Standard Audit File Tax (SAF-T)

Touching down in Europe

Initially landing in Portugal, it is spreading throughout Europe with Poland mandating monthly online VAT-filing following the SAF-T protocol, as a fairly recent example.

SAF-T was created around commonly held business data, adapting it to a statement of best practice in obtaining tax data for use in a computer-assisted audit. Its key purpose is to allow tax administrations to get access to billing and logistic data, timely diagnose non-compliant tax behaviours (outliers) and, as a consequence, speed up the inspection process. The application on national level is the accountability of individual EU Member States, this leaves some movement for the local tax authorities to add specific elements. Following the execution of SAF-T, the Organisation for Economic Co-operation and Development (OECD) produced a very detailed guidance note, describing what data needs to be in the file structure.

What exactly is SAF-T?

SAF-T is an electronic file which is designed to facilitate the efficient and steady interchange of tax information between businesses and international tax authorities, and is now a filing obligation in many European countries.

Submitted information in the SAF-T is can be extracted from your businesses accounting software and electronically filed with the applicable local tax authority. Each EU country has varying data requirements, but will include details of transactions from your general ledger, purchase ledger, sales ledger, fixed assets register, stock register and bank accounts.

Why has SAF-T been introduced?

SAF-T was developed to be part of a wider ongoing program by the OECD to deal with the huge increase in eCommerce in recent years.

Although the OECD have established the standards to be assumed within the SAF-T, self-determination has been given to each tax authority as to the exact format, level of detail and deadline. This allows each local tax authority to have real-time information which lines up with their current reporting requirements and timeframes, and to assist closer control of the collection of indirect and direct taxes.

How can amavat® help with the ‘Generation’ and ‘Verification’ of SAF-T?

The goal of amavat® is to assist locally where our experience in each EU country really becomes apparent. We will provide comprehensive support at a local level with respect to generation and verification of the SAF-T in each country your online business is present. This will give consistency and completeness of each countries SAF-T ,or that countries equivalent of SAF-T.

Scope of amavat® SAF-T service:

  • SAF-T implementation – which may cover all or selected SAF-T structures (Accounting books, Bank statements, Stock, VAT purchases and sales record, VAT invoices, Revenue and expense ledger, Revenue record).
  • SAF-T verification – We can verify SAF-T files prepared by other providers for correct data formats and consistency with the structure presented by each Ministry of Finance.

The ‘benefits’ of SAF-T for your business

Yes, this does mean additional reporting requirements for businesses, but there are several benefits:

  • The information collected by local authorities through SAF-T ought to mean fewer tax enquiries, as this information will probably already have been requested and will already be accessible;
  • SAF-T encourages better archival measures for businesses; and
  • Once completely realised throughout Europe, SAF-T will probably decrease the cost to business of meeting compliance requirements for multiple jurisdictions (with one standard reporting file submitted rather than multiple local filings, each in their own format).

The ‘challenges’ of SAF-T implementation

Systems where accounting and tax records are retained are typically multifaceted and varied. Subsequently, the data comes in different formats which ideally requires a mapping mechanism of entries and outputs, then, a conversion into a standard format to finally extract and align the bookkeeping information.

Businesses can gather data that has to then be converted into the SAF-T file from different mixed sources, such as, relational databases, enterprise resource planning (ERP) systems, flat files, spreadsheets, but to be generated into a single report and into a standard format may not be an simple task, particularly when facing with EU country specific standards.

For each taxpayer, this in theory adds extra reporting requirements and possible. Furthermore, if the pulling out and alignment of data is done manually, the chance of mistakes will increase and possibly exposing the taxpayer. Nevertheless, as an outcome, it can help improve billing and logistics management.

Having experts in each EU country sets amavat® apart. Our valuable knowledge and involvement, helps you to navigate the world of SAF-T, thus creating a more simple experience.