SAF-T reporting in Europe
The 'Standard Audit File for Tax Purposes' (SAF-T standard), created by the OECD, is intended to give tax authorities easy access to the relevant data in an easily readable format. The SAF-T should lead to efficient and effective tax audits.
The file's legal requirements are in line with the obligation of using certified billing and logistic software that prevents changes on documents already issued. The OECD has described which processes in an ERP system are required to take a stance regarding the reliability of the electronic data used for substantiation of tax positions – corporate tax and VAT.
The guidance note describes the processes needed in business and accounting software to attain a sufficient level of reliability for electronic records kept in support of tax returns during the retention period prescribed by tax legislation in individual countries.
The following countries within Europe have implemented SAF-T: Austria, Czech Republic, France, Lithuania, Luxembourg, Norway, Poland, Portugal, etc.
The difficulty is that every country has its local tax requirements and interpretation. Thus, there is no coordination or standard approach (yet). In practice, this results in potential differences per country that need to be managed individually from risk management by the tax function. Expansion of the SAF-T initiative to more countries is highly likely, and therefore a further increase of e-audits (electronic data audits) is expected. Moreover, increasingly more data has to be provided.
In most countries, the SAF-T data only has to be provided quickly after the tax authorities announce a tax audit for VAT and Corporate Income Tax. Portugal, Poland, and Lithuania, however, also have an additional monthly SAF-T for VAT specifically. In this SAF-T, the taxpayer must monthly provide the VAT data to the tax authorities. In Poland, the VAT return is now part of the mandatory periodical SAF-T VAT reporting.