Anyone who has been closely following SAF-T announcements over the past few years may be forgiven for thinking that it all seems rather like Groundhog Day. Commencement dates and reporting requirements have been announced and subsequently amended and re-announced as the respective countries re-evaluate their needs and the readiness of companies to provide the data in the prescribed formats.
Earlier this month Poland announced that the changes planned for 1 July 2019, requiring mandatory filing of SAF-T information and the corresponding withdrawal of the requirement to submit a periodic VAT return, have now been deferred to January 2020.
Also this month, Romania announced plans to become the eighth country to introduce SAF-T by introducing requirements for transactional reporting by the end of 2020.
So, what is SAF-T, what is the latest position for countries which have introduced legislation and what lies ahead?
SAF-T – The Standard Audit File for Tax
The Standard Audit File for Tax (SAF-T) was developed by the Organisation for Economic Co-operation and Development (OECD) with the aim of producing a standardised format for electronic exchange of accounting data from organisations to their national tax authority and external auditors.
The two key principles behind SAF-T are that;
- Organisations should be able to export information from their accounting systems (invoices, payments, general ledger journals and master files) into a standardised format and
- Tax authorities and external auditors should be able to make their tax inspections and audits more efficient and effective as a result of data being made available to them in that standardised format.
In 2005 the OECD released the first version of the SAF-T schema which provides details of what should be included in a SAF-T xml reporting file and how that data should be formatted and structured. The original schema was based on the general ledger and details of invoices and payments, together with customer and supplier master files. A second version of the SAF-T schema was released in 2010 to incorporate information about Inventory and Fixed Assets.
What the OECD have not defined, and what remains the responsibility for the tax administration in each country to decide, is the exact format in which the data is to be captured and when and how it is required to be sent to the tax administration.
What has emerged from those countries which have adopted SAF-T are three broad approaches;
- Data to be provided at the request of the tax authority (usually prior to a tax inspection or audit)
- Submission of data periodically in addition to the periodic VAT return
- Submission of transactional data as a replacement to the periodic VAT return
In some cases, the mandate starts with a requirement to produce data on request and evolves through to periodic submissions.
Where are we now?
There are currently seven countries which have introduced legislation enforcing SAF-T requirements.
Portugal was one of the first adopters and Portuguese entities have been required to extract data into the SAF-T file format (based on version 1 of the OECD SAF-T schema) since 2008 on an annual basis. Further extensions to collect sales invoice data and other documents on a monthly basis followed in 2013.
Luxembourg introduced the requirement to extract data in the relevant format in 2011. It only applies to Luxembourg resident companies subject to the local chart of accounts and is only required to be submitted when requested by the tax authority.
France introduced a SAF-T requirement in 2014, using a proprietary format rather than the OECD standard SAF-T schema, requiring files to be submitted in txt format. It is currently only required to be filed on demand when requested by the French tax authority.
Austria introduced SAF-T in 2009 and is currently only required on demand when requested by the tax authority.
Possibly the most significant implementor of SAF-T to date, with large companies having had to file monthly JPK (Jednolity Plik Kontrolny) returns since 2016.
Lithuania introduced the requirement to file the SAF-T based i.MAS on a phased basis, starting with the largest organisations in 2016 and working towards mandating SAF-T for all businesses by 2020. The i.MAS comprises three parts, i.SAF reporting of sales and purchase invoices on a monthly basis, i.VAZ reporting of transport/consignment documents and the i.SAF-T accounting transaction report, which is only required when requested by the tax authority.
SAF-T has been in place on a voluntary basis since 2017 and there are proposals to mandate it, on an ‘on-demand’ basis from January 2020.
What lies ahead for the future of SAF-T?
Countries which are receiving regular, transactional level details under SAF-T may look to reduce the periodic VAT return requirements. This is because the need to prepare a VAT return summarising the details which the tax authority already receives on a transactional basis can be seen as unnecessary duplication.
Poland is proposing that SAF-T data submissions will displace the need for filing a VAT return from January 2020.
Romania is proposing a phased transition to filing of transactional data from 2020, starting with large organisations, with a reduction in the VAT returns which are required to be filed.