The Colombian tax authority (DIAN) continues to invest in the expansion of its CTC (continuous transaction controls) system. The latest update proposes an expansion of the scope of documents covered by the e-invoicing mandate.

In this article we’ll address the newly published Draft Resolution 000000 of 19-08-2022. This advances important changes for taxpayers covered by mandatory e-invoicing rules.

These draft changes include a new obligation to issue equivalent documents (documentos equivalentes) in electronic format, a schedule for its implementation, updated technical documentation and other significant developments, all of which require taxpayers to ready themselves to comply.

What will change for Colombian businesses with these new e-invoicing proposals?

Amongst many proposed changes, the draft resolution’s main purpose is to regulate the electronic issuance of the equivalent document.

These documents correspond to the sales invoice under Colombian law, but cover specific types of transactions and are regulated in the draft resolution, as follows:

This means that all taxpayers subject to the Colombian e-invoicing mandate who issue one of these equivalent documents will be required to do so in an electronic format, according to the Technical Annex of the Electronic Equivalent Document version 1.0 (Anexo técnico del Documento Equivalente Electrónico), introduced by the draft.

Additionally, the draft provides an initial regulation of the electronic documents of the invoicing system (documentos electrónicos del sistema de facturación). These are documents that aid control by the tax and customs authority, to support tax or customs declarations and/or to support the procedures carried out before DIAN, under the provisions of subsection 1 of article 616-1 of the Tax Statute.

Finally, the technical specifications of the system’s main electronic invoice, the sales e-invoice, is updated to version 1.9 (Anexo técnico de la Factura Electrónica de Venta version 1.9).

Deadlines for Colombia’s e-invoicing proposals

The obligation to issue the equivalent document in electronic format will be implemented gradually, according to the type of equivalent document. It starts on 1 March 2023 and will cover all equivalent documents on 1 July 2023.

Early voluntary implementation will also be possible, once the functionality is available in DIAN’s system. Until the deadlines for the electronic implementation of the equivalent document are fulfilled, these must continue to be issued in accordance with Resolution No. 000042 of 2020.

The draft also sets a schedule for implementation of the electronic documents of the invoicing system, during the taxable years of 2023 and 2024. These documents will be further regulated in the six months following the validity of the official resolution, as well as the adoption of its technical annex, which hasn’t been presented with the draft resolution.

Lastly, the proposal establishes the deadline for implementation of the Technical Annex of the electronic sales invoice version 1.9 by taxpayers. This will be at least three months following its official publication.

What’s next for e-invoicing in Colombia?

The draft resolution, once officially published, will derogate DIAN Resolution No. 000042 of 2020 in all provisions that are contrary to it, except those related to equivalent documents, which will remain in force until the DIAN establishes their electronic implementation.

Taxpayers can also expect new legislation regulating the remaining electronic documents of the invoicing system, in the months following the official publication of this draft resolution.

Until then, companies should prepare for the significant upcoming changes and adjust their businesses processes to comply with the new Colombian mandate.

The Customs Handling of Import and Export Freight (CHIEF) system, which is now nearly 30 years old (it was introduced in 1994), will close in two phases:

The Customs Declaration Service will serve as the UK’s single customs platform, with all businesses needing to declare all imported and exported goods through the Customs Declaration Service (CDS) after 31 March 2023.

CDS benefits and key changes

As mentioned on the HMRC website, the Customs Declaration Service toolkit gives traders access to the many benefits of the upcoming changes. In summary:

Benefits

CDS changes

What does this mean in practice?

To be able to use CDS and import goods into the UK from 1 October 2022 and to export from 1 April 2023, businesses are required to have the following:

Businesses should also consider:

The Dutch government issued an updated Policy Statement for Insurance Premium Tax (IPT) on 12 May 2022. The first of its kind since February 2017, the update is intended to replace the 2017 version in full. While the majority of the content remained consistent, there were notable details pertaining to Netherlands storage insurance and ‘own transport’ insurance. These changes will be effective from 13 May 2023.

Storage insurance in the Netherlands

The change extends the scope of storage insurance that can still be regarded as goods in transit insurance, increasing from storage of up to one month to three months. It may even be possible to show goods in transit insurance applies for storage greater than three months, but the onus is on the insurer to prove an absolutely necessary connection between storage and transport.

It’s general market practice in the EU to consider storage of up to 60 days as being part of the goods in transit coverage, making the Dutch approach more flexible in this regard. Any goods stored beyond the 60 days are treated as a property risk, taxable where the goods are located and not where the policyholder has their establishment.

It’s useful to consider this change from the perspective of both IPT rate application and location of risk. In terms of the former, the IPT exemption applicable to all goods in transit insurance in the Netherlands widens this exemption to policies involving longer periods of storage.

Regarding location of risk, the relevant provisions in EU Directive 2009/138/EC determine that in the case of goods in commercial transit risks, the risk location (and therefore the country entitled to levy IPT and/or associated levies) is the policyholder’s establishment to which the contract relates. Where storage insurance does not constitute goods in commercial transit, the risk location is the location of the property itself.

As a result, goods stored in the Netherlands for more than three months as part of a transport policy will generally be taxable there, even where the policyholder’s establishment is elsewhere. Whereas goods stored in the Netherlands for less than three months will not be taxable in the country (unless the policyholder’s establishment is also in the Netherlands).

‘Own Transport’ insurance

The other key takeaway from the Policy Statement was on the subject of ‘own transport’. This is defined as transport ‘where no transport company is contracted, but commercial transport is involved’, confirming the exemption for transport insurance is equally applicable to scenarios where companies arrange for the transportation of commercial goods for their own benefit. As such, the exemption is not restricted to third-party contractors utilised for the transport.

However, the exemption does not apply to insurance of own goods which, although transported are not for the sole purpose of transferring it to another place of destination. This could include the tools of a contractor that are stored in his delivery van.

Is further change possible?

The changes outlined above are relatively minor given they relate solely to goods in transit business. One more fundamental change that had been mooted as a possibility was for the Netherlands to introduce stricter rules on the application of IPT to non-EEA risks, as we saw in Germany at the end of 2020.

The scope of the changes in Germany caused considerable confusion in the market at the time so it’s possible the Dutch government has put any potential plans on hold for now. This will be an interesting issue to monitor as countries seek out alternative ways to generate tax income.

Colombia Update: P.O.S. Tickets Threshold Rules Now in Force

As of February 2023, new rules came into force in Colombia. These are for the issuance threshold of equivalent documents generated by Point of Sale (P.O.S.) systems.

As a result, a ticket issued by cash registers with P.O.S. systems (tickets de máquinas registradoras con sistemas P.O.S.) must not exceed the maximum amount of five Tax Value Units (UVT), without including the amount of tax for each sale or service provision operation.

For sales operations and the provision of services exceeding this amount – excluding taxes – taxpayers must issue an electronic sales invoice as part of the country’s e-invoicing mandate.

It is important to note that the equivalent documents generated by cash registers with a P.O.S. system do not entitle the purchaser to discountable sales tax (VAT) or costs and deductions in income and complementary taxes.

However, purchasers may request that the seller issue a sales invoice when they have the right to request deductible taxes, costs, and deductions. In this case, the supplier must issue an electronic sales invoice.

The Colombian tax authority (DIAN) officialised the implementation of the five UVT thresholds for tickets generated through P.O.S. systems through Resolution 1092, published on 1 July 2022.

The Resolution implemented the phased roll-out of this mandate, following the calendar below:

Every 1 January from the taxable year 2024, taxpayers obliged to issue a sales invoice that choose to issue the equivalent document, called a ticket for a cash register with a P.O.S. system, must adjust the value of the applicable UVT to comply with the limitation of five UVT in the issuance of each ticket.

The Colombian tax authority (DIAN) has concentrated heavily on expanding its electronic invoicing regime over recent years. The DIAN introduced the first schedule for mandatory implementation of e-invoicing in the country in 2018, and, since then, the system has gradually encompassed more transactions and taxpayers.

In this article, we’ll look at the two latest new mandates in Colombian e-invoicing:

These new obligations have significant impact and require adjustments by taxpayers. These changes also represent a substantial expansion of Colombia’s e-invoicing to include entirely new transactions under its scope.

Support document for acquisitions

The Colombian tax authority has created a new e-document type, the support document for acquisitions from subjects not obliged to issue e-invoices. This support document and its corrective notes were introduced by Resolution 167 of 2021. It expands the e-invoicing scope to ensure more transactions fall within the mandate and allows support for tax deductions.

Taxpayers obliged to generate this e-document are those under the country’s e-invoicing regime. It includes those subject to income and complementary tax payments and responsible for VAT when purchasing goods and/or services from suppliers not obliged to issue e-invoices or equivalent documents and require support for costs and deductions in the mentioned tax declarations. To generate the support document, the taxpayer must be authorised by the DIAN as an electronic issuer.

The support document and its corrective notes must be generated in XML format and contain a CUDS: unique support document code (código único del documento soporte). This alphanumeric code allows it to be unequivocally identified. After generation, the e-documents must be transmitted for clearance by the DIAN either in real-time or, at the latest, on the last calendar day of the week, for accumulated operations with the same supplier carried out during that same week.

Having been postponed from its original implementation date, the generation of the acquisitions support document became mandatory on 1 August 2022.

Implementation of POS ticket issuance threshold

According to this mandate, cash register tickets generated through POS systems (tickets de máquinas registradoras con sistemas P.O.S.) may be issued by subjects obliged to invoice, provided that the sale of the good and/or the provision of the service recorded therein doesn’t exceed five (5) UVT (tax value unit) for each document, excluding taxes.

This means that, for operations covering sales of goods and/or provision of services exceeding the amount of five (5) UVT, taxpayers under the country’s e-invoicing mandate must issue an electronic sales invoice. The purchaser of goods and/or services below the threshold may still require the issuance of a sales invoice, in which case the supplier must provide it.

The threshold was de facto introduced in 2021 by Law 2155, but it was only in July 2022 that the DIAN established a phased roll-out of the mandate, through Resolution 1092, following the calendar below:

Are you ready for these changes?

While the generation of the support document for acquisitions is already srequired, taxpayers must start preparing to comply with the new threshold for e-invoice issuance in place of POS tickets. Sovos can help your company adjust to e-invoicing and ensure compliance with Colombia’s new mandates.

ANAF Reverses Position on Grace Period Extension

Romania SAF-T Filing declarations are changing. The draft order extending the grace period for SAF-T will not be implemented. The President of ANAF has confirmed that decision.

The extension originally supported large taxpayers who have had to submit SAF-T since 1 January 2022. ANAF now states that large taxpayers have, on the whole, complied with the original deadlines. This renders the extension “not appropriate.”

ANAF will follow an unofficial policy of leniency for SAF-T submissions. According to a spokesperson, the agency will first give notifications to delinquent taxpayers. Next, they will issue warnings. Fines are a last resort.

The initial six-month grace period for SAF-T hasn’t been formally extended, but it remains in force. Taxpayers will not receive penalties for late or missed filings while the grace period exists.

The grace period applies for six months after the obligation to file SAF-T arises. This obligation begins:

Romania Extends SAF-T Filing Grace Period

On 1 August 2022, the Romanian National Agency for Fiscal Administration (ANAF) published a draft order extending the current grace period for Standard Audit File for Tax (SAF-T) declarations from six months to twelve months. The order will take effect upon approval and publication in the Official Gazette. At the time of writing, approval and publication are expected shortly.

The Romanian tax authority initially granted the grace period due to the complexity of the country’s SAF-T filing. The SAF-T must include available data from master files, source documents, general ledger entries, and, on a separate cadence, data related to fixed assets and inventory. Because of this complexity, ANAF instituted a six-month grace period, during which taxpayers would not be penalised for late or incorrect filings. The ANAF also implemented SAF-T in phases, with the large taxpayers obliged to file before mid-sized and small taxpayers.

ANAF has acknowledged, however, that even large taxpayers have struggled to meet the technical requirements of the SAF-T declaration. Therefore, with the initial six-month grace period set to expire, ANAF proposes to extend it to alleviate the burden on filers.

The grace period, as before, takes effect from the date a taxpayer is obliged to submit the SAF-T declaration. The obligation for different categories of taxpayers begins:

Romania SAF-T grace period extension

This means that taxpayers who are obliged to file SAF-T in 2022 will now have grace periods extending into 2023 (e.g. 1 January 2023 for “large taxpayers” who were categorised as such in 2021; 1 July 2023 for “large taxpayers” who were only categorised as such in 2022).

The language of the amendment doesn’t limit the twelve-month grace period to large taxpayers, so it is presumed that the grace period will apply to other taxpayers as well. This amendment would extend the grace period for medium taxpayers into 2024 and all others into 2026. Further clarifications on this point may be released in the future.

The rollout of SAF-T in Romania has been eventful, with multiple revisions to both the schema itself and taxpayer obligations. Taxpayers doing business in Romania must ensure that they stay abreast of the latest developments with this declaration, as there will undoubtedly be more to come.

Take Action for Romanian SAF-T

Need to comply with the latest changes in Romanian SAF-T? Speak to our team. Follow us on LinkedIn and Twitter to keep up-to-date with the latest regulatory news and updates.

In Italy, the discipline of transfer pricing states that in intra-group transactions between entities from different countries, where one is resident in Italy, transactions must take place on an arm’s length basis. In other words, transactions are based on freely competitive prices and under comparable circumstances.

Companies carefully treat the transfer pricing adjustments from a corporate income tax perspective. However, less attention is paid from a VAT perspective.

It’s worth mentioning that in most cases, the transfer price adjustments are profitability adjustments (rather than price) of the transactions carried out between associated companies.

However, treating the transfer pricing adjustments as outside the scope of VAT might cause problems in case of a tax authority audit and re-qualification of the transactions.

Italian tax authority clarifications

The issue of transfer pricing adjustments for VAT purposes is not expressly regulated by the Italian legislator, other EU Member State legislators or from an EU VAT legislative point of view. In the absence of an ad hoc provision, reference is made to EU and local legislation, and private and public rulings on a case-by-case analysis.

Regarding public rulings, Italian tax authorities published several responses in 2021.

How will this affect my business?

In the 30 December 2021 ruling (no. 884), Italian tax authorities confirmed the adjustments in question were outside the scope of VAT following the transfer pricing adjustments. It stated for subsidiaries “the recognition of an extra cost aimed at lowering their operating margin“, wasn’t “directly related to the original supplies of finished products“.

In this case, at the time of the sale of the goods, the seller applied a provisional price.

That provisional price was then subject to adjustment on a quarterly basis, through the so-called “Profit True Up“. The result could consist either of a claim by the transferor against the transferee or, conversely, transferor’s debt.

In this specific case, Italian tax authorities found a “direct link between the sums determined in the final balance and the supplies” and concluded by determining the relevance of the transfer price adjustments made by the taxpayer for VAT purposes.

Final comments considering other tax authority approaches

Whether or not your business is operating in Italy, the above shows how important the potential VAT implications of transfer pricing adjustments are and the confusion for businesses on how to proceed in different scenarios.

At Sovos we’ve seen more local tax authority audits focused on clarifying if the treatment is valid from a corporate income tax and a VAT perspective.

After a review of the contracts and agreements between the companies and subsidiaries involved, it’s essential to understand whether the transfer pricing adjustments are:

There are some countries across Europe where declaring and settling insurance premium tax (IPT) and parafiscal charges on time is not enough to prevent late payment penalties. You may ask why. Or you may say it’s unfair. The answer is simple.

Some European countries collect insurance premium tax and parafiscal charges or part of them in advance before they become due for payment. We call these prepayments, advance payments or provisional payments. And missing the deadline for the prepayment can be penalised by the tax offices.

This blog will give you an overview of how prepayment regimes work. At the end of this blog, we’ll list the countries where prepayment rules are in place without detailed requirements. In later blog posts, we will discuss the detailed prepayment rules in these countries in depth.

How do IPT prepayments work?

Prepayment or advance payment in the taxation world is a payment that is paid before the tax is due. Therefore, when a prepayment is paid, it’s unknown how much the actual tax will be.

There are various prepayment tax calculation methods. In IPT, the most common calculation is when the prepayment amount is based on the tax amount paid for the previous reporting period. Either the same tax amount or maybe a certain percentage of this tax is required to be paid in advance. However, there are other methods used.

For example, in Poland, there is a quarterly prepayment obligation. The prepayment amount is based on the premium amounts collected in the current quarter. Another example is in Austria, where there is a unique prepayment approach. According to the regulation, you can opt not to pay the prepayment if you pay the IPT liabilities for the November period one month earlier than the standard deadline, so not by 15 January but on or before 15 December instead.

There are similarities in the legislation on how the amount of the prepayment is considered in the final tax due. In most cases, insurers can offset the prepaid tax amount against the future period`s tax obligation. But there are differences in the “how”.

For example, in Belgium, the prepayment made in December can be offset against the December liability. Also, in January and February (the Belgian Tax Offices recently added these two months), periods’ liabilities and the remaining should be reclaimed. In Italy, the prepayment made in November can be fully offset against the next year’s IPT liabilities and against the following tax years’ liabilities until it is used up entirely. Alternatively, insurers can also reclaim it from the Italian tax authority.

If we take a closer look at the calculation of the prepayment, we can conclude that it’s usually based on the tax amount of the same tax type. However, in Italy, the basis of the IPT prepayment isn’t only the paid IPT but also what has been paid for the 1% Consap parafiscal charge.

When do IPT prepayments need to be made?

The due dates to pay prepayments vary across Europe. Some due dates fall at the end of the year, such as Austrian IPT and the Italian IPT. However, for the Italian Hunting Accident Victims’ Fund (HAVF) and Road Accident Victims’ Fund (RAVF) and the Spanish Fire Brigade Tax (FBT), the advance payment is due in January. The advance payment for the Hungarian supplemental IPT is due in November and May. On the other hand, the prepayment is due every quarter regarding the Polish Ombudsman fee.

Where do IPT prepayment regimes exist in insurance taxation?

Without pursuing completeness, here is a list of the prepayment regimes across the EU:

The European Commission (EC)’s action plan for fair and simple taxation – ’VAT in the Digital Age’- continues to progress. After a public consultation process, the EC has published Final Reports discussing the best options for the European market to fight tax fraud and benefit businesses with the use of technology.

The EC is expected to propose legislative amendments in the VAT Directive this autumn.

Conclusions on VAT reporting and e-invoicing pillar

The report focusing on VAT reporting and e-invoicing evaluates ‘Digital Reporting Requirements (DRR)’. This is any obligation for VAT taxable persons to periodically or continuously submit transaction data digitally to the tax authority, e.g. by use of SAF-T, VAT listing, real-time reporting or e-invoicing.

According to the report, the best policy choice would be the introduction of a DRR in the form of an EU-wide continuous transaction controls (CTC) e-invoicing system covering both intra-EU and domestic transactions. Member States with an existing e-invoicing system would be able to keep this in the short term via a standstill clause, provided they ensure interoperability with the new EU system. However, in the medium term of five to ten years, national e-invoicing systems would be required to converge to the EU system.

An EU-wide CTC e-invoicing system

The report clearly favours the policy option of a full EU harmonisation through a CTC e-invoicing system, meaning the invoice will be submitted to the authorities before or after issuance. The harmonisation focus seems to be primarily on form, with a suggestion of an EU-wide common protocol and format. Whereas important decisions regarding architecture risk being left to the Member States include whether the system will be clearance or simply reporting, whether to leverage an existing domestic B2G platform and the periodicity of the reporting etc. The only requirement on Member States seems to be accepting issued and transmitted e-invoices based on a common protocol and format.

The report suggests aligning the scope of requirements and excluding non-registered taxable persons and those covered by the SME VAT scheme. In the short term, only B2B and B2G transactions are covered, with B2C transactions remaining out of scope.

Finally, the report suggests that to ease the burden on businesses Member States must consider a number of measures such as jointly removing other reporting obligations, providing pre-filled VAT returns, supporting the investment in business automation (especially for SMEs) and providing public support to the adoption of the IT compliance systems

How this will be jointly coordinated isn’t discussed but it doesn’t sound like the EC expects such measures to be harmonised by the EU.

Future expectations

Although the report concludes implementing an EU-wide mandatory e-invoicing system is the best and most future-proof measure, how to design an effective e-invoicing system is not explained in the report and doesn’t seem to be in scope for harmonisation.

However, the design of the e-invoicing system may have an important impact on fiscal and economic results. As the independent expert report ʻNext Generation Model Decentralized CTC and Exchange’ (supported by EESPA, openPEPPOL and other key stakeholder groups) describes, the greatest benefits can only be realised when an e-invoicing system allows businesses to automate other processes as well as invoicing.

It’s a welcome start that the Commission is aiming for an EU-wide CTC e-invoicing scheme. It remains to be seen how effective this harmonisation will be. When Europe’s politicians return from this year’s summer break, we’ll start to gain more insight into the overall feasibility of the Commission’s views.

As a vendor that has implemented CTC and VAT compliance solutions around the world for several decades now, our desire would be for the debate to go beyond interoperability on a data level, so that Europe can take bold steps towards a future that preserves supply chain automation and technological innovation.

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 regulatory changes and developments in global tax regimes, to support you in your tax compliance.

We spoke with Hector Fernandez, principal compliance tax services representative, who explained the complexities surrounding Spanish insurance premium tax (IPT) and how Sovos helps insurers operating in Spain.

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

I’m a principal compliance tax services representative at Sovos. As part of my role I work with the different teams helping them with the tax requirements of different tax authorities.

I also work with clients with IPT requirements in Spain, helping them with the many elements of tax compliance.

Ensuring compliance with Spain’s IPT reporting requirements is especially complex, why is this the case?

As mentioned in previous blogs about Spanish IPT, Spain has one of the most complex monthly and annual IPT reporting procedures. It’s challenging due to many factors such as multiple IPT tax authorities (national and provinces), additional entities to deal with including the Fire Brigade Tax (FBT) and the surcharges that must be paid to the Consorcio de Compensación de Seguro (CCS) or other bodies like Spanish Motor Insurers Bureau (OFESAUTO).

Modelo 480 – IPT Form:

In Spain, five tax authorities charge IPT: the National Tax Authority (AEAT) and four provinces (Alava, Guipuzcoa, Navarra and Vizcaya). They are responsible for the policies in those territories. The Modelo 480 contains the same information for different tax authorities, but the formats and requirements can vary.

The annual submission coincides with the December monthly period, which means that it occurs at the same time as submitting the last monthly submission of the year and the annual report.

The Modelo 480 is a yearly overview form submitted by insurance entities that summarise monthly returns and payments. Insurers must include exempt premiums written during the year on this form because this information is not included in the monthly returns.

The data provided in this summary form will be broken down by class of business and monthly payment. While this form is purely informative, it’s vital since it helps tax authorities to find any mistakes, inconsistencies or fraud that could have been committed in the monthly submissions.

Fire Brigade Charge:

There is a compulsory annual return for those entities that subscribe to Fire and Multi-risk policies in Spain (Class 8 & 9). The report is submitted through a specific portal provided by CCS. Insurers must submit the return before the last day of April.

In this report, the different Fire or Multi-risk policies must be declared and broken down by the postcode where the risk is located and include the taxable premium of each policy.

CCS will share this information with the local bodies with competencies to calculate and charge the Fire Brigade in Spain, including councils and provincial councils or the body that helps the insurance companies to deal with this surcharge such as GESTORA (Gestora de Conciertos para la Contribución a los Servicios de Extinción de Incendios).

Green Card:

Those insurance companies that provide car insurance must deal with the Green card surcharge paid to OFESAUTO, the body in charge of this surcharge. Companies must provide the number of car insurance policies issued during the year, and the body will issue the invoice.

How can Sovos help with these reports?

Spanish IPT complexity is based on the timing and the high amount of data that insurers must take into account to provide accurate data to the tax authority. It’s important to have software that can compile and process vast amounts of data in an accurate way.

Sovos’ team of IPT experts can help ease the burden of Spanish IPT compliance, through our managed services or consultancy offering as well as our IPT determination software.

The Italian Customs Authorities recently updated their national import system by applying the new European Union Customs Data Model (EUCDM). These new changes came into effect on 9 June 2022.

According to the new procedure, the old model of paper import declarations has been abolished. The import declarations are now transmitted to the Italian Customs Authorities’ information system with a digital signature.

What does this mean in practice?

The acceptance of a customs declaration is notified to the economic operator (that can be the importer, the Customs Agent, etc.) through a Master Reference Number (MRN), an alphanumeric string of 18 characters.

The old IM message (telematic track to be submitted at the time of the import to the Italian Customs Authorities through the Customs Telematic Service (i.e. Servizio telematico doganale (STD)) has been replaced by the following paths as defined by EU legislation:

How can I know how much import VAT is due on goods imported from outside the EU into Italy?

At the time of the release of the goods, Italian Customs Authorities make available the “summary statement for accounting purposes of the customs declaration” (prospetto di riepilogo ai fini contabili della dichiarazione doganale). The summary includes all data necessary to detect customs duties, import VAT and any other charges due.

The summary mentioned above is made available to the importer and the declarant/representative in the reserved area of the single portal of Italian Customs Authorities through the “Document management – customs declarations” service.

We recommend that importers contact their Customs Agent to receive a copy of this summary for their accounting purposes.

How and when can I recover my Italian import VAT?

As per Italian VAT Law, possessing a Single Administrative Document (SAD) is needed to exercise the right to recover import VAT in Italy. As the SAD is now unavailable, Italian Customs Authorities, in agreement with the Italian Revenue Agency, agreed that the new accounting summary is sufficient to allow the importer to exercise the right to recover the import VAT.

Therefore, the new accounting summary is needed to exercise your right to recover the import VAT paid to the Italian tax authorities.

Moreover, the right to recover import VAT is exercised only once the summary is reported in the Purchase VAT Ledger as per art. 25 of Italian VAT Law.

Finally, the import document must be included in your quarterly VAT return and your annual VAT return which must mirror your Italian VAT Ledgers.

To ensure your import VAT is not lost, we recommend considering that the last day to recover the import VAT, related to an import of goods carried out in 2022, is 30 April 2023.

Further documents introduced from June 2022

In addition to the Summary Prospetto di riepilogo ai fini contabili della dichiarazione doganale, discussed above, economic operators will be able to receive:

Italian Customs Authorities advise customs operators to provide the Prospetto di svincolo to transporters as proof of the fulfilment of customs formalities in the case of checks.

In India, the e-invoicing system has been live since 2020. Taxpayers in the scope of e-invoicing mandate must issue their invoices relating to B2B and B2G transactions through the e-invoicing system, which is a form of continuous transaction controls (CTC).

However, B2C invoices are not issued through the CTC system, which means that B2C invoices don’t pass through the Invoice Registry Portal’s (IRP) clearance. The Indian authorities have announced their goal to include B2C invoices in the scope of the CTC system although there is no timeline provided for that plan.

Meanwhile, there is a separate QR code requirement for B2C invoices. We explain why and when a QR code is required and how taxpayers can generate it:

The QR code’s purpose

The QR code requirement for B2C invoices aims to promote digital payments. In that respect, it differs from the QR code for B2B and B2G invoices which include the IRP’s signature. The latter serves as proof of clearance that B2B and B2G invoices must go through. Additionally, the QR code for B2C invoices must be self-generated, whereas the IRP generates the QR code content for B2B and B2G invoices (if the supplier is in the scope of e-invoicing).

When is a QR code required?

The QR code requirement doesn’t apply to all suppliers. As per the CBIC notification, F. No. CBEC-20/16/38/2020-GST, suppliers with annual revenue of 500 Cr. Rupees or more (from 2017-2018) must comply with the QR code requirement when issuing invoices to their end customers (B2C).

How is the QR code generated?

The QR code must be dynamic. Unlike static QR codes, the system will update the content of the dynamic QR code if the payment is received. Content-wise, businesses must include the following information:

After printing the QR code on the invoice, customers must be able to scan it to make payments. If the supply is made through an e-commerce platform, suppliers must give cross-references of the payment received in respect of the said supply on the invoice. Then the invoice would be deemed to have complied with the requirements of the Dynamic QR Code.

The Indian authorities are making significant progress with their efforts to digitize paper processes in the country by introducing a CTC invoicing system and encouraging digital payments. In line with their ambitions, we expect further digitization developments in the near future.

An increasing insurance premium tax (IPT) trend is using transactional level information in various returns and reports. Preparation and education are key to ensuring details are being captured on an ongoing basis rather than at the last moment. Furthermore, in some cases where legacy systems are being utilised and don’t have the capability to capture all required fields, a software update may be required. All relevant parties in the data supply chain should educate themselves on the importance of collecting the details to avoid the often painstaking and time-consuming exercise of going back to the policyholder to collect the required information.

Many businesses initiated this trend because of the changes to the Consorcio de Compensación de Seguros (CCS) reporting system in 2019. However, this is not always the case as some countries have had transactional submission in place for some time. Two such examples would be Cyprus and Malta. For the former, Policy Number, Class of Business, Inception/Expiry Date, Premium and Tax Amount are required per policy. The same fields are required for the latter bar Inception/Expiry Dates. We rarely experience any difficulties for insurers collecting this information, as these are common fields often being collected at the source.

Italian transactional trends

Whilst this may surprise some, Italy is another country where transactional level information is required to be recorded. The main difference here is that these details aren’t required for ongoing tax submissions but rather in the form of IPT books which must be regularly maintained and contain the transactional information for the preceding ten years. You can find more about the required details here.

The IPT books are mandatory for successful prepayment transfer following a Part VII portfolio transfer, general prepayment reclaims and historicals. Transactional details are also required for the Claims Report and Contract & Premium Report.

Spanish transactional trends

The changes in CCS submission brought the trend of transactional submission to the forefront of insurers’ thinking. A mandatory field for successful submission is the postcode, which many insurers weren’t capturing at the time. To help insurers with this change, there was a six-month transitional period where insurers could submit policies without the postcode. However, this field then became mandatory and the requirement was that the preceding six months of reports would need updating.

Greek transactional trends

The introduction of the Greek Annual Report in 2019 brought another layer of complexity for insurers. The main issue was the requirement for the VAT/tax registration number to be populated. Where it was impossible to collect, insurers sometimes opted to submit incomplete reports. To date, we haven’t experienced pushback from the tax authority for omitting this detail, but we cannot guarantee this will continue to be the case.

Portuguese transactional trends

The most recent change has been to Portuguese Stamp Duty submissions. This change brought elements of the Greek Annual Report and the CCS changes together, in the sense that the geographical area required population (Azores, Madeira, Mainland) and the tax ID of the policyholder were required. Unlike in Greece, there was no option of submitting incomplete reports; if all necessary details were not populated, the insurer couldn’t pay the tax.

The trend towards transaction reporting will increase

The above list is by no means exhaustive but gives a good idea of the exponential complexity facing insurers for ongoing compliance. Simply put, the insurer must have agile systems to deal with any potential changes. 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’re on the right compliance path.

As previously predicted by Sovos, the threshold for implementing mandatory e-invoicing has been lowered by the Indian authorities. According to the Central Board of Indirect Taxes and Customs Notification No. 17/2022 – Central Tax, from 1 October 2022 compliance with the e-invoicing rules will be mandatory for taxpayers with an annual threshold of 10 Cr. rupees (approximately 1.270.000 USD) or more.

Recap of India’s e-invoicing requirements

The Indian e-invoicing system falls under the category of continuous transaction controls (CTCs) under the Goods and Services Tax (GST) framework. The legal validity of the invoice is conditional based on the Invoice Registration Portal (IRP) digitally signing the invoice and providing an Invoice Registration Number (IRN). If the IRN is not included in an invoice, the invoice will not be legally valid.

The scope covers both domestic and cross-border transactions. The IRP clearance process is mandatory for B2B, B2G and export transactions. So, taxpayers in scope must issue their invoices (as well as other documents that need an IRN) according to the new system for all B2B, B2G or export transactions.

Taxpayers in scope of e-invoicing must generate e-waybills through the e-invoicing system. It is not possible to voluntarily adhere to the e-invoicing system. This means that taxpayers not satisfying the threshold limit cannot adopt CTC invoicing.

Implementation timeline

Before the initial introduction, the e-invoicing plan was announced by the Indian authorities as early as 2018. Afterwards, the evolvement of the plan has been as follows:

1 January 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.500 Crore or more

1 February 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.100 Crore or more

1 October 2020: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.500 Crore or more (six months later than previously intended). For the first 30 days, there was a grace period during which invoices could be reported after they had been issued.

1 January 2021: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.100 Crore or more.

1 April 2021: Threshold for mandatory e-invoicing lowered to taxpayers with turnover between Rs. 100 Crore to Rs. 50 Crore.

1 April 2022: Threshold lowered from Rs. 50 Crore to Rs. 20 Crore. Taxpayers above Rs. 20 Crore must implement e-invoicing.

1 October 2022: Threshold will be lowered from Rs. 20 Crore to Rs. 10 Crore. Taxpayers above Rs. 10 Crore must implement e-invoicing.

What’s next for e-invoicing in India?

Some changes concerning the e-invoicing workflow are expected. Currently, there is a single platform (IRP) for the clearance process but multiple IRPs will be introduced soon. The Indian Authorities have already approved new IRPs, demonstrating that the authorities wish to have an interoperable e-invoicing market and are moving ahead with their plans to realise their goals.

Additionally, B2C invoices are not currently covered by the IRP clearance, yet the authorities have announced their intention to include those in scope of their CTC system.

India is a challenging jurisdiction for many taxpayers; businesses must have smart digitization and maintenance strategies to stay compliant. The benefits of digitization can be realised through a global strategy that businesses might put in place.

Since 1 January 2019 foreign electronic service providers must issue electronic invoices, a type of e-invoice, for sales of electronic services to individual buyers in Taiwan. Alongside this, Taiwan’s local tax authorities have been introducing incentives for domestic taxpayers to implement e-invoicing despite not being a mandatory requirement.

Before diving into the details of the e-invoicing system in Taiwan, we’ll discuss the Government Uniform Invoice (GUI), which the e-invoicing system is based on Government Uniform Invoices.

What is a Government Uniform Invoice (GUI)?

The government uniform invoice is a standard VAT invoice governed and pre-numbered by the tax authorities in Taiwan. All business entities must issue GUIs for all sales of goods and services subject to VAT, except for any legal exemptions.

Taxpayers can issue GUIs once following business registration approval by the local competent tax authority in Taiwan. Taxpayers can issue different types of GUIs including paper-based GUIs and Electronic Government Uniform Invoices (eGUIs) as well.

What is an eGUI?

eGUIs are a type of GUI issued, transmitted, or obtained via the internet or other electronic means.

Issuing an eGUI is mandatory for foreign electronic service providers who sell electronic services to individuals in Taiwan as of 1 January 2019. However, issuing eGUIs for B2B, B2C and B2G transactions is optional for the broader economy, including domestic taxpayers in Taiwan.

How are eGUIs issued?

Business entities in Taiwan must use a sequential track number called the electronic invoice track number (eGUI number for short) in their electronic invoices. Business entities must apply to the local tax authority to have eGUI numbers assigned.

The e-invoice issuance process requires the use of these eGUI numbers and must comply with MIG 3.2.1 based on an XML format provided by the tax authority.

Following the issuance of an electronic uniform invoice, businesses have 48 hours to upload the invoice information to the tax authority platform for B2C transactions and seven days for B2B transactions This model is known as continuous transaction controls (CTCs), whereby the tax authorities receive transactional information from taxpayers in real time or near-real time.

Business entities can appoint a certified e-invoicing service provider, also known as value-added centers, to issue and transmit uniform invoices electronically.

What’s next for Taiwan’s tax system?

Taiwanese authorities have encouraged electronic invoicing for many years. As a result, more and more businesses have started issuing eGUIs.

The requirement to issue e-invoices for foreign electronic service providers has played an important role in the widespread adoption of e-invoicing throughout the country. While it’s clear Taiwan has come a long way in terms of the digitalization of e-invoicing processes, paper-based invoices can still be issued according to Taiwanese regulations.

We’ll monitor developments in the future to see whether the mandatory implementation of e-invoicing will be extended to the broader economy in Taiwan.

Need more information about Taiwain e-invoicing?

Need to issue GUIs electronically in Taiwan? To comply with tax authority requirements in Taiwan and around the world, contact us now.

A parafiscal tax is a levy on a service or a product which a government charges for a specific purpose. It can be used to financially benefit a particular sector (public and private).

Unlike the drastic changes in Stamp Duty reporting within the Portuguese region, the parafiscal taxes have remained consistent and unchanged for many years. Sovos helps customers report the central parafiscal taxes within the region:

The reporting of these taxes is varied and comprehensive which can become confusing for businesses unfamiliar with the requirements. The parafiscal charges, more notably INEM and ANPC, are reported on a monthly declaration structure, whilst PR and FGA are reported on a quarterly structure, and ASF is reported on a half-yearly basis.

ANPC and INEM: monthly reporting

The ANPC and INEM are reported quarterly, and premiums concerning the Azores, Continent (mainland Portugal), and Madeira must be split. This should be identified by the insurer and declared to the corresponding tax authorities.

The tax ANPC (also known as the National Authority for Civil Protection Contribution) can be applied in classes 3 – 13 and is commonly applied at 13% of the fire risk premium. However, this rate is not consistent for all classes of business and can fluctuate accordingly.

Moreover, the tax INEM (also known as the National Institute of Medical Emergency Contribution) can be applied to classes 1, 2, 3, 10 and 18 and at 2.5% of the taxable premium. The rate of 2.5% is consistent between all classes of business and reported on the compliant tax point with Portugal, which is the cash received date (much like ANPC, FGA, PR and ASF). Finally, an annual report for INEM needs to be reported directly to the tax authorities, confirming the total liabilities due throughout the fiscal year.

FGA and PR: quarterly reporting

The reporting of FGA and PR is completed quarterly and submitted on two separate returns. The tax PR is reported at 0.21% of the premium (relating to motor insurance) for classes of business 1, 3 and 10; whilst an FGA rate of 2.5% of the premium (relating to Compulsory Third Party Liability) is only applicable to class 10.

ASF: half yearly reporting

The ASF tax is applied at a tax rate of 0.242% of the taxable premium and is calculated on all classes of business. The rate of 0.242% is confirmed annually by ministerial order within Portugal. So, the tax authority can effectively change the rate annually. It’s also important to mention that a separate rate of 0.048% applies to life insurance and is included within this return.

On 22 July, the EU Commission opened four new infringement proceedings against the United Kingdom for allegedly breaching the 2021 Northern Ireland Protocol on conditions related to customs requirements, excise tax and VAT. The EU has brought seven proceedings against the UK over the Protocol since 2021.

The Northern Ireland Protocol

Following the UK’s departure from the EU in 2020, the parties agreed that customs checkpoints on the land border between Northern Ireland and the Republic of Ireland could lead to political instability. The Protocol was an attempt to avoid border posts between the two countries.

Instead, the Protocol ensures customs checks are done in Northern Irish ports before goods are released into the Republic of Ireland. This process effectively created a customs border on the Irish Sea. In addition, the Protocol allows Northern Ireland to follow EU rules on product standards and VAT rules related to goods.

Potential UK Protocol Amendments

The Protocol has been controversial in the UK, as it creates special rules for Northern Ireland that don’t apply in England, Scotland or Wales. Members of the UK’s governing Conservative Party – including Liz Truss, a frontrunner to replace Boris Johnson as UK Prime Minister – have recently introduced a Northern Ireland Protocol Bill that would allow the UK to amend the terms of the Protocol.

Among other things, the draft legislation seeks to remove dispute settlement from the jurisdiction of the Court of Justice of the European Union, authorises “green [fast track] channels” for goods staying within the UK, and allows for UK-wide policies on VAT. Proponents of the bill claim it is necessary to protect the “essential interest” of peace in Northern Ireland.

Protocol Amendment Controversy

However, European Union Representatives have condemned this draft legislation as a potential violation of international law. In its most recent infringement proceedings, the EU alleges that the UK has not substantively implemented parts of the Protocol at all.

At the time of writing the Northern Ireland Protocol Bill has not yet been adopted by the UK Parliament. It awaits review in the House of Lords. The UK and the EU have stated that further negotiations over the Protocol would be the preferred option. The parties, however, remain far apart on the details.

The EU has set out two months for the UK to respond to the infringement action. Failing any new agreements, the action could lead to possible fines and/or trading sanctions between the parties. Taxpayers conducting cross-border trade between the UK and EU should ensure they stay on top of future developments.

Understanding European VAT Compliance

Your guide to making VAT compliance simple

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

Helps you to understand VAT
Covers over 40 jurisdictions within and outside the EU
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Navigating cross-border and understanding European VAT compliance can be complicated. With requirements varying from country to country it’s important to be prepared for any upcoming changes to ensure continued compliance. The digitization of VAT continues, and our guide will help you understand and be ready for changes.

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What this guide to understanding European VAT compliance covers

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

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What is VAT compliance?

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

Each Member State has its own VAT invoicing and reporting requirements. VAT requirements continue to change so it’s important to be aware of upcoming regulations and prepare in advance to remain compliant with the latest requirements.

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

What is a VAT number in Europe?

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

Make European VAT compliance simple

Need help with VAT compliance now? Get in touch

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

Sovos Managed Services can help with a range of VAT compliance requirements, including:

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

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Data is one of the most valuable assets of companies and individuals. Data gathered, cleaned and analysed well enables businesses to realise their utmost capabilities. With the digitization trend, error-prone paper forms, ledgers and books are replaced by electronic versions. This development gave companies more control over their data and liquidated data for further analysis.

This is also true for governments. Since tax income is one of the most significant revenue sources for countries and transactional data is the basis of tax income calculation, transactional data analytics is also essential for governments.

Purpose of real-time data collection

Receiving data in electronic form enables tax authorities to estimate their tax income and income sources better and eventually collect taxes more efficiently. This process has led many global tax authorities to require taxpayers to transmit relevant tax data electronically. Furthermore, the reliability of real-time data has shown to be so appealing that taxpayers are required to transmit data in real-time to the tax authority in many countries.

The real-time or near-real-time tax-relevant data transmission requirement is a new trend often referred to as Continuous Transaction Controls (CTC). CTCs require each transaction to be transmitted to the tax authorities to enable immediate and continuous control. CTCs are becoming more and more common around the world. The initial purpose of the CTCs when it was first launched in Latin America, the origination point, was to reduce the VAT gap. By looking at countries which have adopted CTCs, it’s fair to say that CTCs have already achieved this goal. However, tax authorities subsequently noticed that the benefits of CTCs are not limited to closing the VAT gap.

The vast amount of data collected through CTCs presents immense opportunities for tax authorities. Tax authorities can achieve unprecedented levels of business transaction transparency. Tax authorities T can calculate taxpayers’ compliance risk, and can plan audits based on these risk calculations. Furthermore, data can be used to drive fiscal and economic policy and shared with other government bodies. For instance, during an economic crisis, it’s possible to determine the business sectors most affected through the sales data reported by taxpayers. Those effected can be granted support (through tax exemptions, reduced rates etc.). The OECD Forum on Tax Administration’s chart compares different tax jurisdictions’ data management and analytics abilities and can be used to understand different countries’ data analytics technology.

Challenges for businesses

Granular data collection and transparency of source data create challenges for businesses as there is little room for mistakes, shortcuts or later error correction. Businesses will need to ensure much more granular tax determination decision-making earlier in their processes and their trading partners’ processes.

Furthermore, ensuring compliance where CTCs are implemented can be challenging, especially for international companies, who have historically viewed taxes as something to be addressed by local accountants. Viewing tax as primarily a local concern by adopting local solutions that combine business and compliance functionality for each jurisdiction will be difficult to reconcile with a business’ broader digital and finance transformation and alignment, which is often global.

To step up their game, businesses should focus on data gathering and having a central data repository to have the “big picture” rather than acquiring local solutions to “save the day”. Real-time data transmission also requires clean data to maintain. The global digital transformation strategy must be in place to meet these requirements as well as a scalable technology to manage future tax demands.