VAT news

Increasing trend for real time VAT reporting

Gareth Bevan 4 January 2017 No comments

As tax authorities transform their operations to bring themselves into the digital age, the burden of real time VAT reporting for businesses will become increasingly common.

Tax authority digital transformation

Many countries have required or allowed electronic filing of VAT/GST returns for some time now. Growing numbers of tax authorities routinely conduct e-audits, with some countries such as France, Lithuania, Portugal and Poland imposing legal obligations on taxpayers to maintain standard tax audit files (e.g., SAF-T). Other countries, such as Brazil and China, already require businesses to submit detailed transactional information directly to the tax administration.  Now within the EU we are seeing a move by tax authorities towards real time or live VAT reporting.

Real time VAT reporting in the EU

Over the next 12 months real time VAT reporting of certain transactions is expected to be introduced in the following EU countries:

  • In Spain the Immediate Information Transfer System (IITS) is due to come into force on 1 July 2017. Under this system real time transaction information is to be submitted to the tax authority within 4 days of invoice date. Businesses affected include those with turnover in Spain over €6 million, VAT groups and companies in the REDEME monthly VAT refund scheme.  Foreign companies with a Spanish VAT registration that meet the criteria will need to comply.
  • In Hungary from 1 July 2017 VAT registered businesses will be required to electronically live report all B2B sales invoices including a VAT charge over HUF 100,000 to the tax authority. The tax authority will issue a unique invoice number that must be included on the invoice sent to the customer.  
  • In France the 2017 Finance Law includes a new obligation for businesses to report all VAT transactions over €863,000 within 24 hours. This is expected to come into effect from 1 January 2018.

Real time reporting requirements are often justified by tax authorities on the basis that they ease VAT compliance, speed up VAT refund processes and strengthen the fight against tax fraud.  However for many businesses they often result in greater administrative burdens and additional systems costs, as well as the potential for increased penalties in the event of non-compliance.

In an increasingly digital age though we should expect the trend for real time VAT reporting to continue to grow.

Get in touch with us if you think your company may be affected by these changes.