After postponement by a quarter of a year, NAV’s service of sending to taxpayers draft VAT returns (also called eVAT) will be introduced soon. As reported in our newsletter of 21 July, the tax period starting on 1 October 2021 will be the first one for which NAV sends draft VAT returns. In addition to the fact that the draft VAT returns cannot be used initially for a number of domestic transactions subject to the reverse charge mechanism, they must also be supplemented with data on the import of goods, as well as intra-Community acquisitions of goods and services.
The eVAT system is mainly based on online invoicing data disclosure that has become mandatory basically for all invoices issued by domestic taxpayers, with a substantially wider data content than before. Since, in essence, the draft VAT return will be a structured database query, its usability fundamentally depends on the accuracy of the data submitted into the Online Invoice system, and whether the system of NAV is even able to process the submitted data submitted. In order to ensure that the draft VAT returns be generated in the best possible quality, from October 2021, NAV will regularly notify taxpayers of online invoice data submissions that were unsuccessful or triggered a warning.
Based on information provided by NAV, the notification is sent to the electronic storage space of the taxpayer submitting the online invoice data. Since a significant part of the data reporting errors are due to the incorrect parameterization of the invoicing software, NAV informs the developer of the invoicing software before contacting taxpayers, provided that the tax number of the developer is included in the data supply (in the ”softwareDevTaxNumber” field). It seems logical to add this data to the XML data supply, so that the developer of the invoicing software can start correcting the error on the basis of first-hand information; however, it is advisable to proactively test the quality of the online invoice data supply with the help of tax IT experts, because the later an error is discovered, the more costly it will be to deal with its consequences.
It is important to emphasise that NAV can only send a list of data that is obviously missing from the XML file and a list of relationship errors; however, an apparently correct online data supply may also be incorrect if it contains data that is different from the invoice image. In the latter case, the draft VAT returns sent to both the issuer and the receiver of the invoice will show a difference from the VAT analytics drawn up on the basis of the accounting data. When taxpayers start using the eVAT system, parameterization errors of the invoicing software will quickly be revealed due to which, for example, the date of issue of the invoice is reported instead of the date of performance, as a result of which the eVAT system will indicate the amount of VAT due or deductible after the given invoice into the wrong reporting period. As business partners start to notify each other about the errors in the data supply discovered, a new wave of software debugging can start, ultimately resulting in further improvements in the quality of the draft VAT returns.
In the near future, we will have more information and experience about the eVAT system and its practical application, but it is already known that the interface is expected to be very similar to the one used in the Online Invoice system. It should be pointed out that the use of the eVAT system is not mandatory and that – unlike the PIT return proposal – the VAT return proposal is not automatically finalized and submitted to NAV at the end of the tax return deadline. Nevertheless, it is worth paying due attention to the comparison of the draft VAT returns with taxpayers’ own VAT analytics, as the analysis of discrepancies may also result in the detection of software setup errors, with the quick correction of which default penalties imposed for incorrect online invoice data submission can be avoided.
In the framework of our tax IT services, we are at the disposal of our clients with services such as the checking of online invoice data supplies (including the comparison of the XML files against the invoice images), the correction of XML files, the provision of expert advice for software developments and parameterizations, as well as the support of data supplies with technological solutions.
