Global VAT Guide: December VAT updates
Our VAT experts provide the latest VAT updates so you can keep on top of your business’ VAT compliance. This month we feature VAT updates from France, Italy and China.
VAT updates in France regarding mandatory B2B e-invoicing
A provision of the Finance Bill for 2020 stated there will be an introduction of mandatory B2B e-invoicing between companies commencing January 2023.
Companies will no longer be able to receive or issue paper invoices.
Companies will also need to transmit the data contained in these e-invoices to the French Tax Authorities.
This bill will see the introduction of:
- Mandatory electronic invoicing for domestic transactions between companies (e-invoicing);
- An obligation to transmit invoicing and payment data for transactions carried out with individuals or foreign operators (e-reporting)
Under the legislation, all businesses must be able to receive e-invoices beginning 1 January 2023.
The schedule for the introduction of the e-invoicing requirements for other companies between 2023 and 2025 will depend on the size of the company.
The schedules dates for the issuance of e-invoices are:
- 1 January 2023 – large companies required to issue e-invoices
- 1 January 2024 – medium sized companies required to issue e-invoices
- 1 January 2025 – small and medium-sized entities required to issue e-invoices
Companies are advised they should ensure they have the appropriate automated software in place to ensure an easy transition.
VAT updates in Italy on the extension of the e-invoicing system
Italy is set to extend its e-invoicing system to cross-border invoices.
It has also been announced that the requirement to complete an Esterometro return will be withdrawn from 1 January 2022.
Data relating to transactions with foreign countries will be sent through the Exchange System.
The Exchange System and e-invoicing will be the channel for sending data to the Revenue Agency.
From 2022, the transmission of data relating to operations carried out with non-residents (sales invoices) must be reported within 12 days from the date of operation to the Exchange System of the Revenue Agency.
Transactions received from non-residents (purchase invoices) must also be submitted to the Exchange System by the fifteenth day of the month following the receipt of the document.
This transition from Esterometro to the sending of data through the electronic invoicing system will allow for pre-filled VAT returns.
From 1 July 2021, pre-filled annual VAT declarations and registers will be introduced.
Also, from 1 January 2021 there will be an adoption of new technical specifications for the issue of electronic invoices. The SDI system will only accept electronic invoices whose XML file is set on the basis on the new XML format.
VAT updates in China see more new invoicing requirements
China’s general VAT e-fapiao was piloted and rolled out from 2015.
Based on the growth of the e-fapiao system over the last number of years, this year another type of invoicing has been introduced.
Over the last two months, China’s State Taxation Administration has been implementing the program on electronic special VAT “e-fapiao” invoices.
Compared with the general VAT fapiao, the special VAT e-fapiao can be used to offset input VAT from output VAT.
This program for the special VAT e-fapiao invoicing was implemented in Ningbo and Zhjiang.
After the success in those regions, the program has now been expanded to Hangzhou and Shijiazhuang.
This means that the fapiaos that are usually issued on paper will now be available electronically.
Ningbo piloted the first e-invoice program for special VAT fapiao in August 2020 and this was fully implemented in September 2020.
From October 2020, the State Taxation Administration expanded the e-invoicing system for special VAT fapiao in Zhejiang province.
The Tax Administration has stated:
- If a business uses a printout of the e-fapiao as a tax voucher – it should keep the original VAT e-fapiao; if this is lost – the original e-fapiao can be downloaded from the National VAT Invoice Verification Platform;
- Electronic invoices will use electronic signatures instead of the special invoice stamp; and
- Photographs, scans and screenshots are not considered as electronic accounting documents
E-fapiao can be acquired by applying to the electronic tax bureau.
Entities and individuals can easily check and verify the VAT e-fapiao through the National VAT Invoice Verification Platform.
Companies are advised to prepare for a digital transformation of the fapiao system.
It is hoped that the special VAT e-fapiao invoices will be rolled out nationwide by the end of 2020.