In order to avoid tax fraud and increase the accuracy of VAT reporting, tax administrations around the world are adopting an electronic invoicing system which enables tax authorities to have a consistent approach to managing tax audits. This system is known as the Standard Audit File for Tax, and it is becoming an increasingly popular method across the EU for archiving and checking tax data electronically. The SAF-T affects businesses trading with EU countries that have adopted it, and this is why it is important to keep abreast of what SAF-T is and where it is currently being implemented.

What is the Standard Audit File for Tax?
The Standard Audit File for Tax was originally developed by the OECD (Organisation for Economic Co-operation and Development), an intergovernmental economic organisation with 36 member countries. It is a computer-readable checking file designed to make the exchange of data between businesses and tax authorities more reliable and less susceptible to fraud. It was first adopted by Portugal in 2008, and it is a popular way of filing tax returns electronically across Europe.

The physical representation of the SAF-T is a XML file format which allows businesses to list transaction information under five (sometimes six) categories, which include:

  1. General ledger and accounting journals
  2. Accounts receivable
  3. Accounts payable
  4. Warehouse inventories
  5. Fixed assets ledger and depreciation/amortisation

How does the SAF-T affect me?
If you have never completed tax returns in an EU country that has adopted the Standard Audit File for Tax, you will be used to exchanging data through means such as allowing the taxpayers access to your data through an ERP system, or completing traditional VAT returns. Once you register for VAT in EU countries which implement SAF-T, you will learn that different practices are involved when sharing your tax data with authorities.

Wherein lies the advantages and disadvantages of the SAF-T filing? On the plus side, the SAF-T gives tax authorities live electronic access to companies’ VAT and tax liabilities, so the transparency side is very much strengthened. However, by the same token, this powerful tool is threatening to render the traditional VAT return completely redundant. This is why it is important be prepared to use this SAF-T or Standard Audit File for Tax. It is not a bad thought to be aware of the countries that implement SAF-T before you register for VAT in these countries.

Which countries have adopted SAF-T?
There are currently seven countries in Europe that have implemented the SAF-T process for VAT-registered businesses, and most of them are only optionally offering the SAF-T. The table below demonstrates the countries which use it, the date it was introduced and whether it is mandatory to submit the SAF-T files to the tax authorities on a quarterly or monthly basis.

Country Name When was SAF-T introduced Mandatory?
Austria January 2009 No-only required on demand
France January 2014 No-only required on demand
Lithuania 2016, but only for a number of
businesses. SAF-T will be available for all businesses in January 2020
No-only required on demand
Luxembourg
(limited to resident
companies)
January 2011 No-only required on demand
Norway 2017 Only required on demand, but will become mandatory in January 2020
Poland Compulsory for all taxpayers
from January 2018
Yes – to be submitted on 25th of the month following the reporting period
Portugal January 2008 Yes – to be submitted on 20th of the month following the reporting period

 

EU countries Hungary and Romania are planning to adopt standard audit file for tax or a similar system in the future – Hungary announced in May this year that they are considering launching a pilot for SAF-T, and the pilot is due to trial at the start of 2020 with a potential launch in 2021. Romania is planning to make SAF-T mandatory for VAT registered businesses, and will start with a pilot scheme for the introduction of SAF-T targeting selected groups of taxpayers in January 2020.

We hope that this article has helped you to learn more about the Standard Audit File for Tax, how it differs from submitting VAT returns using traditional methods,  how it enables to prevent tax fraud and which countries currently use it as a method for exchanging data between businesses and tax authorities.


 

If you have any more queries in relation to SAF-T and changing EU tax regulations, please do not hesitate to call us on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com. Follow our social media channels for regular updates on changes to VAT laws across Europe.