The Italian government has taken important steps to broaden the scope of its e-invoicing mandate, more specifically by widening the scope of taxpayers subject to electronic invoice issuance and clearance obligations, starting 1 July 2022.
On 13 April 2022, the draft Law-Decree, known as the second part of the National Recovery and Resilience Plan (Decreto Legge PNRR 2 – Piano Nazionale di Ripresa e Resilienza), was approved by the Italian Council of Ministers (Consiglio dei ministri).
The Italian government-approved National Recovery Plan is part of the European Union’s Recovery and Resilience Facility (RRF), an instrument created to assist Member States financially in recovering from the economic and social challenges raised by the Covid-19 pandemic.
The expansion of Italy’s e-invoicing mandate is one element of the government’s anti-tax evasion package and addresses, in particular, the advancement of digital transformation, one of the six pillars of the RRF.
New taxpayers in scope
The draft Law-Decree PNRR 2 expands the obligation to issue and clear electronic invoices through the Italian clearance platform Sistema di Intercambio (SDI) to certain VAT taxpayers exempt from the mandate thus far. This means that from 1 July 2022, the following additional taxpayers are obliged to comply with the Italian e-invoicing mandate:
Taxpayers who benefit from the flat-rate tax regime (regime forfettario)
Amateur sports associations and third sector entities with revenue up to EUR 65,000
The regime forfettario is available to taxpayers who fulfil specific requirements, allowing them to adopt a reduced flat-rate VAT regime of 15%, decreased to 5% for new businesses during the first five years. These taxpayers have, up until now, been exempt from the obligation to issue e-invoices and clear them through the SDI, according to Legislative Decree 127 of 5 August 2015.
Additionally, amateur sports associations and third sector entities with revenue up to EUR 65,000 who have also been exempt from the e-invoicing mandate, are included as new subjects. Starting 1 July 2022, e-invoicing will also become mandatory for them.
The mandate still excludes microenterprises with revenues or fees up to EUR 25,000 per year, which instead will be required to issue and clear e-invoices with the SDI starting in 2024.
Short grace period introduced
The draft decree also established a short transitional grace period from 1 July 2022 until 30 September 2022. During this time taxpayers subject to the new mandate are allowed to issue e-invoices within the following month when the transaction was carried out, without being subject to any penalties. This gives the new subjects time to conform to the general rule stating electronic invoices must be issued within 12 days from the transaction date.
What’s next?
The definitive text of the decree has not yet been published in the Italian Official Gazette; only once this final step is taken will the decree formally become law, and the extended scope become binding. The start of the second semester of this year brings additional significant changes in Italy concerning the mandatory reporting of cross-border invoices through FatturaPA, also set to begin on 1 July 2022.
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Need help ensuring your business stays compliant with evolving e-invoicing obligations in Italy? Contact our team of experts to learn how Sovos’ solutions for changing e-invoicing obligations can help you stay compliant.
It’s been just over nine months since the introduction of one of the biggest changes in EU VAT rules for e-commerce retailers, the E-Commerce VAT Package extending the One Stop Shop (OSS) and introducing the Import One Stop Shop (IOSS).
The goal of the EU E-commerce VAT Package is to simplify cross-border B2C trade in the EU, easing the burden on businesses, reducing the administrative costs of VAT compliance and ensuring that VAT is correctly charged on such sales.
Under the new rules, the country specific distance selling thresholds for goods were removed and replaced with an EU wide threshold of €10,000 for EU established businesses and non-EU established businesses now have no threshold. For many businesses this means VAT is due in all countries they sell to, requiring them to be VAT registered in many more countries than pre-July 2021. However, the introduction of the Union OSS allowed them to simplify their VAT obligations by allowing them to report VAT on all EU sales under the one OSS return.
How the EU E-commerce VAT Package has affected businesses
Whilst for many businesses the thought of having to charge VAT in all countries they sell to may have been overwhelming to begin with, they are now seeing the many benefits that the introduction of OSS was meant to achieve. The biggest benefit for businesses is the simplification of VAT compliance requirements with one quarterly VAT return as opposed to meeting many filing and payment deadlines in different EU Member States.
Businesses who outsource their VAT compliance have been able to reduce their costs significantly by deregistering from the VAT regime in many Member States where they were previously VAT registered. Although some additional registrations may be required depending on specific supply chains and location of stock around the EU. Businesses also receive a cash flow benefit under the OSS regime as VAT is due on a quarterly basis as opposed to a monthly or bi-monthly basis as was the case previously in many Member States. As part of the implementation of the EU E-Commerce VAT Package we also saw the removal of low value consignment relief, which meant import VAT was due on all goods coming into the EU. This has brought many non-EU suppliers into the EU’s VAT regime with the European Commission (EC) announcing that there are currently over 8,000 registered traders.
We have seen some early hiccups with EU Member States not recognizing IOSS numbers upon import, leading to double taxation for some sellers. But for the majority of businesses IOSS has enabled them to streamline the sale of goods to EU customers for orders below €150. The EC has also recently hailed the initial success of this scheme by releasing preliminary figures which show that €1.9 billion in VAT revenues has been collected to date.
The future of OSS and IOSS
The EC is currently undergoing a consultation, gathering feedback from stakeholders on how the new schemes have performed with a view to making potential changes. Some of the changes being discussed include making the IOSS scheme mandatory for all businesses, which would significantly widen its use as it brings significantly more traders into scope. There has also been talk of increasing the current €150 threshold which would allow more consignments to be eligible for IOSS, although with the current customs duties threshold also being €150 it would be interesting to see how they align these rules. The EC will also be publishing proposals later in the year on the possible extension of the OSS to include B2B goods transactions, with a view to implementing this by 2024.
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E-commerce continues to grow, and tax authorities globally have struggled to keep pace. Tax authorities developed many VAT systems before the advent of e-commerce in its current format and the evolution of the internet. Around the world this has resulted in changes to ensure that taxation occurs in the way that the government wants, removing distortions of competition between local and non-resident businesses.
The European Commission made changes on 1 July 2021 with the E-commerce VAT Package, which modernised how VAT applies to e-commerce sales and also how the VAT is collected. As the previous system had been in place since 1 July 1993, change was well overdue.
Taxation at Place of Consumption
The principle of the taxation of e-commerce in the European Union (EU) is that it should occur in the place of consumption – this normally means where the final consumer makes use of the goods and services. For goods, this means where the goods are delivered to and for services, where the consumer is resident – although there are some exceptions.
Where the VAT is due in a different Member State than where the supplier is established, this requires the supplier to account for VAT in a different country. Micro-businesses are relieved of the requirement to account for VAT in the place of consumption. Though, most e-commerce businesses selling across the EU will have to account for VAT in many other Member States which would be administratively burdensome.
Expansion of the One Stop Shop (OSS)
To overcome this problem, the European Commission decided to significantly expand the Mini One Stop Shop (MOSS), which was previously in place for B2C supplies of telecoms, broadcasting and electronically supplied services. Three new schemes allow businesses to register for VAT in a single Member State and use that OSS registration to account for VAT in all other Member States where VAT is due.
Union OSS allows both EU and non-EU businesses to account for VAT on intra-EU distance sales of goods. It also allows EU businesses to account for VAT on intra-EU supplies of B2C services.
Non-Union OSS allows non-EU businesses to account for VAT on all supplies of B2C services where EU VAT is due.
Import OSS allows both EU and non-EU businesses to account for VAT on imports of goods in packages with an intrinsic value of less than €150.
Currently, none of the OSS schemes are compulsory, and businesses can choose to be registered for VAT in the Member State where the VAT is due. The European Commission is currently consulting on the success of the OSS schemes, and one of the proposals is that the use of Import OSS would become compulsory. There are also questions about whether the threshold should be increased, although that would require consideration of how to deal with customs duty as the €150 threshold is the point at which customs duty can become chargeable.
Benefits of OSS
The use of the Union and non-Union OSS schemes can provide a valuable alternative to registering for VAT in multiple Member States. However, there can be other reasons why a business will need to maintain VAT registrations in other countries. Businesses should carry out a full supply chain review to identify the VAT obligations.
There are also many benefits to using the Import OSS, including the ability to recover VAT on returned goods and a simplified delivery process for both the supplier and customer.
Any businesses using any OSS schemes should fully understand the scheme’s requirements. Non-compliance can result in exclusion with the requirement to register for VAT in those countries where it is due. This will remove the benefit of the OSS schemes, increasing costs and administrative burden for the business.
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Get in touch with our team to find out how we can help your business understand the new OSS requirements.
Want to know more about the EU E-Commerce VAT Package and One Stop Shop and how it can impact your business? Download our e-book.
The Philippines continues in constant advance towards implementing its continuous transaction controls (CTC) system, which consists of near real-time reporting of electronically issued invoices and receipts. On 4 April, testing began in the Electronic Invoicing System (EIS), the government’s platform, with six companies selected as pilots for this project.
The initial move toward a CTC system in the Philippines started in 2018 with the introduction of the Tax Reform for Acceleration and Inclusion Act, known as TRAIN law, which has the primary objective of simplifying the country’s tax system by making it more progressive, fair, and efficient. The project for implementing a mandatory nationwide electronic invoicing and reporting system has been developed in close collaboration with the South Korean government, considered a successful model with its comprehensive and seasoned CTC system.
Electronic invoicing and reporting are among many components set forth by the TRAIN law as part of the country’s DX Vision 2030 Digital Transformation Program. With this, the Philippines is making headway toward modernising its tax system.
Introduction of mandatory e-reporting in the Philippines
The Philippines CTC system requires the issuance of invoices (B2B) and receipts (B2C) in electronic form and their near real-time reporting to the Bureau of Internal Revenue (BIR), the national tax authority. The EIS offers different possibilities in terms of submission, meaning that transmission can be done in real-time or near real-time. Documents that must be electronically issued and reported include sales invoices, receipts, and credit/debit notes.
According to the Philippines Tax Code, the following taxpayers are covered by the upcoming mandate:
Taxpayers engaged in the export of goods and/or services
Taxpayers engaged in e-commerce
Taxpayers under the jurisdiction of the Large Taxpayers Service (LTS).
However, taxpayers not covered by the obligation may opt to enroll with the EIS for e-invoice/e-receipt reporting purposes
E-invoices must be issued in JSON (JavaScript Object Notation) format and contain an electronic signature. After issuance, taxpayers can present their invoices and receipts to their customers. The tax authority´s approval is not needed to proceed. However, electronic documents must be transmitted to the EIS platform in real-time or near real-time.
E-archiving requirements
The Philippines introduced somewhat unusual requirements in this period of digitization, when it comes to e-invoice archiving. The preservation period is ten years and consists of a system in which taxpayers are obliged to retain hard copies for the first five years. After this first period, hard copies are no longer required, and exclusive storage of electronic copies in an e-archive is permitted for the remaining five years.
What’s next for taxpayers?
With tests officially underway, the next phase should begin on 1 July 2022, with the go-live for 100 pilot taxpayers selected by the government, including the six initial ones. After that, the government plans to advance a phased roll-out in 2023 for all taxpayers under the system’s scope. Meanwhile, taxpayers can take advantage of this interim period to conform with the Philippines CTC reporting requirements.
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Need to ensure compliance with the latest e-invoice requirements in the Philippines? Speak to our team.
Sovos SAF-T Extraction
Save Time and Reduce Data Extraction Cost Required for SAF-T Report Preparation
Automate tax data extraction from SAP
Remove the pain of getting data into diverse country SAF-Ts with changing schemas.
The data needed to complete a SAF-T report is diverse. It ranges from accounts receivable and accounts payable data, such as billing and purchasing documents, to accounting data found in general ledger entries. It can also include information about fixed assets and inventory, more often associated with the annual financial statement than with VAT returns and other VAT-related periodic declarations. Getting such large quantities of varied data (depending on the country, this can be as extensive as 1,000 fields) from across different modules in SAP or from multiple SAP instances, using traditional extraction methods is both time-consuming and labor-intensive.
Sovos automates extraction of your data from SAP as a first step to preparing a compliant SAF-T report. This frees up SAP experts to focus on more strategic IT initiatives that affect your business. We continually track changes to different jurisdictional SAF-T requirements and ensure these are codified in the Sovos SAP Framework that extracts data for mapping to the approved legal structure.
If you opt to extract your own data for SAF-T generation in SAP or have other ERP/source systems, we have complementary modules in our triple play SAF-T solution to help you achieve accurate and robust SAF-T output.
You can also present your data to us in various electronic formats (e.g., CSV, TXT) then use both SAF-T analysis and SAF-T generation to ensure the SAF-T file you plan to submit meets the expectations of the relevant tax authority.
Alternatively, if your data is prepared in the legal SAF-T XML structure for the specific jurisdiction, it will be ready to be validated using our SAF-T Analysis module.
Automatically extracted data pushed to the Sovos APR cloud for mapping to the relevant country-specific SAF-T file
Eliminate need for a bespoke solution designed, built and maintained by SAP experts
Update extraction requirements as SAF-T expands to more jurisdictions
Align to APR SAF-T common data model, which covers the full requirements of the OECD’s revised standard SAF-T schema from 2010
Ensure the data extracted is always aligned with country-specific schema requirements as existing SAF-T obligations evolve
Build up the required data gradually, by extracting the required data on an ongoing basis, rather than waiting for the end of a reporting period or a request from the tax authority
Use Sovos’ complementary SAF-T analysis and SAF-T generate modules to review the data integrity and make any necessary adjustments well ahead of SAF-T reporting deadlines
Assess Accuracy, Integrity and Data Quality to Ensure Compliance with Country-Specific SAF-T Obligations
Full visibility, user-friendly interface
Automate the process of preparing robust and accurate data structures required for tax and compliance purposes, including SAF-T
A VAT return, like an annual financial statement, consolidates and summarizes lots of information in a format that can be easily read and interpreted. By contrast, a SAF-T report compiles large quantities of diverse data in an XML format. A company’s SAF-T report can be used for auditing purposes, with the tax authority referring to it as a primary source against which all historical tax returns are queried. Ideally, SAF-T data determines whether fraudulent practices or transactions have taken place. However, the format, origins and volume of SAF-T data makes it very challenging for companies to evaluate and interpret what is sent to tax authorities. This unknown creates a major risk for companies, their accountants and advisors.
As part of Sovos’ SAF-T triple play, integral analysis provides a human-readable view of otherwise indecipherable SAF-T data. A summary of findings is presented in a user-friendly interface, pinpointing information inconsistencies and tax anomalies that may expose business problems. Through this deep SAF-T analysis of structured data, Sovos powers internal due diligence to ensure organizations achieve compliance peace of mind.
Sovos uses a broad set of rules and tests for the accuracy, integrity and quality of data that’s intended for any SAF-T report. It searches for errors in syntax and calculations and to ensure statistical and logical consistency. After the SAF-T report is generated, Sovos analyzes the structured file, giving organizations confidence the XML will be accepted by the tax authority without further scrutiny.
Maximize operational efficiency by revealing information inconsistencies and tax anomalies that may hinder business progress
Decodes SAF-T data and presents results in a standard, logical way that’s readily interpreted and understood prior to submission.
Advances preparedness for inevitable inspections and audits by improving data quality and accuracy as a result of data checks on an ongoing basis.
Pinpoints the source of errors through root-cause analysis, enabling ongoing, seamless navigation through all data. This includes immediate on-screen access to information, such as invoice issued, product sold and account balance when consulting a specific customer account.
Allows audit notes (e.g., explanations, justifications, actions required) to be added to a specific document, error or finding (e.g., billing later than shipment). This guides internal teams on any necessary operational changes and increases transparency by recording contextual information that can be readily accessed during subsequent audit or tax inspection.
Ensures alignment between SAF-T data, financial statements and other interim KPIs that are reported to executive-level stakeholders.
Enables navigation through reports and transactions referenced in the SAF-T data, automating previously manual tasks with live updates.
Mitigates risks of tax exposure/possible disputes, automated checks that mimic automated analysis run by tax administrations on the same data set and allows any data outliers to be addressed prior to submission.
The Sovos SAF-T Analysis module can be used to check and validate the contents of a SAF-T report, whether the Sovos SAF-T Generate module has been used to compile the file or if it’s been generated in another way.
Produce Full Range of SAF-T Reports Compliant with Different Jurisdictional Requirements
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
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.
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.
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.
Transition from voluntary to mandatory e-invoicing expected from 1 April 2023
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.
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:
e-Mikrofirma, an online app accessible via smartphone and a web form to any taxpayer logged on to e-Urząd (e-Office).
e-Urząd, will provide taxpayers with online tools that will make it easier to meet tax obligations, including paying taxes, through an online electronic payment service.
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.
Need help with Poland’s evolving CTC requirements?
Development of Sovos’ CTC solution for Poland is already well-advanced and will shortly be ready for implementation. To get ahead of the inevitable rush to comply with Poland’s CTC mandate, contact us today.
Update: 12 September 2023 by Robson Satiro de Almeida
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:
Unified issuance of electronic tax documents
Use of e-invoicing data to calculate taxes and provide pre-filled tax returns
Simplification of tax and contribution payments by consolidating collection documents
Centralisation of tax records and their sharing in accordance with legal mandates
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.
As per the Statute, this integration effort aims to provide benefits such as:
Cost savings for taxpayers
Encouraging taxpayer adherence at all federative levels
Modernising systems and digitalising operations
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.
Update: 21 March 2022 by Kelly Muniz
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.
The principal agenda of the draft law proposal is to introduce:
A unified national standard for e-invoicing
A unified e-bookkeeping format, the Digital Fiscal Declaration (DFD)
A pre-filled tax return using e-invoice data
A unified fiscal registry file and information sharing system (RCU)
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.
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Need to ensure compliance with the latest Brazilian e-invoicing requirements? Speak to our team or download Trends Edition 13 to keep up to date with the latest regulatory news and updates.
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.
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.
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.
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.
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?
I have a few thoughts.
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.
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.
China’s VAT digitization journey began nearly two decades ago with the rollout of a tax regime called the Golden Tax System. This created a national taxation platform for reporting and invoicing, as well as legislation regulating the use and legal effect of e-signatures.
With the increase of mobile payment adoption, the push towards customer-facing e-invoicing grows. The Chinese government has taken initiatives to further reform reporting and invoicing with a proposed nationwide e-invoicing service platform to provide an e-invoice issuance service to all taxpayers free of charge.
E-invoicing has been gradually introduced in China, starting with the B2C segment – in some cases by mandating large amounts of taxpayers in the public service sector to issue VAT e-invoices to their customers.
Whilst e-invoicing is not mandatory, it has been widely accepted in B2C instances for several years. It is mandatory in certain core service-based industries, including telecommunications and public transportation. Invoices are issued via the national system, and the hardware and software are certified by the state authority.
A pilot program was launched in September 2020, which enables specific taxpayers operating within China to voluntarily issue VAT special e-invoices. Special invoices are used to claim input VAT and are generally used in B2B transactions.
Format of electronic invoices in China
Electronic invoices take different forms in China. The document is automatically sent to the State Taxation Administration in XML format, and it is returned to the invoice issuer in either PDF or OFD format.
All e-invoices must include a QR code and an electronic signature, buyer and seller information, an invoice number and issuance date, details for the goods or services provided and financial information (unit price, tax rate & amount, etc).
Yes, China began its pilot program for electronic invoicing in September 2020 – specifically for B2B transactions in Ningbo, Shijiazhuang and Hangzhou.
The ZRE stands for Zentrale Rechnungseingangsplattform des Bundes, which translates as Central Invoice Submission Portal. ZRE is a web portal that allows suppliers and service providers to send electronic invoices to federal entities.
ZUGFeRD is a hybrid e-invoicing format that includes human-readable (PDF/A-3) and machine-interpretable invoice data. It’s based on XML, allowing invoices to be sent as attachments or embedded within an email.
ZUGFeRD meets the requirements of the European standard (EN 16931).
XRechnung is a standard for electronic invoicing that the German government accepted in late 2020. It was devised as a standard for converting invoice information into an XML data file, serving as an e-invoice.
XRechnung also meets the requirements of the European standard (EN 16931).
B2G e-invoicing has been mandated at a national level since mid-2019, meaning that all Member State government agencies must be able to receive and manage electronic invoices.
Elsewhere, here’s the timeline for B2B e-invoicing in the country:
From January 2025, all German taxpayers must be able to receive electronic invoices from their suppliers.
From January 2027, all German taxpayers with an annual turnover of over EUR 800,000 must issue electronic invoices.
From January 2028, all German taxpayers must issue and receive electronic invoices.
When transacting with federal contracting authorities, you should send an electronic invoice through the relevant state’s individual transmission platform.
Timeline of e-invoicing adoption in China
Learn more about China’s journey to adopting electronic invoicing with the key dates below.
September 2020: China’s e-invoicing pilot program began allowing e-invoice issuance for B2B purposes. It initially only included Ningbo, Shijiazhuang and Hangzhou
December 2020: Pilot expanded to include Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, Chongqing, Sichuan and Shenzhen
January 2021: Pilot further expanded to include Beijing, Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Fujian, Jiangxi, Shandong, Henan, Hunan, Guangxi, Hainan Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Dalian, Xiamen and Qingdao
December 2021: A new pilot program, only for selected taxpayers, started in Shanghai, Inner Mongolia and Guangdong, introducing the so-called “fully digitised e-invoice”, a new type of e-invoice that simplifies the e-invoice issuance for both B2B and B2C purposes
December 2024: The State Taxation Administration officially recognises e-invoices with the same legal weight as paper invoices
Compliance Mandates Around the World Have Elevated the Importance of Tax
Sorting out indirect tax issues was not traditionally at the top of any IT organisation’s to-do list. Today that’s changed and new VAT compliance mandates being introduced at an increasing rate around the world have elevated its status.
It’s more important than ever that IT decision makers and in-house tax and finance professionals engage and have meaningful, strategic discussions about how – and also why – to accelerate their digital transformation. This will enable them to not only respond but also to prepare for invasive new tax mandates.
Each time a product or service is sold in a new country or under the watchful eye of evolving national tax regimes, enterprises must respond. They must ensure their VAT recognition and reporting processes are aligned to new and evolving mandates for continuous controls on e-invoicing and other critical sales and purchase processes and documents.
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A cascade of tax compliance mandates
Multinational companies continue to leverage new technologies to optimise borderless supply chains. The spectacular growth of e-commerce and a new generation of technologies is opening global markets for even the smallest of micro-enterprises.
Global businesses and supply chains increasingly intersect new national mandates. Many of these mandates impose sophisticated real-time controls on business transactions and make compliance more complex than it’s ever been before. And the cost of non-compliance can be high.
Non-compliance can affect an organisation in many ways – financial, operational, employee productivity, customer experience, legal, and even brand perception.
IT, tax and finance teams need to communicate and collaborate effectively to fully understand their compliance obligations in each of the markets where they operate. If they can’t companies will likely find their digital transformations inhibited by disparate local point solutions that can be so entrenched, they can become impossible to replace.
With better collaboration between functions and alignment on tax, your entire organisation can achieve real operational efficiencies.
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The opportunities that exist when tax and IT work together
How joined up thinking can reduce risk and uncover opportunities
A shared vision and modern tax solution
How better conversations drive a better compliance process
As tax compliances becomes increasingly interconnected with core business processes, organisations must make all aspects of tax reporting central to, and integrated with, core business activities.
A modern tax compliance solution must be engineered from the ground up to handle modern regulatory mandates. This especially applies to global manufacturers and retailers that do business in numerous countries around the world and must comply with mandates established by hundreds of tax authorities.
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In 2020, the European Commission (EC) adopted a four-year plan to develop a fairer and simpler taxation framework. The Action Plan aspires to tighten up the tax system, ensure that digital platforms are made to follow transparency rules and utilise data better, reducing tax fraud and evasion.
In 2021, the Commission implemented e-commerce changes – another step in the modernisation process. Beginning in July of 2021, the Mini One Stop Shop (MOSS) system was expanded to the One Stop Shop (OSS) and Import One Stop Shop (IOSS).
The implementation of OSS expanded the use of the union and non-union schemes. This allows European and non-European business-to-consumer sellers of digital services and goods to simplify their reporting practices. Meanwhile, IOSS allows businesses to register and import goods into the EU with a value not exceeding €150.
In 2022, there are plans to release legislation under the “VAT in the digital age” Action Plan. Much like its predecessors in 2020 and 2021, the core purpose of this plan is to tackle the issue of fraud and improve the way businesses engage with the VAT system. The Commission has announced three points it seeks to address in its legislation:
Specifically, one point of interest is the single EU VAT registration point, which aims to facilitate compliance among Member States. With this, the European Commission is requesting feedback on how businesses think the I/OSS implementation has gone and on other potential legislative options for the future, including:
Extension of OSS to:
Cover all B2C supplies of goods and services by non-established suppliers
Enable intra-Community supplies and acquisitions of goods, thereby avoiding VAT registration when transferring own goods cross-border
Include B2B supplies of goods and services while leaving in place the current VAT refund mechanism
Include B2B supplies of goods and services while also introducing a deduction mechanism for OSS
Reverse charge made available for all B2B supplies carried out by non-established suppliers
Removing the €150 threshold for IOSS so that it applies to distance sales of goods of any value
Making IOSS mandatory for:
All distance sales of imported goods
All distance sales of imported goods above an EU turnover threshold (e.g. €10,000)
Marketplaces only
The European Commission began a period of public consultation on 21 January regarding adapting VAT rules in a digital economic landscape. They are seeking feedback on how the EC should adapt VAT tax processes and how they can incorporate technology to solve principal issues in tax, such as fraud and the complexity of its systems. The Commission is accepting feedback in this public consultation period until 15 April 2022 – submissions can be made here.
Sovos will continue to monitor the development of this legislation throughout the year as more information about its structure and impact is released, as these changes are sure to be impactful upon the European VAT landscape.
Insurance is a dynamic sector in constant flux to accommodate with insured’s needs. An increase in holidays abroad following WWII saw the need for Assistance insurance for any unforeseen events that occurred away from the insured’s home country. Council Directive 84/641/EEC regulated Assistance insurance for the first time, and a new class of insurance was created. This was in addition to the 17 previously regulated classes outlined in Directive 73/239/EEC of non-life insurance and was called Assistance (Class insurance 18).
Travel insurance evolution
Initially, the insured was covered by a policy that provided aid for any event travelling abroad (loss of passport, assistance with any problem in the car etc). The insurer created a range of support with call centres, supplier networks and additional services to help solve difficulties when travelling abroad.
Subsequently, following the insured’s requirements, insurance companies and travel agents created travel insurance that includes a wide range of services. These consist of several protections within different classes of business. This is where the tax complexity of travel insurance policies begins. It’s an amalgamation of coverages, and the application of the correct fiscal treatment needs to be analysed in each territory.
Correct tax treatment in travel insurance
When weighing the correct application of tax for travel insurance, businesses must consider the following: location of risk (LoR), class of businesses and the correct tax approach.
Business travel: The LoR of the employer’s policy to cover their employees will be located where the business is located.
Individuals: The LoR will be the territory in which the policyholder is habitually resident unless the policy covers travel or holiday risks for four months or less. In this case, the LoR is the Member State where the policyholder took out the policy.
Class of business affected: As mentioned previously, one of the complexities of travel insurance is determining the classes of business affected. It’s common to see, in these policy types, multiple coverages such as medical assistance cover, loss or damage to baggage, travel delays or cancellations, loss of documents or money, personal accident, repatriation etc. Insurers must adequately identify these coverage details to ensure the compliant tax treatment is used.
Taxability: This step is crucial. The correct treatment of the policies could vary the liabilities to be paid, the different taxes and/or levies and parafiscal charges to be included in the tax calculation. This means that the tax treatment can change by country. It’s necessary to identify the tax liability or exemption based on the class of business and the geographical location.
Insurers must understand the importance of the vital details associated with travel insurance. Determining LoR, class of business affected and taxability ensures the correct amount is paid and submitted to the proper jurisdictions.
Many multinational companies find VAT compliance challenging, especially when trading cross-border.
With the increase in real-time reporting across Europe and differing VAT registration and reporting requirements, VAT compliance now requires significant resources and specialist knowledge to ensure compliance and avoid costly penalties.
As your business expands, so do your VAT obligations. This is why many organisations, turn to managed service providers to ease the burden of VAT compliance, audits and fiscal representation.
This e-book discusses the many elements of VAT compliance including:
VAT registration
Fiscal representation
How to determine VAT obligations
Filing VAT returns
Preparing for an audit
Managing VAT changes
VAT compliance advice from JD Sports’ Indirect Tax Manager
How JD Sports manage VAT compliance with Sovos’ Managed Services
John Dowd, Indirect Tax Manager at sport-fashion retailer JD Sports discusses how he managed cross-border VAT compliance with the help of Sovos’ managed services
“For us at JD Sports and me personally I’m looking for a partnership, something long term, as it takes time and costs money to change advisors. I’m looking for a long-term relationship over a number of years with a VAT service provider.
“I want my advisor to have specialist knowledge, for us that’s retail and cross-border supply chains, overseas tax authorities, and I want to see new talent joining the team. I prefer a single point of contact to make it easier to move things along and of course, competitive pricing, and Sovos ticked all of these boxes for us.”
John Dowd, Indirect Tax Manager at JD Sports
The many elements of VAT compliance
VAT compliance has many elements, beginning with an understanding of place of supply rules to determine where VAT registration is required. Fiscal representation might be required to register in EU Member States.
Once VAT registration is underway, the next step is to determine EU VAT obligations by mapping the supply chain for the country of registration. There are also additional requirements to consider including exemptions, recovering VAT, Intrastat and varying continuous transaction controls (CTCs) mandates.
Submitting VAT returns to ensure compliance is a never-ending process. Each country has its own VAT return regulations and additional declaration requirements.
The VAT compliance cycle also includes preparation for VAT audits. Tax authorities can carry out audits for a variety of reasons so it’s important businesses prepare for audits and ensure they are able to manage the process successfully.
How Sovos VAT Managed Services can help with VAT compliance
Sovos’ end-to-end, technology-enabled VAT Managed Services can ease your compliance workload and mitigate risk where-ever you operate today, while ensuring you’re ready to handle the VAT requirements in the markets you intend to dominate tomorrow.
