VAT Tax Technology - the Digitization of European Business

Governments all over Europe are digitizing the collection of VAT in efforts to close the VAT fraud gaps, collect more revenue, and increase visibility into all transactions.

Tax digitization instruments (such as Standard Audit File for Tax), and CTCs (Continuous Transaction Controls) have been gradually introduced while tax authorities have adapted their infrastructure and e-audit system. Some of the more technically advanced tax authorities today: include Poland, Italy, Hungary, and most recently France who are investing heavily in electronic invoicing mandates. The European Commission is now proposing digital invoicing as the norm throughout the EU and real-time reporting for intra-EU transactions.

Small businesses’ tax technology requirements are suddenly becoming more and more demanding; while tax authorities are gather increasing amounts of information. For example in the UK’s all VAT-registered businesses are now required to keep digital records of invoices and use software to submit their VAT returns. As small and medium-sized enterprises are rushed to comply with digital tax requirements and as this VAT digitization gathers momentum, we can expect to see a shift in the software and platforms that support the digitization of tax processes

Each country will implement the rules in their way and on their timeline. In 2014 Italy was the first EU country to introduce an e-invoicing model. In comparison, France just started CTC system recently.

Multi-national businesses comply with VAT reporting requirements in every country where they report VAT and therefore need to adapt to various electronic system requirements. They are searching for a tech solution to manage multiple tax compliance capabilities from a single vendor including: e-invoicing, SAF-T, VAT rates, reporting etc. There are only a few tax tech players today that meet multinational business needs. We are following these developments closely and look forward to reporting more. If you need tech assistance, EuroVAT has developed strong partnerships with various companies in Europe. Feel free to reach out to us for more information.

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