Demand for Transactional Data
Another compliance trend that will undoubtedly continue is tax administrations’ demand to provide transactional data. Countries that choose not to introduce mandatory e-invoicing to gather invoice-level data will be asking taxpayers to provide transactional data in other formats. Some countries will rely on the standard audit file for tax (SAF-T), which will be submitted either periodically or on the tax authority's request. Norway has just implemented a SAF-T obligation: As of Jan. 1, 2020, businesses now need to prepare SAF-T files upon request in the case of tax audits.
SAF-T pilot programs are underway in Romania and Hungary. The Greek tax administration is planning to maintain taxpayers’ electronic books (recording a company’s transactions and other accounting information) on its digital platform myDATA beginning this year or next.
The Reality of Pre-Filled VAT Returns
Looking at the long-term future and the increasing demand for granular transactional data, it is quite likely that VAT returns will ultimately be pre-filled or compiled by tax administrations. Tax administrations will receive transactional data automatically via the e-invoicing systems or directly from businesses' own ERP systems on a regular or real-time basis.
Pre-filled VAT returns will become reality in Italy this year. Beginning in July, the Italian tax administration will create VAT ledgers and draft quarterly VAT returns for Italian resident businesses. These will be based on transactions processed through the e-invoicing system (Esterometro) and daily online cash register data. Businesses will be able to review and amend the returns prepared by the tax administration. For transactions carried out as from Jan. 1, 2022, the annual VAT return will also be automatically populated by the tax authorities.
Similar developments are taking place in Spain. The Spanish tax authorities intend to implement a new tool that will enable them to create draft VAT returns that would be provided to taxpayers for confirmation.
Looking at the above-mentioned developments, we can conclude that VAT reporting of the future will be different from current processes.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.