Digital Reporting rewrites the rules for live VAT calculations, e-invoicing & e-reporting
The EU’s VAT in the Digital Age (ViDA) Digital Reporting Requirements Pillar 1 will change how businesses calculate and issue VAT invoices, and mandate e-invoicing and e-reporting. But, more importantly, it will turn traditional VAT errors that have remained hidden into instant roadblocks for your customers, suppliers, and tax authorities.
We conceived VATCalc’s unique single Calculator tax engine & Filer application for this digital challenge.
ViDA E-invoicing & e-reporting opens up digital VAT challenges
The July 2030 Digital Reporting Requirements (DRR) Pillar obliges the issuance and receipt of structured e-invoices for intra-EU transactions within 10-day of sales to local tax authorities and 5-day customer e-reporting of the supplies purchased (but member states have option to not impose this counter-party e-reporting). The traditional VAT returns, SAF-T etc submission will remain.
What are the new challenges, and how does VATCalc address them:
ViDA - VAT calculations, e-invoicing & reporting challenge
| ViDA challenge | VATCalc response | |
| 1. Live VAT determination | ||
| Businesses must calculate VAT live at transaction level to issue e-invoices within 10 days – compared to up to 45 days today. Using multiple systems and mismatched data will likely lead to incorrect e-invoices which customers can reject within 5 days. | VATCalc has uniquely codified the national VAT laws and EU VAT Directive in its tax engine. That means with unparallel accuracy, it can instantly determine the correct VAT treatment against prevailing tax legislation, and e-invoicing or e-reporting reporting | |
| Plus inaccurate e-reporting submissions will be instantly visible to tax authorities since they have matching counter-party submissions. They will pay particular attention to new reverse charge and triangulation rules and disclosures where VAT fraud hides. | These rules are kept live by our Content team down to article-level substantiation for VAT treatments. Our VAT experts are part of the ongoing ViDA business consultation groups, and have complete insight on upcoming changes. | |
| This will fire off automated audit requests which will prove time consuming and possible costly. | Whether for sales invoices and our Calculator, or validating your suppliers VAT on purchase invoices via our Auditor. This is important for meeting the new ViDA deductibility time limits on purchase invoices. Either way both products access the same dynamic tax engine rules for e-invoices and e-reporting obligations. | |
| Calculator or Auditor can be accessed via a modern RESTful APIs to your ERP or billing system, and is ready out-of the box with minimal implementation time or expense | ||
| 2. E-reporting and returns discrepancies | ||
| The continuing preparation of VAT returns, SAF-T submissions etc outside of these new e-processes will likely throw up exactly the category of discrepancy the tax authorities are alert to in their hunt for fraud. | Once e-invoices and e-reports via accurately processed by Calculator and Auditor, they may be seamlessly feed to Filer, the global returns product within the application. This means there is only one source of VAT truth for all e-invoices, e-reporting and returns – minimising errors, gaps and manual workload burden. | |
| 3. 27 variations in country processes puts trade at risk | ||
| The EU member states have retained full scope to set their own standards and processes for collecting transaction e-reporting. Which means businesses will have to monitor, build and support as many different schema’s, messaging protocols and interfaces and EU countries they are active. | As we already do for scores of jurisdictions for returns submissions, VATCalc will be supporting all EU member state e-reporting requirements. Our Content team are tasked with codifying the application, and providing e-submissions where available. | |
| This major miss on harmonisation represents a huge resource ask for taxpayers; potentially enough to put in question some business models and smaller jurisdictions | This erases the concern of e-reporting obligation frictions, and keeps you focused on the meaningful business needs. | |
| And of course it is not just ViDA that VATCalc fully covers; member states are still free to run different domestic e-reporting regimes, plus intra-community ones until 2035. Again, VATCalc is single application for all. |
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