Compliance Category: Actualizaciones de los países

VAT in the Digital Age – public consultation published

We previously communicated that the European Commission was busily engaged with a public consultation on the ‘VAT in the Digital Age’ initiative. The underlying aim of the initiative, as the name suggests, deals with how the EU’s fiscal, and specifically VAT rules, can be adapted alongside a more digitised working mechanism, and how technology can circumvent tax fraud, which in turn will reduce VAT gaps. It is hoped that a digitised platform can counter these problems and output a streamlined, automated and efficient working mechanism, coupled with cost benefits.

The public consultation covered multiple facets of the vision to fully digitise VAT.

On a high level, the following observations were collated during the public consultation:

  • Most stakeholders negatively regard the current Digital Reporting Requirements (DRRs), implying that reform is a necessity
  • Progress in the digitisation era is regarded slow, and EU intervention is paramount to accelerate progress in this area.

In terms of requisite action:

  • Most stakeholders supported the introduction of EU level DRRs for intra-community transactions, with or without the inclusion of domestic transactions.

Clear consensus was not reached on the following issues:

  • Recording data on VAT transactions in a standard digital format
  • Adopting non-binding commission recommendations to introduce uniformity regarding reporting obligations across the EU
  • Removing the requirement for Member States to request an explicit derogation for the introduction of B2B e-invoicing mandates.

The following specific issues were highlighted by respondents during the public consultation:

  • Member States applying different VAT treatments, ranging from different rates, different treatment of electronically supplied and intermediary services, to different thresholds for the application of VAT to SMEs
  • Problems with either double-taxation or non-taxation
  • Problems concerning the definition of supplies, the status of the supplier and customer, and the place of supply
  • Problems attributable to platform providers, for example, due to a lack of appropriate invoicing from their side, or the application of an erroneous VAT rate.
  • Problems when dealing with non-EU counterparts, such as uncertainty over whether VAT should be applied, and if so, what rate this would be.

While the virtues of the One Stop Shop (OSS) and Import One Stop Shop (IOSS) were not extolled, it was acknowledged that these implementations have enjoyed moderate successes. OSS specifically allows online businesses to report certain B2C EU supplies in a single Member State. Similarly, the IOSS allows a taxable person to register in a single Member State and pay VAT on imported goods. Both schemes endeavour to reduce the compliance burden on taxpayers.

The schemes were commended for the following:

  • minimising the need for businesses to hold multiple VAT registrations
  • simplifying and facilitating VAT compliance
  • reducing fraud and increasing VAT revenue
  • modernising the VAT rules.

In terms of policy options:

  • The strongest agreement among stakeholders was for the option to extend the OSS to cover all B2C supplies of goods and services by non-established suppliers. Only slightly less respondents agreed with extending the OSS to intra-Community supplies and acquisitions of goods, and to B2B supplies of goods and services, together with the introduction of a deduction mechanism into the OSS.
  • More than half of responses were in favour of making the reverse charge available for all B2B supplies conducted by non-established suppliers, and with removing the 150 Euros threshold for the IOSS.
  • However, the option of making the IOSS mandatory, either for all distance sales of goods above a certain threshold or for marketplaces only, did not have majority agreement.

The Commission’s summary report on the consultation can be accessed via the following link:

https://circabc.europa.eu/ui/group/cb1eaff7-eedd-413d-ab88-94f761f9773b/library/caee6205-b1d0-4705-8f64-213f4050e06a

A list of more detailed reports can be found below:

  • Final report. Volume 1, Digital reporting requirements
  • Final report. Volume 2, The VAT treatment of the platform economy
  • Final report. Volume 3, Single place of VAT registration and import one stop shop
  • Final report. Volume 4, Consultation activities.

All reports can be downloaded from the following website:

https://op.europa.eu/en/publication-detail/-/publication/a07ffdc4-0966-11ed-b11c-01aa75ed71a1/language-en

Reporting rules for digital platforms

We recently communicated that the UK government was undergoing a public consultation relating to reporting rules for digital platforms. This was expected to provide a complex and detailed insight into the envisaged legislation relating to digital platforms.

The public consultation has now concluded. As previously indicated, the response is detailed and can be found here.

VAT registration threshold increase

There are multiple reasons why a country may want to increase its VAT registration threshold. In June, we communicated that the Bulgarian government raised the VAT registration threshold to combat rising inflation.

The Czech government is proposing a bill to double the VAT registration threshold by a sizeable margin- from CZK 1 million to CZK 2 million (c. 85,000 Euros) per annum. The European Council has provided permission for the Czech government to raise its VAT registration threshold.

If successfully implemented, this would take effect from 1st January 2023 until 31 December 2024.

The threshold does not apply to non-resident businesses, who must register immediately if providing certain supplies.

Increase in stamp duty deferment threshold for e-invoices

The Italian tax authorities have introduced some changes relating to the stamp duty deferment threshold for e-invoices.

Semplificazioni Law Decree no. 73/2022 states that for e-invoices issued with effect from 1 January 2023, the threshold for deferment of payment of stamp duty for the first two quarters of the year will be raised from 250 Euros to 5,000 Euros. This will affect the timeframes within which stamp duty can be paid.

Provided the amount related to stamp duty on electronic invoices issued in the first quarter does not exceed 5,000 Euros, it can be paid within the deadline for the payment of the second quarter liability (i.e. 30 September).

If the amount relating to stamp duty on electronic invoices issued in the first and second quarters does not exceed 5,000 Euros, it may be paid by the deadline for payment of the third quarter liability (i.e. 30 November).

Extension of reverse charge on specific supplies

In addition to e-invoicing mandates, countries deploy a range of complementary measures which serve to reduce tax evasion and by extension reduce the VAT gap. VAT gaps are defined as the projected amount of revenue a government is expected to receive against the actual amount of VAT-related revenue collected by the government. This has been, and continues to be, a perennial problem across Europe which the introduction of e-invoicing mandates seeks to address.

The reverse charge is one such complementary mechanism designed to circumvent the difficulties posed by VAT gaps. The reverse charge shifts the onus of paying the VAT to the customer rather than the supplier. This in turn means that suppliers cannot charge VAT on an invoice and knowingly avoid paying VAT after having received payment from a customer.

Romania has extended the reverse charge mechanism on the following products:

  • A variety of foodstuffs
  • The exchange of certificates for greenhouse gas emissions
  • The issuance of green certificates
  • The delivery of integrated circuit devices

Romania has one of the highest VAT gaps in Europe, with an astonishing 34.9% of VAT unaccounted for in 2019. It is no surprise that governments continue to advance supplementary measures in addition to e-invoicing mandates to thwart substantial VAT gaps.

No requirement for e-invoices for export customs declarations

A recent notification (No. 2054) issued by the General Department of Customs (GDC) set forth the requirements for invoices for exported goods.

According to the notification, invoice to be used for export customs declarations is a commercial invoice or equivalent document, and that it is not required to issue additional electronic VAT invoices to perform export customs procedures.

Developments on the fully-digitalized e-fapiao system

The fully digitalized e-fapiao system has progressed swiftly since its launch, below is a timeline of key events:

  • Dec 2021: China kicked off the Fully digitized e-invoice pilot with selected taxpayers in Guangdong, Inner Mongolia, and Shanghai. taxpayers should use the dedicated e-invoicing portal to issue and transmit fully digitized e-invoice.
  • April 2022: the pilot expanded further in Guangdong and Inner Mongolia.
  • May 2022: Taxpayers in Sichuan joined the pilot as “Receiver”, receiving fully digitized e-invoice from taxpayers in Guangdong, Inner Mongolia and Shanghai.
  • June 2022: State Tax Administration (STA) announced an expansion of the “Receiver” scope across the country in phases.
  • June 2022: the STA announced that 5 more provinces (Shenzhen, Beijing, etc) to join the pilot as “Receiver” starting on 21 June
  • July 2022: the STA further confirmed 9 more provinces to participate the pilot as “Receiver” from 18 July

Although the STA intends to achieve fully invoice digitization by 2025, the top-tier provinces are expected to reach the goal earlier. We are closely monitoring the developments in China and will continue to inform our customers of any updates.

SAF-T obligation extended to non-established businesses

The Portuguese State Budget, approved on 27 June 2022, introduced some changes for SAF-T reporting. SAF-T reporting refers to the Standard Audit File for Tax and Portugal pioneered the SAF-T format, being the first country to introduce it on 1st January 2008. It was created with the underlying intention to orchestrate an efficient exchange of information between businesses and tax authorities.

All VAT-registered taxpayers in Portugal are subject to SAF-T reporting obligations. The State Budget has now extended this obligation to foreign businesses from 1st January 2023.

This effectively brings the Portuguese SAF-T legislation in harmony with the requirement for non-established companies in Portugal to also use certified billing software, which came into effect in July 2021. This requirement ensures that taxpayers can only use billing systems authorised by the Portuguese Tax Authorities (PTA), thus reducing the scope for tax evasion and fraud.

Draft Resolution Introduces Changes to the Guía de Remisión Electrónica (E-transport Document)

A Peruvian draft resolution has made changes to the guías de remisión electronica (GRE). The draft resolution should further regulate the issuance of the e- transport document.

Regarding a high-level overview of the changes:

  • The GRE can no longer be issued from SEE-OSE (Sistema de Emisión Operador de Servicios Electrónicos), but should exclusively be issued through the taxpayer’s invoice issuance system (SEE del contribuyente) or the Sunat Portal (SEE-SOL).
  • A QR code can be used electronically or on paper as one of the support forms for the transport of goods.
  • A new e-transport document has been introduced (the guía de remisión por evento), which has to be issued through the Sunat Portal.

Taxpayers can voluntarily start using the QR code as the support for transportation from 13 July 2022.

Postponement of e-invoice and fee voucher remittance

Further to Emergency Decree 112-2021, the Peruvian government will postpone the deadline of 4 days concerning the remittance of an e-invoice and fee voucher until 30 June 2022.

Previous regulations had the postponement set to 2 days.

The Decree effectively means that Peruvian taxpayers have an additional 2 days to submit their e-invoice and debit and credit notes until 30 June 2022. After this deadline, the old deadline of a 2-day postponement applies.

Phased implementation of e-invoicing mandate

Tungsten Network has steadily been following the progress of e-invoicing in Latin America. In November 2021, we communicated around the first wave of taxpayers who were obligated to comply with the mandate.

The phased implementation of e-invoicing has been progressing swiftly since then- the second wave of taxpayers were obligated to comply in April 2022. Bolivia’s National Tax Service (SIN) published Resolution N 102200000010, which identifies the additional group of taxpayers who will be required to comply with the mandate from this date.

The third group of taxpayers, comprising of 3,897 taxpayers who are listed in the annex of the Resolution, is due to comply from 1st October 2022 and all indications suggest that the roll-out of the Bolivian e-invoicing mandate is on schedule.

Extension for mandatory CFDI 4.0 usage to 1 January 2023

Tungsten Network has closely been monitoring timeframes around the inception of the mandatory usage of CFDI 4.0 and associated documents in Mexico. Mandatory usage of the CFDI 4.0 and associated documents has been postponed several times.

Once again, mandatory usage of these documents has been delayed. The Mexican Tax Authorities, Servicio de Administracion Tributaria (SAT) have confirmed via a press release that the mandatory usage of the CFDI 4.0 has been extended to 1st January 2023.

This means that taxpayers can invoice using CFDI 3.3 or 4.0 until 31st December 2022. Note that Tungsten network is ready to process both CFDI 3.3 and 4.0 invoices as well as both versions of the payment receipt.

The press release published by the SAT can be found here.

Tool for validation of electronic invoice data

The Mexican government has imposed some further requirements regarding the mandatory tax data required on the CFDI 4.0.

In addition to the introduction of the CFDI 4.0, which now becomes mandatory as of 1st January 2023 (see update above), the following tax data of the CFDI’s recipient will also be mandatory. This data must also be updated and matched with the information on the Mexican Tax Authorities’ database:

  • Mexican tax Id (RFC)
  • Legal name
  • Tax regime
  • Zip code

Consequently, businesses will need to collect the form ‘Constancia de Situacion Fiscal’ (proof of tax situation) from the CFDI recipients.

There are several Mexican Tax Authority application forms from which taxpayers can validate this information, including:

Tungsten Network is analysing the requirements for the new mandatory tax data in the CFDI 4.0 and is working on a solution to ensure these are integrated into our service offering to our customers.

Group on the future of VAT – e-invoicing and the need for EU standards and interoperability

The Group of the Future of VAT has discussed the “Working Paper on E-invoicing and the need for EU standards and interoperability” published by the European Commission. The study carried out on the Digital Reporting Requirements (DRR) part of the VAT in the Digital Age concludes that the policy options providing the most significant advantages are the partial and total harmonisation of DRRs across the EU.

More details around this can be found here.

Draft bill to implement EU VAT legislation

Slovakia is involved in a draft consultation for the implementation of EU legislation on the VAT Act, with reference to Draft Bill No. 309/2022. This is due to come into effect on 1st January 2023.

This as a recurring trend across Europe, where countries adopt EU legislation into their own Directives. This adoption offers advantages- offering greater standardisation and consistency with the EU VAT principles and regulations and aligning policies with other EU countries which have enacted similar legislation into their own domestic laws.

The public consultation covers the following:

  • Change the VAT registration threshold to EUR 49,790.
  • Regulate processes for VAT registration exemptions and cancellations
  • Exempt VAT for EU-purchased or imported goods and services if made accessible free of charge
  • Revise the VAT deduction requirement regulations for non-payment of VAT
  • VAT requirements for refund
  • Payment service providers’ recordkeeping duties for cross-border payments.

Feedback for the consultation is requested by 20 June 2022.

Mandatory e-invoicing via Bookkeeping Act

Despite momentum around e-invoicing being relatively quiet in Denmark in comparison to other countries, this month there have been some very significant developments concerning e-invoicing in the country.

The Bookkeeping Act is expected to come into force on 1st July 2022, which envisages the digitisation of bookkeeping in Denmark. This means all transactions will need to be recorded in a digital system. All documents relating to these transactions must also be preserved in a digital format.

The requirements will apply to all enterprises subject to the obligation to present financial statements in accordance with the Danish Financial Statements Act.

Implementation of the requirements is expected to follow a phased approach- in line with the following:

  • 1 July 2022: The Act is expected to come into force
  • 1 January 2023: The Danish Business Authority lays down rules and requirements for bookkeeping systems
  • 1 July 2023: Existing suppliers of digital bookkeeping systems must meet the new requirements for digital bookkeeping systems and be registered with the Danish Business Authority
  • 1 January 2024: Enterprises covered by the Danish Financial Statements Act’s reporting classes B, C and D must meet the new requirements for digital bookkeeping systems for financial years commencing on or after 1 January 2024
  • 1 July 2024: Enterprises covered by the Danish Financial Statements Act’s reporting classes B, C and D and which use their own bookkeeping system that has not been registered with the Danish Business Authority must meet the digital bookkeeping system requirements
  • 1 January 2026: Enterprises covered by the Danish Financial Statements Act’s reporting class A and whose revenue exceeds DKK 300,000 must meet the new requirements for digital bookkeeping systems for financial years commencing on or after 1 January 2026
  • 1 July 2026: Enterprises covered by the Danish Financial Statements Act’s reporting class A and whose annual revenue exceeds DKK 300,000 for two consecutive years, and which use their own bookkeeping system, must meet the digital bookkeeping system requirements.

This is a significant development in Denmark. Tungsten Network is analysing the requirements and monitoring further e-invoicing developments in the country and what this means for our service offering in the country.