Compliance Services

An overriding objective relating to the implementation of e-invoicing has always been to reduce VAT fraud. A specific means to achieve this is through the reverse charge mechanism.

The reverse charge mechanism is where liability to pay the VAT shifts to the buyer rather than the supplier.

This is important, as cross-border transactions in theory, by virtue of intra-community supplies, should be subject to zero VAT. However, to exploit this, it is possible to sell goods / services domestically, charge and then pocket the VAT. The reverse charge counters this as responsibility to pay VAT lies with the buyer, and not the supplier.

It has been proposed that this is extended until 31 December 2025.

The duration of the public consultation in the digital age has been extended until 5 May 2022.

One of the underlying aims of the European Parliament has been the harmonisation of e-invoicing across Member States. This naturally will lead to increased automation, efficacy and reduced costs associated with the e-invoicing process.

To this effect, the European Parliament has called on the European Commission to set up a common standard by 2022.

In related objectives, there is also a request to consider the role of e-invoicing in real-time reporting. We have already seen some EU Member States such as Hungary successfully deploy this.

Following the success of mandate in Italy in significantly reducing the VAT gap, the European Parliament has called for a gradual adoption of obligatory e-invoicing- with an emphasis on small and medium enterprises (SMEs). Considering the upcoming French mandate, there has also been renewed interest to consider the needs of this particular group of taxpayers, and it looks like this this is gaining traction in Europe, too. Furthermore, there is a call for invoices to only be administered via certified systems to ensure full data protection.

By 2023, it is anticipated that the system will produce compliant documents for taxpayers, again with a focus on SMEs.

The original timeline communicated by the tax administration in Mexico, the Servicio de Administracion Tributaria (SAT), was that CFDI 4.0 and Carte Porte was to become mandatory from 1 May 2022, with a transition period between 1 January and 30 April 2022.

The SAT subsequently announced that the mandatory usage of CFDI 4.0 was delayed by a further 2 months, to become mandatory as of 30 June 2022. However, more recently on 9 March 2022, the Mexican Tax Administration issued a press release indicating that the transitional period has been further extended up until 30 September 2022 for the Carta Porte.

The CFDI 4.0 and associated documents continues, for now, to be mandatory from 30 June 2022. The usage of these documents continues to be optional up until 30 June 2022.

Tungsten Network has successfully been able to process the Carta Porte since January 2022.

As globally we turn to what many regard a new stage in the pandemic, a post-Covid economic recovery period of sorts, several countries are still enacting VAT-related measures to strengthen their economies after a tumultuous 2 years.

The Finnish Parliament has passed Bill No. 8/2022, which effectively extends the temporary VAT exemption for domestic sales of goods and intra-EU purchases of goods which are used to treat or prevent coronavirus, including testing.

This extension is expected to last until June 2022.

The extension of the reduced VAT rate for catering, transport, gyms, cinemas and theatres is due to expire in June 2022. However, the Greek government has proposed that this be extended. A precise date has not yet been confirmed.

However, the costs of such an extension have been laid bare- to accommodate the extension, the Greek government will need look at other areas of the budget to make up the shortfall, amounting to around 250 – 300 million Euros.

Such figures offer an insight into the often-drastic financial costs governments are incurring in their fiscal-related measures, and the ramifications on budget planning.

The Norwegian Ministry of Finance has extended the VAT exemption applied to electronic news services until 2028, via press release No.14/22. This exemption was first introduced in 2016 and provided parity between news relayed on paper and electronically.

It is hoped that the extension will serve to increase consumer appetite for news and current affairs.

Belgium, Netherlands, and Luxembourg representatives have convened to discuss plans to reduce the VAT gap.

Although Continuous Transaction Controls (CTC) have proven to be extremely popular in the past few years, with a means to reducing the VAT gap, the VAT gap remains high- 134 million Euros was lost in revenue the EU in 2019.

Shared borders and economic interests between the 3 countries have prompted the countries to work together to reduce this gap yet further- a key factor in the implementation of e-invoicing mandates.

B2G e-invoicing is expected to go live in 2022, and B2B e-invoicing in 2023.

Considering the upcoming e-invoicing mandate, the Serbian Ministry of Finance has published some new documents. These outline the final specifications of the application interface for the e-invoicing system.

XML formats based on the UBL 2.1 standard will be available for the following documents:

• Advance payment invoices;
• Invoices related to VAT exempted transactions;
• Public procurement invoices;
• Credit notes related to a certain period in time;
• Credit notes for multiple invoices;
• Debit notes related to multiple invoices;
• Debit notes related to a certain period.

Many European countries are reviewing their plans for e-invoicing implementation and Slovakia is no exception. Despite e-invoicing expected to take hold in the country some way away yet- in 2024- the Ministry of Finance is setting out some clear timeframes to accomplish this.

Some key dates are summarised below:

• 2021: Ministry of Finance introduces a law regarding sending invoice structured data to the Financial Directorate; public consultation with stakeholders commences
• 2022: Law expected to finalise
• 2023: Law effective from this date
• 1 January 2024: obligation to use e-invoicing expected

The passing of the year between the ‘effective date’ and the obligation to use e-invoicing indicates that the Slovakian tax authorities acknowledge the difficulties that can be expected in the transition from paper to e-invoicing. This time should allow Slovakian taxpayers to familiarise themselves with the technical specifications, e-invoicing process and finer detail relating to e-invoicing.

Small businesses will get further assistance via a free online application ‘Virtual invoice’. This aims to reduce administrative burdens and offer a more simplified process to smaller businesses. This includes the ability to issue an invoice via a mobile phone and send this to the national e-invoice system.