Tax authorities migrating from VAT returns to digital reporting requirements, including: e-invoices; real-time reporting; SAF-T; Control Statements; pre-filled VAT returns; freight transport e-registers; and fiscal cash registers
Driven by stubborn VAT fraud and other missing indirect tax revenues – the EU VAT Gap is €136billion – many countries around the world are moving away from relying on the traditional VAT return. This is time consuming for taxpayers to prepare, is historical and lacks the immediacy of live data to help prevent fraud and is open to manipulation and error. This pivot to digital transaction-based reporting is being facilitated by rapid improvements in software, better internet access and sophisticated analytical and AI tools for authorities.
Invoicing listing turning to e-invoicing
Below is a listing to the alternative transactional level options being used, and you can click through for country-by-country listings. What started with invoice listing Control Statements is now moving toward Continuous Transaction Controls (CTC) including e-invoicing. The EU’s Digital Reporting Requirements project is seeking to harmonise this approach in Europe.
Death of the VAT Return - global migration to digital reporting requirements
|Measure (click for country details)||Comments|
|Reverse charge||Shifting VAT obligations from suppliers to customers on B2B cross-border transactions and high-risk domestic supplies|
|Transaction control statements||VAT transaction listings typically filed with VAT returns on monthly/quarterly basis|
|SAF-T||OECD standard scheme for data exchange between tax authorities and tax payers. Most popular in Europe|
|Fiscal Cash Registers||Fiscal point-of-sale devices linked to tax authorities for automated live or daily batch reporting of sales|
|E-invoicing||Electronic secure legal VAT invoices, typically with Continuous Transaction Controls - preclearance by tax authorities|
|Freight movements e-registers||Data of goods freight shipments domestically and within EU to match to VAT / Intrastat reporting. E.g. Hungary's BIREG or India's e-Way portals|
|Pre-fiilled draft VAT returns||A global trend for tax authorities to use transaction data to become single source of truth for VAT returns|
|Blockchain||A breakthrough to resolve transaction integrity and transparency|
Tax Engine and VAT reporting with CTC
VAT Calc’s tax engine, ‘VAT Calculator’, has been developed with the EU’s VAT in the Digital Age reforms in full focus, including Continuous Transactions Controls agility to live calculate and report invoice data.