Starting January 1, 2019, in Italy a mandatory electronic invoicing obligation will be in force for the supplies of goods or services. This e-invoicing obligation - similar like Spain and Hungary - is about detecting and combating VAT fraud/tax evasion, but also to stimulate company's to get ready for the digital age. Taxpayers will be forced to get their ERP systems to send and receive in XML format e-invoicing data via the Interchange System ('SDI').
SAP VAT health check for e-invoicing data requests in Hungary, Italy and Spain
The Key Group has recently delivered its Hungarian SAP health check pilot for one of its major clients, and the outcome was that quite some changes in SAP had to be made to avoid either future questions by the tax authorities or announcement of a tax audit when data is submitted mid-2018. The method used applies to Italy and Spain as well.
The tax authorities are aware that SAP setup itself is often not in order and that tools outside the ERP system are used to remediate and manipulate tax data outside of SAP with the purpose to improve tax reporting.
The full automated legal requirement is to force taxpayers to remediate the ERP VAT setup itself and realize that taxpayers do not use workarounds as Excel sheets or similar tools outside the ERP system as human intervention is not allowed.
An incorrect SAP setup could result in inaccurate and incomplete data during submission.
Developing or purchasing a solution for automated submission of sales invoice data to the tax authorities does not solve a wrong SAP setup.
The 'garbage in' and 'garbage out' principle applies: 'the real problem is that tax data in standard SAP needs remediation as that tax data is not meeting the local legal invoice requirements itself.'
Our assessment has identified several critical gaps and also areas for improvement in the current billing process. Based on this pilot we have designed an efficient and effective assessment process that will include not only an overview of gaps but as well our view how to remediate these weaknesses in SAP itself.
The Key Group offers an SAP health check specifically on e-invoicing data requests such as Hungary, Italy (Spesometro, etc.) and Spain (SII) and our method is based on the legal tax requirements defined in XML format and local VAT law.
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Written by Richard Cornelisse
Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.
He started his career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently, he is a senior managing director of KEY Group.
Richard has over 20 years’ experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service center migration, and post-merger integration work. Richard is also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact him.