Episode 2 – SAF-T: Standard Audit File for Tax

Hello everyone, and welcome back to the TBI Expert View. Today we’re going to discuss SAF-T – Standard Audit File for Tax. I’m joined by our Global VAT Director, Barbara Barcsik.

So, why is SAF-T so topical at the moment Barbara.

I think there is some confusion when the term SAF-T is used, and this is because of the evolution of the concept or use of SAF-T by the tax offices.

I think it really is down to the terminology. And what does SAF-T mean to different countries? This is where the confusion lies. So can you bring us back to the beginning and explain a little of the origins and evolution of SAF-T.

The Standard Audit File for Tax (SAF-T) was developed by the Organisation for Economic Co-operation and Development (OECD) with the aim of producing a standardised format, for electronic exchange of accounting data from organisations to their national tax authority and external auditors.

The two key principles behind SAF-T are that;

• Organisations should be able to export information from their accounting systems (invoices, payments, general ledger journals and master files) into a standardised format and
• Tax authorities and external auditors should be able to make their tax inspections and audits more efficient and effective as a result of data being made available to them in that standardised format.

OECD released the first version of the SAF-T schema which provides details of what should be included in a SAF-T xml reporting file and how that data should be formatted and structured.

This sounds very practical and straightforward but what has emerged following this introduction to the concept of SAF-T

What has emerged from those countries which have adopted SAF-T are three broad approaches;

• Data to be provided at the request of the tax authority (usually prior to a tax inspection or audit)
• Submission of data periodically in addition to the periodic VAT return
• Submission of transactional data as a replacement to the periodic VAT return

On demand countries include Austria, France, Luxembourg, Portugal

Real time: Hungary

Near Real time: Spain SII

Periodical: Czech Rep (Control Statement), Lithuania (i.Mas),

Periodical and in place of the VAT return: Poland, Norway.

I have heard that Norway has just introduced as from 1 January 2022 a new SAFT obligation/ new eVAT report. It is said to serve the simplification of the reporting purposes, and to achieve increased compliance effectiveness. Could this be true? Because based on my experience meeting with SAFT requirements might be a quite challenging burdensome exercise, so how about in Norway?

This is a simplification indeed, because SAFT should be submitted since 2020 in Norway anyway on the top of the VAT returns, so this was an effective duplication in data provision. As from 1 January only SAFT eVAT should be submitted, so this is a simplification indeed. Especially, if we consider that the vast majority of the taxpayers has already adjusted their ERP system anyway to the SAFT requirements in the past, so the required data could be run straight out of the ERP system and submitted via API to the tax authority.

So, no standard VAT return should be submitted anymore? And how the content of previous VAT return will currently be covered?

The introduction of the SAFT reporting in 2020 has already resulted in using standardized VAT codes and standardized chart of accounts already, the same data content will be covered by the new reporting requirements, but instead of return box level allocation, the transactions allocation will be based on the SAFT codes. As a result of this, all transactions will be reported just like in the past, but just reported only once. So, it is a real simplification indeed.

I see, so now the transactions should be reported according to the SAFT codes. And how the taxpayers should know which are the SAFT code equivalent of their tax codes used previously?

There is a summary table to be found on the homepage of the Norwegian tax authority to give straightforward instruction in this regard. No worries, it is pretty clear.

Good to hear, once the minimum requirement for the information is upheld, then no further requirements for configuring the format, namely how the report should look like, is set. And how about the submission? Is it also so easy? You have mentioned API connection to the tax authority portal before? Does this not require extended IT capacity being available at the taxpayers? And what if somebody does not have the API connection established?

Based on my experience due to the already existing SAFT obligation (for accountancy related information that are subject to the Bookkeeping Act), lots of taxpayers are having the API connections up and running already. But having an API connection is by far not an obligation, it is also possible to upload the data in XML format as well.

You have mentioned that this new obligation has been introduced as from the 1 January 2022, but when the first return is due align with this new requirements? Whether the filing frequency will be changed?

No, the filing frequency will not change. The first return for bi-monthly frequency is due on the 10^th April. So the taxpayers has got still plenty of time to clarify any unclear issues and adjust their ERP system if needed.

Ok so that covers the main points for Norway, but back to Europe, what is on the cards for Europe? The EU Commission has launched it first phase of public consultation “VAT in the digital age” as part of its action plan for fair and simple taxation. What is this hoping to achieve?

The Commission’s action plan for fair and simple taxation underline the need to look at how technology can be used by the authorities to fight tax fraud and also to benefit business. It will look at the current VAT rules and how they are adapted to doing business in the digital agent. It will try to bring some harmonisation to use of technology and digitalisation for VAT reporting.

The EU Commission has announced a legislative proposal for 2022 under the heading VAT in the digital age looking at:

• VAT reporting obligation and e-invoicing
• VAT treatment of the platform economy
• Single EU VAT registration

The public consultation has been launched from 20 Jan 2022 until midnight April 15^th 2022.

The legislative proposal, and impact assessment is expected in Q3 2022.

So Barbara, I think we just live in hope of the harmonisation and hopefully the EU Commission consultation and proposal will bring us for some form of harmonisation for SAF-T reporting.

Thanks very much for joining us today Barbara to discuss this in a bit more detail.

Thank you Lisa!

Thanks everybody for joining us here on the Expert View, we really look forward to seeing you next time round.

Tune in to Episode 3 of Series 2 of TBI Expert View where Lisa Dowling, our Senior Global Director – Head of Indirect Tax, Advisory and Compliance and Eoin Dunphy, our Senior VP of Onboarding discuss outsourcing from an onboarding angle and how to successfully onboard if you have decided to outsource for the VAT compliance function.