrity and authenticity stored electronically as well.
E-invoices may only be stored in EU Member States (or other countries) of which Luxembourg has signed a mutual tax assistance treaty – prior to notification and access.
VAT returns may be filed monthly, quarterly or annually electronically through Luxembourg’s online platform (eCDF) via PDF or XML format. Alternatively, annual filings can be made either in electronic format through the portal or via sending a paper copy of the VAT return to the requisite tax office.
To submit tax returns electronically, taxpayers must ensure the service provider they use is certified within eCDF.

SAF-T reforms

Officially implemented in 2011, Luxembourg’s Standard Audit File for Tax (SAF-T) is locally known as Fichier Audit Informatisé AED (FAIA).

Businesses must, if requested, submit their financial data electronically in a format that is compliant with AED electronic audit file specifications (i.e., in the specified FAIA format). Only resident businesses subject to the Luxembourg Standard Chart of Accounts must file the FAIA.

Mandate rollout dates

2011 – Introduction of SAF-T, known as Fichier Audit Informatisé AED (FAIA)

2019 – Adoption of e-invoicing legislation in public procurement with 2014/55/EU Directive

How Sovos can help

Need help to ensure your business stays compliant with evolving e-invoicing, reporting and SAF-T obligations in Luxembourg?

Keeping up with VAT compliance obligations has become more difficult as Luxembourg continues to take steps to reduce its VAT gap and modernise the system.

Our experts continually monitor, interpret and codify changes into our software, reducing the compliance burden on your tax and IT teams.

Learn how Sovos’ solutions for changing SAF-T and VAT obligations can help companies stay compliant.

From 1 January 2022, taxpayers have been able to issue structured invoices (e-invoices) using Poland’s National e-Invoicing System (KSeF) on a voluntary basis, meaning electronic and paper forms are still acceptable in parallel. Introduction of the KSeF system is part of the digital transformation happening in Poland following the establishment of continuous transaction control (CTC) mandates all around Europe, supporting faster and more effective identification of tax fraud.

The KSeF system enables taxpayers to issue and receive invoices electronically. It is one of the most technologically advanced tools in Europe for exchanging information on economic events. Structured invoices issued via the system are prepared in accordance with the invoice template developed by the Ministry of Finance. After issuance, the invoices are sent from the financial and accounting system via an interface (API) to the central database (KSeF). Afterwards they are available in the system and can be downloaded by the recipient.

Poland’s derogation requests

On 5 August 2021, the Republic of Poland requested authorisation to derogate from Articles 218, 226 and 232 of the VAT Directive to be able to implement an obligation to issue electronic invoices, processed through the National e-Invoicing System (KSeF), for all transactions that require the issuance of an invoice according to Polish VAT legislation.

Subsequently, on 9 February 2022, Poland modified its request, asking for the authorisation to derogate only from Articles 218 and 232 of the VAT Directive and specified that mandatory electronic invoicing would only apply to taxable persons established in the territory of Poland.

Poland considers the introduction of a generalised obligation to issue electronic invoices would bring significant benefits in terms of combating VAT fraud and evasion while simplifying tax collection. Moreover, the implementation of the measure will accelerate the digitalization of the public sector.

The European Commission derogatory decision

As derived from Article 218 of the VAT Directive, Member States are obliged to accept all documents or messages in paper or electronic form as invoices. Poland strived to obtain a derogation from the above-mentioned Article of the VAT Directive so that only documents in electronic form could be considered as invoices by the Polish tax administration.

Additionally, based on Article 232 of the VAT Directive the use of an electronic invoice is subject to acceptance by the recipient. Therefore, the introduction of an electronic invoicing obligation in Poland requires a derogation from this Article, so that the issuer no longer has to obtain the consent of the recipient to send an invoice in a paperless format. Currently, under Article 106n of the Polish VAT law, the use of electronic invoices requires the approval of the invoice recipient, which hinders the possibility to impose mandatory electronic invoicing.

As announced by the European Commission on 30 March 2022, Poland has been granted the derogatory decision both from the Article 218 and Article 232 of Directive 2006/112/EC. The decision will apply from 1 April 2023 until 31 March 2026, after receiving the last approval from the EU Council. The mandatory phase of the mandate is expected to begin on 1 April 2023.

The KSeF taxpayer application – on the horizon

To allow taxpayers to issue and make electronic invoices available using KSeF, the Polish Ministry of Finance will offer several tools free of charge:

On 31 March 2022 the Ministry of Finance announced that the test version of the KSeF Taxpayer application will be made available on 7 April 2022. It will enable management of authorisations, issuing and receiving invoices from the KSeF.

Next steps

With the published decision of the European Commission Poland has entered into the next implementing stage of mandatory e-invoicing. The next steps will follow after receiving the approval from the EU Council (which is now a formality and should take place within a few weeks). Subsequently, the Ministry of Finance will implement universal electronic invoicing in Poland giving adequate time for the businesses to adapt to new solutions.

Tax Reform in Brazil: Simplification Statute Published

Recent developments in Brazil indicate changes on the horizon, as the country continues to move towards a tax reform for simplification of e-invoicing obligations.

A significant reform of ancillary tax obligations is underway aiming to create a unified system for issuing tax documents. The government has long anticipated and discussed this project, but it now shows promise of becoming a reality.

The Brazilian government published Complementary Law no. 199 (Lei Complementar no. 199) in August 2023, establishing the National Statute for the Simplification of Additional Tax Obligations (the Statute). The Statute derives from Draft Law Proposal no. 178/2021 and seeks to streamline ancillary tax obligations, including filing tax returns, keeping accounting records and issuing electronic invoices.

What will change in e-invoicing?

The Statute’s primary change provides the unification of rules for issuing electronic invoices and fulfilling other ancillary obligations. There are currently more than a thousand different electronic invoice formats throughout the country, driving up business maintenance costs and resulting in adversities in company budgets.

Specifically, the Statute establishes integrated action at the Federal, State and Municipal levels to reach the following:

How will changes occur?

To achieve unified e-invoice issuance and integration of other ancillary obligations, the government will assess existing systems, legislation, special regimes, exemptions and electronic tax platforms. The next step is to standardise legislation and the respective systems used to fulfil such obligations.

The Statute also creates the National Committee for the Simplification of Ancillary Tax Obligations (CNSOA) to establish and improve the processes for simplifying tax obligations in line with a definition of a national standard process. However, the Union, States, Federal District and Municipalities may establish additional tax responsibilities related to their respective taxes, if they are aligned with the CNSOA provisions.

What’s next?

After formal composition of the National Committee, the Federal Executive Branch must adopt the necessary measures to allow it to carry out its activities as defined in the Statute. This is essential to start the official move towards national unification of e-invoicing processes and other ancillary obligations.

Additionally, the National Congress will still analyse and vote on certain points of the Statute that the President vetoed, which could result in further alignment or changes within the National Statute for the Simplification of Additional Tax Obligations.

Starting to prepare for eventual changes with e-invoicing in Brazil? Sovos can help.

Brazil is, without doubt, one of the most challenging jurisdictions in the world when it comes to tax legislation. The intricate fiscal system that encompasses rules fromhttps://sovos.com/vat/tax-rules/brazil-e-invoicing/ 27 states and over 5000 municipalities has created a burden on companies, especially for cross-state and cross-municipality transactions.

Furthermore, taxpayers must carefully examine the numerous e-invoicing formats and requirements (and, sometimes, the lack of such). Therefore, hopes for tax reform in Brazil have existed for quite some time.

Simplifying e-invoicing compliance

In recent years, several legislative initiatives towards integrating indirect taxation mandates across the country have not met successful outcomes. Meanwhile, a feasible step into bringing forth such changes may be through the unification of rules on digital compliance with tax obligations, such as VAT e-invoicing and e-reporting.

In late 2021 a draft law proposal (Projeto de Lei Complementar n. 178/2021) was initiated by the private sector. Named the National Statute for the Simplification of Ancillary Fiscal Obligations, it has been welcomed this year by the House of Representatives. Its primary purpose is to introduce a significant reform within digital tax reporting obligations by creating a unified e-invoicing system.

By establishing national fiscal cooperation, the proposal intends to reduce costs with compliance, allow information sharing among tax authorities, and create an incentive for taxpayers’ conformity across all federal, state and municipal levels.

What this means for businesses

The most significant change is the introduction of the NFB-e (Nota Fiscal Brasil Eletronica), a national standard for e-invoicing. It entails the unification of the NF-e (Nota Fiscal Eletronica), NFS-e (Nota Fiscal de Servicos Eletronica) and NF-C (Nota Fiscal do Consumidor Eletronica) in one single document. This will cover Brazil’s VAT-like taxes, in this case, ICMS (VAT on products and certain services) and ISS (services VAT).

In practice, this means that instead of complying with numerous e-invoicing formats and mandates, according to the state and municipality of the transaction, one national digital standard will provide uniform country-wide compliance for e-invoicing. The NFB-e will cover invoicing of goods and services on state and municipal levels for B2G, B2B and B2C transactions.

The reform will drastically reduce the burden on taxpayers and expand the scope of e-invoicing to municipalities where such a mandate hasn’t been adopted yet.

It’s essential to add clearance requirements for e-invoicing in Brazil will be maintained, meaning that businesses will still need to comply with rules for real-time clearance of invoices with the tax authority.

What’s next?

The draft law proposal is still in early discussions and will follow to the Justice and Citizenship Constitutional Commission (CCJC) for approval and possible amendments before voting by Congress. Until then, compliance with e-invoicing rules across Brazil remains at its current challenging status.

Slovakia E-invoicing

The modernisation of tax and tax controls remains a high priority for Slovakia’s tax authority. The Slovakian Ministry of Finance plans to introduce a continuous transaction control (CTC) scheme aligned with ViDA to improve the fight against tax evasion and obtain real-time information about underlying business transactions.

Plenty is happening in Slovakia where e-invoicing is concerned, and this page is your ideal overview of the country’s journey towards obligatory electronic invoicing.

1. B2B e-invoicing in Slovakia 2. B2G e-invoicing in Slovakia 3. The use of Peppol in Slovakia 4. Timeline of e-invoicing adoption in Slovakia 5. Setting up e-invoicing in Slovakia with Sovos 6. FAQ 7. Additional resources

B2B e-invoicing in Slovakia

Slovakia has proposed to implement mandatory e-invoicing for B2B transactions from 2027.

The proposal would require taxpayers to issue and receive electronic invoices for domestic, business-to-business transactions. This mandate would use Peppol—the pan-European e-invoicing initiative used by many countries—to facilitate the exchange of e-invoices.

The idea behind implementing Peppol is to enable multiple certified e-invoicing providers to participate, creating a decentralised system.

In addition to mandating the exchange of electronic invoices, the proposal includes real-time reporting of invoice data to the country’s financial administration.

B2G e-invoicing in Slovakia

Slovakia currently requires central, regional and local authorities to be able to receive and process electronic invoices. This has been enforced since 1 August 2019.

E-invoicing is still not fully implemented for business-to-government transactions. However, it is expected that the new CTC regime will cover both B2B and B2G e-invoices.

The use of Peppol in Slovakia

Slovakia’s Financial Administration plans to introduce a mandate for B2B e-invoicing, utilising Peppol’s infrastructure and framework to facilitate document transmission.

The plan of having a decentralised e-invoicing system would allow businesses to exchange e-invoices uniformly and securely and therefore improving operational efficiency.

Also, by joining the Peppol network, the government would allow businesses currently offering e-invoicing solutions in the Slovakia to become Peppol-certified providers, fostering healthy market competition. Slovakia’s Financial Administration will serve as the nation’s Peppol Authority.

Timeline of e-invoicing adoption in Slovakia

Here are the key dates in Slovakia’s journey towards adopting e-invoicing:

19 December 2024: The Ministry of Finance unveils a proposal regarding mandatory e-invoicing and real-time reporting of invoice data to the Financial Administration
1 January 2027: The proposed date of the country’s B2B e-invoicing mandate
1 January 2027: The proposed date of the country’s requirement to report domestic transactions to the tax authorities in real time
1 July 2030: Meeting the requirement from the EU’s ViDA initiative to implement reporting of intra-community transactions
1 July, 2030: Slovakian VAT-registered businesses must comply with VAT in the Digital Age (ViDA) requirements, which include mandatory e-invoicing and digital reporting for Intra-Community B2B transactions.

Setting up e-invoicing in Slovakia with Sovos

With Slovakia well on its way to introducing mandates for e-invoicing, it’s important to be ahead of the curve to ensure compliance. However, an evolving e-invoicing landscape isn’t unique to Slovakia.

Chances are that most countries you do business in are undergoing a similar digital transformation. Sovos is a single solutions supplier to ensure your organisation complies with its tax obligations – everywhere you operate.

Choosing Sovos means choosing peace of mind and reclaiming your time.

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FAQ

Is e-invoicing mandatory in Slovakia?

It is only mandatory for central, regional and local authorities to be able to receive and process e-invoices. Outside of that, Slovakia has no mandate in place for electronic invoicing.

What type of Continuous Transaction Controls system is planned in Slovakia?

Slovakia is expected to introduce mandatory e-invoicing combined with real-time reporting of invoices to the tax authority.

Is Peppol mandatory in Slovakia?

Currently, the use of Peppol to exchange e-invoices is not mandatory. However, according to the upcoming CTC reform, the Peppol network is planned to be mandatory for the exchange of e-invoices between businesses.

Additional resources

IPT in Slovakia

Ensure you’re aware of all your tax obligations with this blog.

Read here

E-invoicing: Your Guide

Learn about the global rise of electronic invoicing.

Read here

In our earlier article, Optimising Supply Chain Management: Key B2B Import Considerations, we looked at the possibility of UK suppliers establishing an EU warehouse to facilitate easier deliveries to customers. In this article, we look at this one solution in more depth – again from the perspective of B2B transactions.

The pros and cons of creating a permanent establishment in the EU

When looking to set up a warehouse facility in the EU, the first consideration should be whether the warehouse will create a permanent establishment (PE) or not. Permanent establishment is a direct tax concept, but creating one can have VAT consequences if that permanent establishment is also considered a fixed establishment.

The OECD defines a permanent establishment as a fixed place of business through which the business of an enterprise is wholly or partly carried on.

The EU defines a fixed establishment as the permanent presence of the human and technical resources necessary to facilitate a supply.

However, the trend towards local warehousing, ‘just in time deliveries’, the gig economy with local contractors and other developments are causing tax authorities to adapt these definitions.

For example, with regards to warehousing, the traditional view is that a taxpayer would need to own or lease a warehouse and employ the staff for it to be considered a fixed establishment for VAT purposes. However, one tax authority has ruled that a fixed establishment can also be created where a warehouse keeper makes a defined area within a warehouse exclusively available to a taxpayer and also provides the warehouse staff.

Creating such a permanent establishment that is also considered to be a fixed establishment will have both advantages and disadvantages. On the plus side, the supplier will be required to charge VAT on local sales involving the fixed establishment, and VAT registration can be used to deduct import VAT paid. Additionally, the supplier may not be required to appoint an indirect customs agent to act as the declarant for imports. On the negative side, the business will incur local VAT on some supplies that would otherwise attract a reverse charge in the UK and may be a liability to direct tax.

As this is a blog on VAT, we will not dwell on the above, but clearly the possible use of a warehouse is one consideration in the supply chain setup.

In deciding whether and where to establish an EU warehouse there are several considerations. For the purposes of this blog, we will first consider a UK supplier looking to set up a warehouse to service customers in Spain.

Spain considers that a third-party warehouse can constitute a permanent establishment where the supplier has exclusive access to a defined area of the warehouse. Therefore it will be important to carefully review the warehouse contract for VAT consequences before signing it.

Reverse charge and import VAT

Spain has a reverse charge for domestic B2B sales. Therefore, a UK supplier importing goods into Spain and making only domestic B2B sales will not be required to charge local VAT. There will also be no requirement to submit a local VAT return, and therefore import VAT will be recovered via the 13^th Directive. This will potentially be a significant negative cash flow.

To avoid this, the UK supplier could change where the goods are imported as follows:

When sending the goods to Spain, the import occurs in France. The UK supplier will declare the goods for import into France and then report a transfer of own goods from France to Spain when the goods arrive in the Spanish warehouse. Where the goods are moving by lorry, this should not be too much of an issue.

Since 1 January 2022, France has a compulsory reverse charge for import VAT, and therefore there is no issue with recovering the import VAT paid so long as the conditions are met. The supplier will need a French VAT number to report a dispatch from France and report an acquisition in Spain. The supplier will also require a Spanish VAT number to report acquisitions, but will not be required to submit a VAT declaration since all sales from the Spanish warehouse are under the extended reverse charge.

Alternatively, the goods could be imported into a French warehouse from which the UK supplier can make intra-EU deliveries to its Spanish customers, thereby avoiding the need for a Spanish VAT number and the need for SII reporting should the threshold be breached.

VAT is a transactional tax, and once a transaction has happened, it cannot be undone. Therefore, it is important to fully understand the VAT consequences of a proposed transaction before a contract is signed. Once a contract is signed, the parties are committed to the VAT consequences unless the contract can be renegotiated before the goods are shipped. Once the goods are shipped, the VAT consequence is crystallised and cannot be changed.

Meet the Expert is our series of blogs where we share more about the team behind our innovative software and managed services.

As a global organisation with indirect tax experts across all regions, our dedicated team are often the first to know about new regulatory changes and the latest developments on tax regimes across the world, to support you in your tax compliance.

We spoke to Russell Brown, senior IPT consulting manager, about Sovos’ IPT consultancy, supporting tax teams and his thoughts about the future of IPT.

Can you tell me about your role and what it involves?

I head up the Insurance Premium Tax (IPT) consultancy practice within Sovos. We’re responsible for providing advice, mostly to compliance clients on tax issues of different types of insurance that they write in EU and non-EU countries. We provide clarity on applicable tax rates and their compliance requirements in various countries, as well as location of risk queries.

One of my main responsibilities is to review and approve the reports written by consultants in the team. I also assist our sales team with clients interested in registering for IPT in different countries. This involves discussing the insurance the client provides and the countries involved and helping to onboard new customers. I also participate in writing regular IPT blogs and articles on a variety of subjects, and in webinars and other client events where we discuss a wide range of IPT issues around the world.

We also assist the compliance managed services team with any questions from their clients that they need help with. This can include legislative references or just confirmation of tax rates.

Can you tell us about Sovos’ IPT consultancy and typical projects you help with?

The short answer is we help insurers with their IPT compliance queries but that can vary from project to project.

A typical project for the consultancy team would be for a client to approach us and say, “We’re thinking of writing this type of insurance policy in 10 countries. Could you please tell us all the taxes and tax rates that apply, who bears the cost of those taxes and how they’re calculated. Could you also provide us with guidance on the compliance requirements in each country?”. This could be for EU and non-EU countries.

Another common project is to look at insurance policies and confirm the type of insurance to ensure its taxed correctly or looking at location of risk for an insurance type. This will involve analysing a sample policy from the client to confirm what the insurable risk is so that the correct rules are applied on taxing it in the relevant countries.

Sovos’ IPT customers tend to deal in non-life insurance; we’re often asked to look at property policies or liability risks. Spain, France, Portugal and Belgium are the countries we’re asked most about due to their complicated IPT and parafiscal charges regimes and different rates.

We are also asked questions about non-admitted insurance. For example, if a company is writing insurance but isn’t licensed in that country, they might have questions about how the taxes are calculated, who is liable for the taxes, who should settle taxes etc. These questions tend to be from non-EEA insurers writing policies in EEA countries.

Brokers are another type of client we deal with, or as part of discussions with insurers when there are queries around who is responsible for settling taxes on premiums. We’re able to offer advice to both the insurer and the broker in these cases.

Where do tax teams need support and how does Sovos help?

Tax teams want certainty that they’re charging the correct taxes, and that they’re compliant in settling those taxes with the relevant countries’ authorities. That’s where we come in, providing guidance as well as reporting. We’ve received feedback from clients saying the reports have been especially useful to show senior stakeholders that tax compliance is being maintained. The reports are also an important document to have on file that demonstrates that there was an issue identified and they received external advice. Having this activity on record for senior managers and both internal and external auditors is important. If a tax team is asked any questions by tax authorities, they can provide evidence.

We tend to work with tax teams in the planning stages, when an organisation wants to identify any potential tax issues ahead of time to ensure systems are updated and compliant from day one.

What are your thoughts about the IPT landscape the future of IPT?

The first is about Germany’s IPT laws. When the country changed its IPT law at the end of 2020, the authority extended the scope of who could potentially be taxed for German IPT. There was some thought that other countries in Europe might try to do the same, the Dutch being a good example where current legislation does potentially allow this under certain circumstances. But because the application of Germany’s law wasn’t the most successful, there’s a feeling that other countries are unlikely to follow this path for the moment.

There is also the question whether or not IPT will be abolished in the UK and replaced with VAT. The government is in the process of starting a VAT consultation on financial services, and it’s likely that this proposal will be included in the discussions between HMT, HMRC and the insurance market including both insurers and brokers. This consultation will likely run for a couple of years, so we won’t know the results for some time, and it is possible that any decisions on this point may be delayed by the timing of the next general election.

There is also always the discussion of the digitization of IPT. There hasn’t been much movement on this recently. Ireland is in the process of digitization and France was due to follow suit but has postponed until next year. We are already helping our customers to possess the ability to file IPT online when this does become a requirement.

In the European Union, the VAT rules around supplies of goods, as well as ’traditional’ two-party supplies of services, are well-defined and established. Peer-to-peer services facilitated by a platform, however, do not always fit neatly into the categories set out under the EU VAT Directive (Council Directive 2006/112/EC). There are ambiguities around both the nature of the service provided by the platform operator, and the status, for tax purposes, of the individual service provider (i.e., a driver for a ride-sharing service, or an individual offering their property for rent on an online marketplace). This creates a unique challenge for VAT policymakers.

The EU Commission has recently opened a public consultation on VAT and the platform economy to address these issues. We have previously discussed other initiatives proposed by the Commission including a single EU VAT registration and VAT reporting and e-invoicing. This blog will discuss the underlying challenges policymakers face and the specific proposals set out in the consultation, which could significantly impact digital platform operators and users.

Digital platforms and existing VAT law

A threshold question for the VAT treatment of digital platforms is whether the platform merely connects individual sellers with individual customers – i.e., acts as an intermediary – or whether it actively provides a separate service to the customer. This question is significant because services rendered to a non-taxable person by an intermediary, under Article 46 of the VAT Directive, are sourced to the location of the underlying transaction.

In contrast, services provided to a non-taxable person under a taxpayer’s name are sourced either to the supplier’s location or, in certain circumstances, to the customer’s location. Whether a particular platform is acting as an intermediary can be very fact-specific and can depend, for example, on the level of control exercised by the platform over pricing or user conduct.

A final source of ambiguity is whether an individual service provider qualifies as a taxable person when making only occasional supplies; this could raise the question of whether said supplies would attract VAT.

These ambiguities present an obvious challenge to the consistent VAT treatment of platforms across the Member States.

Proposed solutions

As part of its public consultation on “VAT in the Digital Age”, the EU Commission has proposed several solutions to the challenges listed above. Of these, three proposals directly address the ambiguous nature of services provided via platforms:

These proposals aim to provide clear guidelines to Member States on how platform services should be categorised, and, therefore, which VAT rules should apply under the Directive. Perhaps the most direct is the “deemed supplier” proposal, which would attach VAT liability to platform operators under defined circumstances.

A “deemed supplier regime” already exists for platforms that facilitate sales of low-value goods in the EU, so it is likely the Commission will seriously consider this option. Notably, the public consultation solicited comments on three different permutations of the deemed supplier regime, differing only in the scope of services covered.

Whichever direction the EU ultimately goes in, it is clear that a significant change is on the horizon for digital platforms. Platform operators and platform users should pay close attention to these ongoing consultations in the coming months.

Governments throughout the world are introducing continuous transaction control (CTC) systems to improve and strengthen VAT collection while combating tax evasion. Romania, with the largest VAT gap in the EU (34.9% in 2019), is one of the countries moving the fastest when it comes to introducing CTCs. In December 2021 the country announced mandatory usage of the RO e-Factura system for high-fiscal risk products in B2B transactions starting from 1 July 2022, and already now they are taking the next step.

RO e-Transport system

The Ministry of Finance recently published a draft Emergency Ordinance (Ordinance) introducing a mandatory e-transport system for monitoring certain goods on the national territory starting from 1 July 2022. The RO e-Transport system will be interconnected with existing IT systems at the level of the Ministry of Finance, the National Agency for Fiscal Administration (ANAF) or the Romanian Customs Authority.

According to the draft Ordinance, the transportation of high-fiscal risk products will be declared in the e-transport system a maximum of three calendar days before the start of the transport, in advance of the movement of goods from one location to another.

The system will generate a unique code (ITU code) following the declaration. This code must accompany the goods that are being transported, in physical or electronic format with the transport document. Competent authorities will verify the declaration and the goods on the transport routes.

The first question that comes to mind is what the definition of high-fiscal risk products is. The Romanian Ministry of Finance had already established a list of high-fiscal risk products for mandatory usage of the RO e-Factura system. However, it is still unknown if the high-fiscal risk product list will be the same. The Ministry of Finance will establish a subsequent order defining the high-fiscal risk products in the coming days.

If the transportation includes both goods with high-fiscal risk and other goods that are not in the category of high-fiscal risk, the whole transportation must be declared in the RO e-Transport system.

Which transportations are in scope?

The RO e-Transport system is established to monitor the transportation of high-risk goods on the national territory.

The carriage of goods intended for diplomatic missions, consular posts, international organisations, the armed forces of foreign NATO Member States or as a result of the execution of contracts, are not in the scope of the RO e-Transport system.

What happens next?

The draft Ordinance is expected to be published in the official gazette in the coming days. Following the publication, the Ministry of Finance will establish subsequent orders to define the categories of road vehicles and the list of high-fiscal risk products for the RO e-Transport system. Moreover, as of 1 July 2022, using the RO e-Transport system will become mandatory for transporting high-fiscal risk products.

Noncompliance with the rules relating to the e-Transport system will result in a fine reaching LEI 50,000 (approx. EUR 10,000) for individuals and LEI 100,000 (approx. EUR 20,000) for legal persons. In addition, the value of undeclared goods will be confiscated.

The European Commission’s “VAT in the Digital Age” initiative reflects on how tax authorities can use technology to fight tax fraud and, at the same time, modernise processes to the benefit of businesses.

A public consultation was launched earlier this year, in which the Commission welcomes feedback on policy options for VAT rules and processes in a digitized economic EU. In an earlier blog post, Sovos explored the aspects of a single EU VAT registration. It’s one of the main initiatives proposed by the Commission to adapt the EU VAT framework to the digital age. Another critical issue is VAT reporting obligations and e-invoicing, discussed in this blog.

Digital Reporting Requirements

The Commission sees a need for modernising VAT reporting obligations and is considering the possibility of further extending e-invoicing. The term Digital Reporting Requirements was introduced by the Commission for any obligation to report transactional data other than the obligation to submit a VAT return, i.e. reporting transaction by transaction. This means that Digital Reporting Requirements include various types of transactional reporting requirements (e.g. VAT listing, Standard Audit File/SAF-T, real-time reporting) and mandatory e-invoicing requirements.

These measures have been implemented in various fashions in different EU Member States over the past couple of years resulting in diverse rules and requirements for VAT reporting and e-invoicing across the EU. The current Commission initiative is an opportunity for the EU to obtain harmonisation in this area. Its public consultation is asking for input as to which road to take.

The route to harmonisation

The public consultation contains several policy options to consider. One would be to leave things as they currently stand with no harmonisation and the continued need for Member States to request a derogation if they wanted to introduce mandatory e-invoicing. At the other end of the scale, a further option would be to introduce full harmonisation of transactional reporting for VAT for both intra-EU and all domestic transactions.

And sitting between these extremes, are several other routes. Instead of making a harmonised solution mandatory such a solution could be simply recommended and voluntary, coupled with the removal of the need to request a derogation ahead of introducing B2B e-invoicing mandates. Another way is to have taxpayers keep all transactional data and make it available on request by the authorities. And one final option could be to adopt partial harmonisation where the VAT reporting for all intra-EU supplies is aligned and mandatory but where domestically it remains optional.

While these policy options formally remain open to public consultation until 5 May here, they must now be viewed in the light of the European Parliament resolution of 10 March 2022 with recommendations to the Commission on fair and simple taxation supporting the recovery strategy.

In its resolution, the European Parliament calls upon the Commission to take actions regarding e-invoicing and reporting, to reduce the tax gap and compliance costs. Among the measures recommended are to set up a harmonised common standard for e-invoicing across the EU without delay and establish the role of e-invoicing in real-time reporting. Furthermore, the European Parliament proposes that the Commission explore the possibility of a gradual introduction of obligatory e-invoicing by 2023, where state-operated or certified systems should administrate the invoice issuance. In both cases focus should be on a significant reduction of costs of compliance, especially for SMEs.

It remains to be seen how the Commission will manage to align the European Parliament’s recommendations with their policy options and Member States where in several cases solutions have already been implemented.

Beginning in April 2022, the requirements for Making Tax Digital (MTD) for VAT will be expanded to all VAT registered businesses. MTD for VAT has been mandatory for all companies with annual turnover above the VAT registration threshold of £85,000 since April 2019. As a result, this year’s expansion is expected to impact smaller businesses whose turnover is below the threshold but who are nonetheless registered for UK VAT.

Under MTD, businesses must digitally file VAT returns using “functional compatible software” which can connect to HMRC’s API. Companies must also use software to keep digital records of specified VAT-related documents. Stored records must include “designatory data,” such as the business name and VAT number, details on sales and purchases, and summary VAT data for the period. The use of multiple pieces of software is permitted. For example, companies can use accounting software to store digital records. Additionally, “bridging software” can be used to establish the connection with HMRC’s API and to submit the VAT returns.

Since April 2021, businesses must also comply with the digital links requirement. Under this requirement, a digital link is required whenever a business uses multiple pieces of software to store and transmit its VAT records and returns under MTD requirements. A digital link occurs when a transfer or exchange of data can be made electronically between software programs, products, or applications without the need for or involvement of any manual intervention.

In 2020, in response to the COVID-19 pandemic, the British government introduced a 5% reduced rate on specified hospitality services. This reduced rate was increased to 12.5% starting 1 October 2021. The reduced rate is currently scheduled to expire at the end of March. As a result, the following services will return to being taxed at the standard rate beginning in April:

In November 2021, a Draft Royal Decree was published by the Chancery of the Prime Minister of Belgium, aiming to expand the scope of the existing e-invoicing mandate for certain business to government (B2G) transactions by implementing mandatory e-invoicing for all transactions with public administrations in Belgium. This obligation was already in place for suppliers of the centralised public entities of certain regions (Brussels, Flanders, Wallonia). However, going forward, it will include all public entities in all Belgian regions.

A phased approach

More specifically, the roll-out for mandatory issuance of e-invoices by the suppliers of public institutions in Belgium will be carried out in the following phased approach:

As a result of the transposition of the Directive 2014/55/EU, all Belgian government bodies are already obliged to be able to receive and process e-invoices within public procurement. This new national legislation expands the Directive’s scope and mandates the issuance of e-invoices by all suppliers to the federal government.

The journey continues towards a B2B e-invoicing mandate

These B2G developments are not the end of the story. They are just the beginning. The Belgian Minister of Finance, Vincent Van Peteghem, announced in October 2021 that the government intends to extend the existing B2G e-invoicing obligation to also cover B2B transactions. Nevertheless, official sources have not yet communicated formal information specifying details of the mandate and its following implementation. Rumour has it that a legislative proposal for the B2B e-invoicing mandate was going to be published during 2022 with the implementation process happening in 2023.

However, considering the European Parliament Resolution last week which strongly favours harmonised and mandatory e-invoicing in the EU, Belgium will likely hold its horses at least until the Commission produces a proposal for how to manage e-invoicing and reporting in the Union.

Registering for Insurance Premium Tax (IPT) with tax authorities across Europe can be challenging and complex, particularly when multiple territories are involved. There are many elements businesses must consider when registering for IPT. What are the required supporting documents? Who can sign? Do documents need to be legalised? Is there a two-step process? These are just a few of the questions you may ask yourself during the registration process.

Based on common pain points we come across with our IPT customers, we’ve put together our five top tips to help make your IPT registration journey easier:

Your company is likely already writing business in the territories you need to register with. Therefore, it’s important the registration is completed promptly to avoid sanctions that some tax authorities may impose. We recommend signing and returning the documents as soon as possible to avoid such complications.

European tax authorities are very specific with their requirements, and depending on the EU Member State, the rules may be different. Generally, supporting documents should be dated within the last six months and clearly legible. Some tax authorities require documents to be notarised and apostilled, some accept electronic signatures and some do not. The registration process can be delayed when supporting documents are incorrect, or templates are completed incorrectly. To avoid delays in your registration submission, be sure to pay close attention to the instructions provided.

Whilst some requested information may seem intrusive and personal, there is always a reason for the request. We will never ask you to provide anything more than what the tax authorities require to complete an IPT registration. Your personal data is always treated with the strictest confidentiality, security and complies with GDPR standards.

Timelines for IPT registration in EU Member States can vary. Some tax authorities, such as Germany, confirm registration within a week of submission, whereas Greece can take 8-12 weeks. Don’t be concerned if your registration is not confirmed as fast as you had expected.

We are keen to have your registration completed as efficiently and swiftly as possible. If you have any queries, your registration representative is always here to help. We can address your questions by email or arrange a call to go over the entire process if this is preferable to you.

Sovos’ IPT Managed Services provides support from our team of experts using software that is updated in real-time. Additionally, our team of regulatory specialists monitor and interpret global IPT regulations, so you don’t have to.

On 10 March, the European Parliament (EP) adopted a Resolution to the Commission’s Action Plan on fair and simple taxation supporting the recovery strategy, which set forth 25 initiatives predominantly related to European Union Value Added Tax (EU VAT). The document includes several general considerations and recommendations to the Commission for the VAT Directive revision proposal (“VAT in the Digital Age”) for 2022.

Changes to the EU VAT tax policy

The EP’s resolution addressed the significant challenges in the European Union (EU) VAT tax policy and placed particular attention on the simplification, modernisation and harmonisation of such rules by uniform adoption of technology tools across all Member States, including digital and e-invoicing requirements and mandates.

The updated resolution highlights a concern around the lack of sufficient support from the Council regarding the definitive VAT regime, that is, the shift from origin to destination principle, still due for implementation. In such a system, VAT will be levied at the place of destination, leaving behind the complex transitional VAT system rules.

EU VAT tax policy challenges

Concerns were also raised on the complexity of the multiple tax regulations across the EU and the constraints this entails, particularly for small and medium enterprise (SME) compliance and for those vulnerable to fraud. Added to these factors are the high costs borne by businesses to conform to the multitude of legislative requirements in the different jurisdictions. The Parliament makes an urgent call for a consistent move towards a more straightforward and modern VAT system.

Moving towards simpler VAT reporting

More specifically, the EP described the Commission’s efforts to harmonise procedural rules across the EU and encourage closer cooperation efforts among tax authorities and businesses through the EU Cooperative compliance program as of “highest importance”.

The objective of various points was to use technology as an effective means for simple and modern tax compliance. Digitization of VAT was utterly welcomed as a means for modern and simplified VAT compliance, where real-time or near real-time reporting and e-invoicing is to be utilised by Member States in a uniform and harmonised manner across EU all jurisdictions.

On the same front, recommendations were for one-time collection of data by the tax authority aligned with utmost protection and respect regarding data security legislation, and the use of artificial intelligence (AI) and various software to ensure maximum effectiveness of data usage and security. Adopting digitization requirements will enhance security, prevent and combat fraud and increase administrative cooperation among Member States.

The resolution also targeted the new Union business and taxation agenda, supporting the design of a new and single Union corporate tax rulebook, which should reflect the OECD Pillar 1 (reallocation of taxing rights) and Pillar 2 (minimum tax on corporate profit) negotiations.

These recommendations are to be followed by the European Commission’s submission of one or more legislative proposals by 2022/2023.

Poland has been moving towards introducing the CTC framework and the system, the Krajowy System e-Faktur (KSeF), since early 2021. As of 1 January 2022, the platform has been available for taxpayers who opt to issue structured invoices through KSeF and to benefit from the introduced incentives.

As the taxpayers have been using KSeF for a while, let’s take a closer look at what has been happening and will happen in the future regarding Poland’s CTC reform.

Publication of regulation on the use of KSeF

Initially presented as a draft act by the Ministry of Finance in November 2021, the regulation on the use of KSEF was finally adopted and published in the Official Gazette on 30 December 2021 after several reiterations.

The regulation covers mainly the categories of authorisations, methods of authentication, and information required to access the structured invoices.

According to the regulation, taxpayers using KSEF are required to authenticate using one of the following methods: Qualified Electronic Signature, Qualified Electronic Seal, Trusted Signature, or Token.

A trusted signature confirms the identity assigned to a specific Polish Identification (PESEL) number. The token method can be used to grant authorisations in the KSeF once the taxpayer has been authenticated.

New information and documentation published by the Polish tax authority

The Polish tax authority has published new information on its website about KSeF features including FAQs and further documentation.

The FAQs include information regarding the scope and operational side of the system, whereas the sample XML files and the information brochure shed light on the logical structure of e-invoices and mapping requirements.

What will happen next?

Although the tax authority continues to make every effort to clarify the many aspects of the new CTC system in Poland, we still have a long way to go regarding the full implementation of KSeF.

For instance, during the public consultation of the draft act the Ministry of Finance stated taxpayers would be able to download structured invoices via API in XML or PDF format. As of today, there is no technical information available regarding the PDF generation within the system using the API. The tax authority has published the technical documentation related to the outbound process but there is still no documentation available on the inbound side.

More importantly, a decision authorising Poland to introduce special measures derogating from Articles of the EU VAT Directive is yet to be obtained from the EU Council for roll-out of the e-invoicing mandate for all B2B transactions. The current Polish VAT Act requires the buyer’s acceptance to receive structured invoices. As the Polish authorities aim to make the KSeF mandatory in 2023 an amendment of this provision is expected once the special measures have been authorized by the EU Council.

Pre-Filled VAT Returns: Updates in 2024

In recent years, tax authorities worldwide have embraced digital transformation to streamline compliance processes, particularly through the increasing implementation of pre-filled VAT returns.

Below we explore the countries that currently provide pre-filled VAT returns or are actively working on projects to implement them:

The adoption of Pre-Filled VAT Returns so far

The trend of tax authorities pre-filling VAT returns using data gathered in continuous transaction controls (CTCs) is persisting across many countries.

CTCs see transactional data sent in real-time through e-invoices or e-reports auto-populate VAT returns and ledgers. Below is the status of the countries that either make available pre-filled returns or have projects to do so:

Disproving returns created by the tax authorities using transactional data sent by the taxpayer is a challenging task. Tax authorities assume they either have all the data they need for an assessment or the taxpayer has failed to submit it in good time.

Therefore, it is imperative to maintain complete electronic records that pre-filled VAT returns can reconcile. Possessing analytics solutions that can perform such analysis in an automated way might also help taxpayers to identify mismatches and correct errors.

Pre-Filled VAT Returns – New Developments in 2022

We have previously written about the growing trend of tax authorities “pre-filling” VAT Returns using data from electronic invoices – a trend that began in Latin America and has since spread to several European countries. These pre-filled returns, when accurate, can serve as a simplification measure for taxpayers, who can fulfill their reporting obligations simply by approving what has been generated for them. At the end of 2021, two European countries, Italy and Spain, introduced pre-filled VAT Returns, with Hungary and Portugal planning to introduce them in some capacity.

Pre-filled VAT returns across Europe

The landscape for pre-filled VAT Returns has changed significantly in 2022. Hungary and Portugal have both postponed their plans to introduce them. The Hungarian tax authority (NAV) has reversed its decision to introduce pre-filled returns after delaying the eVAT project for several months due to the ongoing COVID pandemic. NAV will instead focus on enhancements to its real time invoice reporting model (RTIR). Because any efforts to pre-fill VAT Returns are dependent on the state of RTIR, it would not be surprising to see NAV revive the eVAT project down the line.

Portugal, meanwhile, had planned to potentially pre-fill sections of its annual VAT Return with data from the so-called “Accounting SAF-T,” which was due to become a mandatory filing in 2022. However, following a rejection of the state budget, the Portuguese tax administration is now stating that Accounting SAF-T will become a mandatory filing from 2024.

On the other side of the ledger, 2022 has seen France introduce pre-populated data into its VAT Returns, while Greece is considering using its myDATA system to pre-fill VAT Returns for taxpayer approval.

France is a particularly interesting case, as it has no e-invoicing regime to pull data from. Instead, auto-population of data on the French VAT Return is limited to information on imports, based on electronic customs declarations. France plans to introduce mandatory B2B e-invoicing in 2024, which may end up widening the scope of pre-population. This new approach was spurred on by a transfer of responsibility from French Customs authorities to French tax authorities for collecting VAT due on imports. Notably, only the VAT due to the authorities, as settled in the VAT Return, is pre-filled; corresponding input VAT amounts must be populated by the taxpayer (likely because some taxpayers won’t be able to claim full deductions).

Greek plans to introduce pre-filled VAT Returns are more undetermined, but some reports claim that a pilot program will be introduced at some point during 2022.

The future of pre-filled VAT returns

It is clear that, despite delays in Hungary and Portugal, European tax authorities are demonstrating a continuing interest in utilising pre-filled VAT returns. In fact, from a tax authority perspective, pre-filled VAT returns are the natural evolution from a mandatory e-invoicing system or a real-time invoice data reporting system – the data is already at their disposal. From the taxpayer standpoint, it is therefore imperative to maintain accurate and complete electronic records that can be reconciled with pre-filled VAT Returns. This will help taxpayers to correct any errors or raise any necessary challenges to VAT assessments. A high-quality accounting software program can be a useful tool to achieve this end.

With a new month comes yet another report due in the Insurance Premium Tax (IPT) sphere. Insurance companies covering risks in Greece must report their insurance policies triggered in 2021 in the form of the Greek annual report. This is due by 31 March 2022.

Let us cast our minds back, in late 2019 this report came to fruition after previously being ratified in legislation released in 2016. At the time, due to the delay in implementation, the report was backdated, and insurers faced the challenge of submitting transactional level details for the period 2016-2018 in a short space of time.

There was however a precedent for such a dramatic change. And those who experienced the change with the Spanish Consorcio de Compensacion de Seguros submission would have experienced a sense of déjà vu with this development. Similarly, some insurers may be experiencing all too familiar issues now with the change in Portuguese Stamp Duty submission.

The market initially struggled with the Greek annual report due to the level of details required. In particular, the VAT/tax registration number was often not being collected from the Insured. Furthermore, with legacy systems still in use some of the other details in the report weren’t readily available. What this meant in a lot of cases for the Insurer was the painstaking and often time consuming process of going back to the policyholder to collect such information.

Greek annual IPT report

What about the report itself? The Greek annual report is a transactional level declaration on excel, which requires the following details to be populated:

The standard IPT rate in Greece is currently 15% with the 20% rate reserved for risks covering fire. Where there is a multi-risk policy covering both rates, the premiums must be apportioned on a per rate basis and therefore split out into two different lines.

Thankfully exempt premiums are not required on the report which somewhat eases the burden.

But what about cases where it was simply not possible to collect this information? This was an issue we’ve seen for some of our IPT customers where incomplete reports were submitted. So far, we haven’t experienced pushback from the tax authority for the omission of certain details, but we cannot guarantee this will continue to be the case.

Easing the pain of IPT reporting in Greece

Preparation is key. And education is key. This annual report is here to stay so the Insurer must be prepared well in advance that such details will be required and they should aim to collect this information on an ongoing basis rather than at the last moment. In some cases, an update in software will be required as the current systems may not have the capability to capture the required data. Furthermore, all relevant parties in the data supply chain should be educated on the importance of collecting the details. We believe that more countries will implement transactional reports in the coming years, so it would be prudent to set up certain controls now, to help prepare and ease the burden later.

As the world of IPT compliance is so fragmented across territories, keeping abreast of changes in reporting requirements can be challenging. Our team of experts can guide you through the details and ensure you are on the right compliance path.

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

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

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

Importing goods into the EU

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

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

Customs considerations

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

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

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

Understanding local VAT issues

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

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

EU warehouse facilities

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

How to deal with import VAT

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

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

Sovos SAF-T Generation

Get in touch: find out more about Sovos SAF-T Generation with our team of experts.

Generate SAF-T reports, ready for timely submission

Consolidate and present data in country-specific, legal XML structures

Deliver the outputs required by each individual tax authority that has introduced SAF-T

Expand coverage as new jurisdictions introduce a SAF-T requirement

Ensure data is fully consolidated from all relevant sources to generate create the SAF-T report in the correct legal structure

Produce valid, submission-ready content when used in conjunction with APR SAF-T analytics.

Provide a repository of the SAF-T files reporting generated, so they the reports can be accessed at a later date.

Learn more about how Sovos alleviates the burden associated with SAF-T generation.

Luxembourg VAT Requirements

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Tax Reform in Brazil: Simplification Statute Published

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Slovakia E-invoicing

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B2B e-invoicing in Slovakia

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Digital Reporting Requirements

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Changes to the EU VAT tax policy

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Publication of regulation on the use of KSeF

New information and documentation published by the Polish tax authority

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Pre-Filled VAT Returns: Updates in 2024

The adoption of Pre-Filled VAT Returns so far

Pre-Filled VAT Returns – New Developments in 2022

Pre-filled VAT returns across Europe