Tax and SAP add-ons

Services and Products

Automated VAT determination of incoming invoices

The objective of introducing e-invoicing data requests is to combat VAT fraud.

The tax authorities can real-time audit the e-invoicing data submitted and verify whether the invoices meet the tax requirements. For example, the Italian tax authorities will check the data submitted for FatturaPA to verify:

  • the name of the file transmitted and that it is not a duplicate;
  • that the document is intact;
  • the authenticity of the signature certificate;
  • the conformity of the invoice format;
  • the validity of the invoice content;
  • that the invoice is unique;
  • that the invoice is deliverable.

After the soft landing period, the taxpayer will face penalties when it fails to meet the mandatory requirements. The penalty range for failing to issue an invoice or failing to meet the XML requirements will be 90% to 180% of the VAT amount not correctly documented.

According to the format requirements, the penalty range for not receiving the purchase invoice through the use of SDI can be equal to 100% of the VAT amount not documented. Purchase invoices have to be submitted in Italy and for specific companies in Spain when dealing with certain subcontractors' government procurement.

The VAT determination logic of sales invoices is usually automated in SAP. That does not apply to purchase invoices. In practice, many of the incoming invoices are still processed manually. AP clerks, who are not VAT experts, have to select the correct tax codes and determine VAT treatment and reporting.

Therefore, inbound invoices are a high VAT risk area and a critical item to assess during a real-time tax audit.

We have developed an SAP add-on that automates the VAT determination of incoming invoices. The advantage is that the solution supports invoice processing without changing the purchase orders retrospectively for VAT reasons.