February 6, 2023
Electronic invoicing requirements currently being enrolled in many European countries are part of a broader tax compliance reform. Typically, e-invoicing comes together with the development of real-time tax and transaction monitoring that allows tax authorities to constantly oversee businesses’ activities.
In order to make real-time tax compliance happen, countries must make a choice regarding the digital infrastructure and protocols, such as the widespread Standard-Audit File-Tax (SAF-T) protocol. Normally, e-invoicing is adopted together with Continuous Transaction Control or CTC. These solutions allow for easy tracing of each transaction.
The most popular choice in helping to facilitate the communication of national and international authorities and the transaction data is the SAF-T protocol. This protocol, based on certain data formatting for efficient transmission, follows the legislations of its user countries and allows for retrieving transactions and tax data upon request. This protocol is adapted to the needs of its users, meaning that the layout, reporting periods, and data types can differ.
There are many benefits to the SAF-T protocol. The files are secure, and the protocol simplifies tax data collection by reducing the number of documents issued. The SAF-T files are also readable within an array of other systems and can be easily archived. It also speeds up auditing as well as reporting, reducing administrative costs to businesses, taxation authorities, and third parties involved in auditing.
The SAF-T users in Europe are Austria, Luxembourg, Norway, Poland, Portugal, and Romania. In Poland, the protocol is called JPK.
Other states, however, choose to rely on similar yet national solutions. For example, Spain has its SII solution, Germany uses the E-Bilanz protocol, and Greece processes the data via the myDATA platform.
Do you want to learn more about the changes in tax compliance related to digitalization? Get in touch with 1StopVAT’s experts, and we will be happy to consult you.