Article

VAT News & Updates 

Indirect Tax Matters | November 2021

Belgium – e-Invoicing

As announced in the 2022 budget agreement, Belgium’s Minister of Finance released a policy note on 29 October 2021 reaffirming the intended implementation of an e-invoicing mandate for business-to-business (B2B) transactions in the near future.

What can be expected?

A legislative proposal is expected in 2022 with details on the timing and practical implementation of mandatory e-invoicing but the government has previously indicated that it intends to take into account the experiences of other EU member states.

It is currently unclear when the rollout will begin and precisely what form the obligation will take but implementation is expected to be introduced progressively, potentially determined by the size of the business. Large businesses would be likely to be the first to be asked to comply with e-invoicing requirements, while small and medium-sized businesses would be affected at a later stage.

It is important to note that while the definition of an e-invoice is currently very broad, namely any invoice that has been issued and received in any electronic format (e.g., a PDF file transferred to another party via email), the e-invoicing obligation will apply only to a specific type of e-invoice. It will require invoices to be issued, transmitted, received, and processed electronically in a “structured format,” i.e., a machine-readable format that can be imported automatically into the buyer’s accounts payable system without the requirement for details to be entered manually.

The government also has announced that it will allow the use of e-invoicing and e-receipts without explicit acceptance from the customer. Suppliers will therefore in the near future be able to proceed to VAT compliant e-invoicing, unless the customer explicitly requests paper invoices.

Digital reporting

While digital reporting often goes hand in hand with e-invoicing, the Minister of Finance has not yet commented specifically on the subject suggesting that the government’s initial focus will be primarily on e-invoices. This does not mean that digital reporting will not be introduced at a future date, but it is currently not a priority for the government.

Implications for businesses

Mandatory e-invoicing may bring significant benefits to the government in terms of counteracting tax avoidance and tax evasion and eventually may simplify the VAT compliance process. However, it represents a new challenge for Belgian businesses who should start preparing for the new obligations in advance.

Belgium is following a growing trend of tax digitalization and joins other countries that have already announced their intention to implement mandatory e-invoicing for B2B transactions, such as France and Poland. It is evident from a review of the current proposals in various EU member states (with many more expected) that businesses operating across the EU may find themselves struggling to keep up with fast emerging e-invoicing requirements, which may differ from country to country since there are currently no plans to harmonize e-invoicing models across the EU.
 

Portugal – Filing and payment deadlines

On 10 November 2021, Portugal’s Secretary of State for Tax Affairs published Order No. 351/2021-XXII (available in the Portuguese language only), which extends the filing deadlines for certain tax returns (namely, VAT returns and payments and “Model 10” forms). The order also extends the period during which PDF invoices will be accepted as electronic invoices, suspends the requirement to include a unique document code (commonly known in Portugal as the “ATCUD”) on invoices and other tax documents during 2022, and allows taxpayers to postpone adopting the new layout for the annual inventories report. The extensions and other measures were introduced in response to the ongoing effects of COVID-19.

Monthly and quarterly VAT returns

Tax due on the monthly VAT returns for September and October 2021 may be paid up to 30 November and 30 December 2021, respectively (previously, the deadlines had been extended to the 25th day of the relevant month).
The tax due on the quarterly VAT return for the third quarter of 2021 may be paid up to 30 November 2021 (previously, the deadline had been extended to 25 November 2021).

The monthly VAT returns for November and December 2021 and for January, February, March, and April 2022 may be filed up to the 20th day of the second following month (i.e. by the 20th day of January, February, March, April, May, and June 2022, respectively, extended from the 10th day of the relevant month). The VAT due on these VAT returns can be paid up to the 25th day of the month in which they are submitted (extended from the 15th day of the relevant month).

The quarterly VAT returns for the fourth quarter of 2021 and the first quarter of 2022 may be filed up to the 20th day of the second month following the quarter (i.e. by 20 February and 20 May 2022, respectively, extended from the 15th day of the relevant month). The VAT due on these VAT returns can be paid up to the 25th day of the month in which they are submitted (extended from the 20th day of the relevant month).

Model 10 form

The Model 10 form related to the 2021 tax year may be submitted up to 25 February 2022 (extended from 10 February 2022). The Model 10 form is intended for the declaration of employment income (category A income), business and professional income (category B income), income from capital (category E income), rental income (category F income), and increases in net worth (category G income) of Portuguese resident individuals that are subject to personal income tax and that have derived income that has been subject to withholding tax and that has not been declared in the monthly statements of remuneration.

Invoices in PDF format

Invoices in PDF format are to be accepted as electronic invoices (even if they are not in compliance with the electronic invoicing rules) until 30 June 2022 (extended from 31 December 2021).

Inventories report

The inventories report for 2021, which is due to the tax authorities by 31 January 2022, will still use the same layout as used for the report for 2020 (related to 2019). The new layout approved by Ministerial Order No. 126/2019 (published on 2 May 2019) will enter into force for the inventories report for 2022, which must be submitted by 31 January 2023.

ATCUD requirements

The requirements for taxpayers to communicate identifying information for the relevant document series to the tax authorities and to disclose the ATCUD on invoices and other tax-relevant documents will be suspended during 2022; the disclosure of the ATCUD will be considered optional through 31 December 2022.
 

Italy - e-invoicing

The Italian budget law (No. 178) dated 30 December 2020 provided for certain changes to the mandatory business-to-business (B2B) electronic invoicing (“e-invoicing”) rules for transactions carried out with foreign business partners (i.e., taxpayers that are not resident or established in Italy and that do not have an Italian VAT number), effective as from 1 January 2022:

  • Taxpayers resident or established in Italy must submit the e-invoice data through the interchange system (SDI) in an XML format documenting the transactions carried out with foreign business partners; and
  • Consequently, the obligation to submit the “Esterometro” return (sales and purchases report) in respect of such transactions will be abolished.

Input e-invoices documenting purchases from foreign business suppliers must be submitted through the SDI portal by the 15th day of the month following the month in which:

  • A paper invoice/documentation issued by the foreign supplier is received; or
  • The transaction took place from a VAT perspective (i.e., the “tax point,” in principle, the time of delivery for supplies of goods or the time of payment for supplies of services).

E-invoices issued to foreign business customers must be submitted through the SDI portal by the standard deadline provided by the Italian law for the issuance of e-invoices (i.e., within 12 days from the date on which the transaction took place from a VAT perspective).

In the case of non-compliance with the new rules, administrative penalties equal of €2 per invoice will apply, up to a maximum of €400 per month. The penalty will be reduced by half in the case of a late submission of the e-invoice through the SDI that is made within 15 days following the deadline.

Norway – eVAT returns

On 1 January 2022, a new and modernized electronic VAT return (eVAT return) will be launched in Norway. All types of VAT returns will be affected and will share a common information structure and set of rules. The general industry (RF-0002) and primary industry (RF-0004) VAT returns will be launched first (on 1 January 2022). As such, VAT returns for periods beginning on or after 1 January 2022 in these industries must be submitted in the new format in accordance with relevant periodical VAT reporting deadlines. For taxpayers that submit VAT returns on a weekly, monthly, or bi-monthly basis, the first VAT reporting period using the new format will take place in 2022, while taxpayers that submit VAT returns annually will submit their first return using the new format in 2023. All other types of VAT returns will be launched at a later date still to be determined, including returns for reverse tax liability (RF-0005), VAT compensation (RF-0009), VAT on e-commerce (RF-1292), maritime share fishing (lottfiske), and maritime average losses (havari).

SAF-T codes

The eVAT return will use XML format and SAF-T (Standard Audit File Tax) VAT codes. Fixed fields in the current VAT return will be replaced by a dynamic list of specification lines that are based on SAF-T codes, and reporting will be done only on lines that are relevant for the business. The eVAT return, however, will continue the requirement of reporting at a very aggregated level, with reporting of aggregate amounts within the different VAT types and rates.

The eVAT return will be a separate report and different from the SAF-T file that applies for the exchange of accounting data in tax audits and controls. The SAF-T file and eVAT return, however, will be closely related since the SAF-T file provides a standardized extract of the accounting information and VAT treatment, which will be the basis of the amounts reported on the eVAT return.

The use of SAF-T codes is not mandatory for bookkeeping purposes. Taxpayers will continue to be allowed to choose between the use of separate accounts for different VAT types and rates, the use of internal VAT codes, or combinations of “clean” accounts and VAT codes for bookkeeping purposes. Nevertheless, the specification requirements in section 3-1 of the Bookkeeping Regulations for account and VAT specifications must be met, and it is these specification requirements that impact whether a VAT code is mandatory or voluntary to use.

However, extensive use of VAT codes that aligns with SAF-T codes will simplify reconciliation and reporting, and the introduction of SAF-T has facilitated increased use of VAT codes for accounting purposes.

System-to-system and web portal reporting

The tax authorities are encouraging businesses and advisors, upon launch, to submit eVAT returns (using XML files) directly from their accounting systems (through an Altinn API). The tax authorities are working closely with system suppliers to facilitate such system-to-system submissions. The tax authorities do not set requirements for what the report should look like in the accounting system. Their goal is for users to keep accounts as normal, and for the system to compile the information from the accounts to the eVAT return, so that the taxpayers easily can submit the return.

However, the tax authorities are developing a web portal where taxpayers will be able to access VAT registration information and directly upload VAT XML files. Taxpayers also will be able to manually prepare, edit, and submit eVAT returns on the web portal. The eVAT return will be logically grouped for the SAF-T VAT codes to be easily available.

The option to use the web portal is intended to be a permanent alternative to the system-to-system submission. Even if a taxpayer has an accounting system that may be used to submit eVAT returns directly to the tax authorities, the taxpayer may choose, rather, to use the web portal. Thus, the alternative to use the web portal will be a process for many businesses that for various reasons do not have the desire or opportunity to submit an eVAT return directly from their accounting system to the tax authorities. This may be particularly relevant for certain taxpayers, such as foreign companies VAT registered in Norway, or VAT groups. For VAT groups, the reporting entity must deliver the VAT group report from the accounting system or in the portal on behalf of all the jointly registered entities.

Required line specifications

In the eVAT return, separate specification lines will be required to indicate the amount of the output and/or input VAT that refers to withdrawal, losses on outstanding claims, reversal, and adjustment of input VAT. Currently, there only is a requirement to specify these amounts in the accounting records. The eVAT return, thus, will have a greater degree of detail compared to the current VAT return in terms of these specifications. No new SAF-T codes have been published for these specifications, but the eVAT return will be designed so that there is a separate specification line within the relevant SAF-T codes. The following amounts will be required to be entered aggregated per specification type:

  • Withdrawal of goods and services pursuant to sections 3-21 and 3-22 of the VAT Act.
  • Losses on outstanding claims and cancellations that are deemed to be losses for VAT purposes. Section 4-7 of the VAT Act provides further rules on when the basis for calculation may be corrected. Corrected output VAT regarding deemed losses for VAT purposes should be reported as an increase in input VAT, and the specification line, therefore, only will be available in connection to input VAT codes.
  • Reversal of input VAT on passenger vehicles or from the sale, etc., of real property before completion, pursuant to sections 9-6 and 9-7 of the VAT Act.
  • Adjustment of input VAT on capital goods pursuant to the adjustment rules in chapter 9 of the VAT Act.

Language, remarks, and attachments

The eVAT return will support English and Norwegian (Bokmål and Nynorsk) languages. Furthermore, remarks may be submitted in lines and fields using pre-defined remarks or free text. In addition, attachments may be uploaded. Each submission may include up to 50 file attachments with a maximum of 25 MB per file. The following file formats are supported: pdf, open office xml, open document format, JPG, and PNG.

“Supplementary return” not supported

If changes are made to a taxpayer’s accounting system that results in the need to correct an eVAT return after 1 January 2022, a new complete eVAT return will be required to be submitted (i.e., the most recent eVAT return will be the valid return). Supplementary returns will, therefore, no longer be relevant after 1 January 2022.

However, the current format must be used when submitting corrections that include VAT periods beginning prior to 1 January 2022, even if the submission happens after that date. Hence, the new format only will be used to correct returns for VAT periods that begin on or after 1 January 2022.

ID-porten login

For general industry and primary industry eVAT return submissions, ID-porten (e.g., minID, BankID) will be required to be used for login and authentication for both system-to-system and web portal submissions. Therefore, the current Altinn login with username and password will no longer be used. However, Altinn still will be used for identification and information exchange.

The tax authorities are expected to provide further information on how to log in in order to submit other types of eVAT returns.

Altinn roles

Altinn roles will be used both for system-to-system reporting and in the web portal. The person submitting the eVAT return must be authorized by holding the necessary Altinn roles. Some Altinn roles entitle a person to prepare and submit the eVAT return, while other roles only entitle a person to prepare the eVAT return.

Roles to prepare eVAT returns include a responsible auditor, an accounting employee, an accountant without signing rights, and an assistant auditor. Roles to submit eVAT returns include a person with limited signing rights, a contact person for a Norwegian branch of a foreign company, and an accountant with signing rights.

These Altinn roles are pre-assigned to persons with specific external roles in the business in connection with registration in the Brønnøysund register (i.e., the government registry that includes company registrations), such as accountants and general managers. Roles or rights to a specific form also may be delegated. In order to be delegated an Altinn role or rights to a specific form, a person must have a Norwegian national ID number (or a “D number” for nonresidents) for this purpose. There is no requirement to have a formal role in the business to be assigned Altinn roles or rights to specific forms.

Consultation paper released on disclosure of sale and purchase transactions

In parallel with the introduction of a new eVAT return, the tax authorities also are considering introducing transaction-level reporting for sales and purchase transactions for companies subject to bookkeeping obligations and public enterprises. This proposal will require a change in the law and regulations, and the tax authorities have released a consultation paper on the proposal (comments may be submitted through 26 November 2021). Such reporting will come as an addition to the eVAT return and is expected to take effect in 2024.

Comments

In preparation for the first eVAT return submissions, taxpayers should:

  • Familiarize themselves with the new requirements and assess any implications in regard to the VAT process;
  • Familiarize themselves with the relation between the eVAT return and the SAF-T and potentially carry out a SAF-T/VAT reconciliation; and
  • With regard to systems, investigate how to adapt to the new requirements and, if necessary, determine if any changes need to be done to technical interfaces.

For further information or if any queries please reach out to your usual VAT contact or any of the below.

Did you find this useful?