Introduction
In the ever-evolving world of tax compliance, the Standard Audit File for Tax (SAF-T) has emerged as a game-changer for European businesses. SAF-T is an international standard designed to streamline the electronic exchange of reliable accounting data between companies, tax authorities, or external auditors. This article delves into the essence of SAF-T, its adoption across various European countries, and the implications for businesses navigating this new landscape.
Understanding SAF-T: The Basics
At its core, SAF-T aims to simplify tax audits and reduce the administrative burden on businesses. By providing a standardised format for reporting accounting data, including general ledger entries, customer and supplier details, invoices, and payments, SAF-T enables tax authorities to analyse data more efficiently for compliance purposes. Based on OECD guidelines, the SAF-T standard has been adopted or adapted by several countries as part of their tax regulations, each with its specific requirements and variations.
SAF-T Adoption Across Europe
While SAF-T is not yet mandatory across the entire European Union, several member states have embraced this standard, each with its unique implementation:
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Poland: Starting from July 2024, KSeF, Poland’s SAF-T system, will become mandatory for taxable persons, and from January 2025, it will also apply to those falling under the subject-related VAT exemption. Poland plans to use KSeF for structured e-invoicing documents, with only selected data being transmitted to the tax authority using SAF-T.
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Hungary: Hungary began its SAF-T journey in late 2019 when the local tax authorities (NAV) proposed introducing a SAF-T structure. Although delayed due to the COVID-19 pandemic, Hungary divided SAF-T into various structures covering different areas of taxpayer finance and accounting, similar to the Polish SAF-T (JPK) but with more distinct structures.
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Lithuania: As an EU member state, Lithuania employs the VAT system, with a standard rate of 21% and reduced rates of 9%, 5%, and 0% for specific goods and services as of 2024.
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Romania: Romania introduced the SAF-T reporting obligation on January 1, 2022, for Romanian legal entities, non-legal entities of foreign companies using the double-entry accounting system, and non-resident companies registered for VAT purposes in Romania.
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Austria: Austria implemented its version of SAF-T in 2009, using an XML Schema Definition (XSD) for transaction-level accounting and tax data analysis. The Austrian SAF-T is only required by tax authorities upon request, usually before a VAT audit. A new version of the OECD’s SAF-T will become effective from March 2024.
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Portugal: The SAF-T accounting file will come into force in Portugal in 2025, allowing the Tax Authority to pre-fill the Simplified Business Information (IES). The postponement of the original 2024 deadline has given companies more time to prepare for this obligation.
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Norway: Foreign traders conducting taxable and VAT-liable activities in Norway must keep accounts under the Bookkeeping Act, including the requirement for SAF-T accounting, regardless of their obligation to register in the VAT Register with a representative.
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Luxembourg has not yet implemented SAF-T, but the Luxembourg Tax Authority (ACD) has been working on a project called FAIA (Fichier Audit Informatisé AED) since 2014. The project is expected to be similar to SAF-T and used for tax audits. Although the Luxembourg Tax Authority has not officially announced the implementation date for FAIA, they anticipate introducing it soon.
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In 2014, France took a significant step by introducing its version of SAF-T, known as Fichier des Écritures Comptables (FEC). This introduction made it mandatory for all companies subject to French corporate income tax or VAT to submit the file upon request during a tax audit. The FEC file is required to include all accounting entries for a given fiscal year, emphasising the importance of compliance. Companies must generate the FEC file in a specific format to meet this obligation.
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Denmark, like Luxembourg, is yet to implement SAF-T. However, the Danish Tax Agency (SKAT) has been actively working on a project since 2017. This project, called Digital Tax Administration (Digital Skatteforvaltning), aims to digitalise and automate tax reporting and compliance processes, potentially including implementing SAF-T or a similar standard. In 2020, SKAT published a comprehensive roadmap for the Digital Tax Administration project, outlining the planned implementation of various digital solutions between 2021 and 2025, providing a clear timeline for anticipated future developments.
The Impact of SAF-T on Businesses
SAF-T offers several potential benefits for businesses, including reduced administrative burden, improved accuracy, enhanced transparency, and simplified audits. By eliminating manual data submission and adopting a standardised format, companies can save time and resources while minimising errors and fostering trust with tax authorities. However, implementing SAF-T also presents challenges and costs that businesses must consider. The extent to which SAF-T is a saviour or a curse depends on individual business circumstances, preparedness, and adaptability to the new format.
Conclusion
SAF-T represents a significant step towards a more harmonised and efficient tax system within the European Union. As more countries adopt this standard, businesses must stay informed about the specific requirements in each jurisdiction and adapt their processes accordingly. While challenges exist, SAF-T’s benefits for businesses and tax authorities are clear. As technology advances and harmonisation efforts progress, SAF-T will become compulsory for future European tax compliance.
Global Tax API SAFT-T Automation
Global Tax API simplifies converting PDF invoices to XML format for Standard Audit File for Tax (SAF-T) compliance. By integrating your existing accounting system, we use artificial intelligence and machine learning to extract relevant data from PDF invoices and generate SAF-T-compliant XML files. This automation saves businesses time, reduces manual errors, and ensures smooth compliance with SAF-T requirements across various European countries.
