KG supports its clients by enhancing SAP for tax. That means implementing new tax audit methods such as SAF-T and e-invoicing, but also it optimizes SAP's VAT determination logic to ensure that manual intervention is limited or avoided.

Below an overview of new legal changes and introductions, that KG will support.

Italy rollout of pre-completed VAT return starting 1 July 2020

Italy proposes to offer resident VAT registered business a pre-completed VAT return starting from 1 July 2020. The authorities introduced this measure via a new law decree.

The Italian tax authorities, Agenzia delle Entrate, will create itself VAT ledgers and draft quarterly VAT returns of these residents. The data used will be the data received from the SdI e-invoicing system, etcetera. Taxpayers can review and amend the by Agenzia delle Entrate proposed VAT return. Such a change would, however, trigger tax audit questions as it no longer would match with the data received by the authorities.

Non-resident Italian VAT-registered businesses will still be obliged to complete and submit their VAT returns without data received from the authorities.

Hungary RTIR version 2.0 in force starting April 2020

Starting April 2020, vendors should use and submit version 2.0 of the XML of the electronic invoices to the Hungarian online report. On 15 October, a test environment will be available. Companies are allowed to report their invoices with version 2.0 around February 2020 voluntarily.

The exact date is still unknown. As of April 2020 and onwards, National Tax and Customs Administration of Hungary (NAV) will only accept version 2.0.

What will change in 2020?

The new version 2.0 includes changes to invoice details and submission requirements. To be added are invoice issuance and numbering, credit and debit note numbering formats, a delivery date of goods, and a calculation of VAT liabilities and VAT rates. Besides that, it will contain a new way of submissions, such as an updated API and API encryption signature and changes to the invoicing software.

Today a vendor reports its sales invoices to NAV, and only this vendor gets access to information. The new legal change allows customers to check the published vendor information via a web portal.

Hungary abandons the threshold starting July 2020

Hungary has proposed to withdraw the RTIR HUF100,000 (€310) invoice threshold starting 1 July 2020. The draft legislation also offers that non-residents will enjoy the limit for an extra year, and thus ending on 1 July 2021.

Greece introduces either April or July 2020 digital VAT books

Greece delayed the introduction of digital VAT books and e-invoices that was scheduled for 1 January 2020 to combat VAT fraud. 

The Ministry of Finance and the tax office (IAPR) did public consultation late 2019 based on a Greek myDATA proposal that contained an e-invoice pre-clearance model similar to that one currently operational to in Italian. Because the needed EU Commission was lacking, this proposal has been abandoned.

Instead, a scheme to require taxpayers to submit digital invoice listings is now considered. IAPR would be able to create digital books. The proposed program might be launched in April or July 2020. KG will develop an add-on immediately when the legislation and specifications are published.

Poland replaces VAT return with SAF-T starting April 2020

The replacement of VAT returns with SAF-T was scheduled in Poland for July 2019 but has been postponed to 1 April 2020. 

Taxpayers are at that date no longer required to submit both the SAF-T (JPK_VAT) file and the VAT return separately.  A new SAF-T file has to be sent. That file should contain both the data from the VAT register and the data from the current VAT return. 

For large businesses, the new schema comes in force starting 1 April 2020. That are businesses who, in at least in one of two last consecutive years: That are businesses who, in at least in one of two last consecutive years:

  • Employ on average at least 250 employees or

  • Record annual net turnover from the sale of goods, products, and services and financial operations exceeding the equivalent of €50 million in PLN and annual balance sheet total is exceeding the equivalent of €43 million in PLN.

  • Employment, turnover, asset value thresholds are determined globally and not locally. Many legal entities – even if only VAT registered in Poland – are therefore obliged to follow the above rules.

If an entity does not meet those conditions, the obligation will be valid in July 2020. These entities can, however, opt voluntarily to follow the new rules by filling the SAF-T in the updated scheme together with VAT returns.

Norway introduces 1 January 2020 SAF-T on request

Standard Audit File for Tax Purposes for Norway first version was ready in March 2016. It was limited to account specification (general ledger), and supplier and customer specification (subsidiary ledger). Required fixed data was also included.

The new version of the SAF-T Financial will consist of source documents such as detailed invoice data and movements of goods and asset transactions. Furthermore, other data elements will be added to support SAF-T Financial as a format for migration of data between different accounting software. The requirement will apply to any enterprise with bookkeeping obligations who use electronic accounting systems and mandatory and in force per 1 January 2020.

'SAF-T on request’ means that tax files have to be submitted only when a tax audit is announced. The assessment period can be a month, quarter, year, or even longer, and solution should be able to submit large data sets.

Digitalization of tax a global trend

Specific European governments in Europe have digitalized tax to perform efficient and effective tax audits. That means companies that run SAP have to be able to submit tax reporting almost real-time or on a periodical basis.

The methods used implemented by European countries substantially differentiate, so every country rollout has to be developed from scratch, taking into consideration first the local tax requirements. Portugal, Poland, Lithuania, Hungary, Italy, Spain, and the UK have implemented these new tax reporting requirements. The other European countries will follow — for example, Norway and Greece in 2020.

This tax trend is a global one. The tax law is dynamic, and that means methods might change as new tax laws are introduced and others revoked. That means our development and research continues for countries that have this tax reporting in force. By 2025, companies in VAT economies are expected to exchange more than 75 percent of all invoices electronically with tax administrations in real-time or very shortly after the invoice-exchange process.

Take aways 

Formal support and active involvement of senior management

Optimum process improvement or business transformations will not likely be realized by the sum of individual independent efforts.The risk is that individually everybody knows what needs to be done within his or her own area of expertise, but what is lacking is overall direction and thus progress.

Anticipate what users would want

We combine technical knowledge with industry understanding and knowhow of technologically advanced tools and methodologies available in the market or developed by ourselves.

What do we like to achieve

  • Focus on tax processes that could be improved
    • Manual process: same data requests are made by different stakeholders
  • As Is assessment
  • Anticipate future changes and the data needed
    • What are tax trends?
    • What is happening locally and what should be considered across jurisdictions where you operate?
    • Anticipate new stakeholders and their data needs or requests (internal and external)
  • Define scope and actions for short, mid and long term
  • Write business case for change
  • Realize sponsorship for implementation

‘As is’ assessment, actions and business case

  • What tax data is requested and by whom?
  • What tax process can be improved and what can be automated?
    • CIT, VAT, tax data warehouse
  • What is the Return on Investment?
    • Hard saving: process improvement
    • Meeting (new) tax requirement
  • What systems are in use: SAP, Oracle, etc
    • By which entities?
  • How many end-use computing tools (e.g. excel spreadsheet) do we have?
  • How do we avoid an ad-hoc solution?
    • Understand the bigger picture
    • Real problem and not the symptom

Risk and reward

Technology-related tax risk: understand and address the potential harms and benefits of (new) technology.

Technology tools & systems integration

Ascertaining proper IT support for ensuring efficient, timely and reliable reporting.

Change and project management

VAT should be considered in every aspect of the process, from concept through completion and beyond. Managing by design — looking at any process or transaction from end to end and factoring in all the requirements and controls essential to designing and optimizing a compliant VAT process.

Effective communication and teaming

We speak the language of the business and IT and no translation is needed.

Set up a project plan

  • Set up a project charter that will take effect preferable during feasibility but ultimately during design
  • Write a business case and problem statement
  • Define scope of the project
  • Define objectives and goals of the project
  • Involve stakeholders and define priorities
  • Set measurable milestones
  • Ensure that the right sponsors provide buy-in.
  • Identify (project) risks and how to manage them
  • Jointly validate and refine the project plan and develop a roadmap to success
  • Hold regular meeting to track progress of the various work streams