The future of vat exchange summit bcn 10 oct-2016_jfs_v2

© All Rights by InCoPro BVBA BE 0 877.807.636 jos.feyaerts@InCoPro.be +32 473/38 16 13
The future of VAT in a platformized world
1
“2016 the year the
e-invoice talks back.”
InCoPro: Design for Margin (D4M)
A guide for the digitalization of your Financial Supply Chain and Supply Chain Finance
Compliance
as a Service
Compl-aaS

Design
for
Margin
A digitalization guide for
your Financial Supply Chain
Powered by InCoPro bvba
Platformization in Business
processes
The Future of VAT the impact of the
network economy:
2

Digitalisation should focus on
the process, not the technology
The digitalization of
financial supply chain
was driven by
technology providers
for far too long.
People
Network
Tools
Process
Collaborative
networks
3

Its all about the end to end processes
Payment
Collectionshipping
Receipt
sales
Purchase
An invoice automation solution can only be really effective, when the
data of all documents relating to the invoice can be linked.
But we focus too much on the process of corporate (1%) and too little
on those of the SMEs (8%) and micro-enterprises <10 FTE (91%).
Do we really need two process? Will they stay?
From Q2C + S2P => S2C Platforms and Blockchain encourage it
Quotation to Cash
Sourcing to Pay
Sourcing to Cash

“Platformization” can bring transparencies
through the whole administrative flow.
5

The impact of the EU vat-
action plan
The EU Action plan is focusing on making
third party service providers liable for the
transaction they support.
6

European Commission publishes VAT action
plan 7 April 2016

European Commission publishes VAT action
plan 7 April 2016
Point2: Investigate the possibility of extending the use of automated access
to data.
It will also explore with Member States the possibility to develop an
automated mechanism that would allow a cross-matching between the
data reported by each party of every single transaction. That would allow
detecting fraud in early stages and ultimately prevent a missing trader
fraud, be it domestic or intra-Community;
Point6: VAT fraud in the electronic commerce sector and new businesses
On the one hand, fraudsters exploit emerging technologies and new
business models to avoid the payment of VAT. On the other hand, legal
and technological tools and policies at the disposal of tax administrations
to combat fraud and evasion are lagging behind and insufficient to
address the emerging risks. The Commission will work on a set of specific
compliance measures including antifraud tools for tax administrations, on a
communication campaign addressed to companies and citizens and on
proposals for third parties involved to supply targeted information to tax
administrations in order to allow the latter to cope with the new digital
economy business model
Source:http://ec.europa.eu/taxation_customs/resources/documents/ta
xation/tax_cooperation/vat_gap/2016-03_20_measures_en.pdf

OECD propose to fight the VAT erosion with
New Technologies: big data, Blockchain etc.
9
• In May 2016, the OECD published a report, Technologies for Better Tax
Administration, which explored how emerging technologies could be
best used by tax administrations. Blockchain could be one of the most
valuable technologies because of its ability to rapidly deliver high-
quality, reliable information to a wide group of interested parties. It
can deliver data in a format that’s interpretable and, in contrast to
the way in which tax data is collected today, can look across a
transaction and the tax treatments associated with it. In other words,
both taxpayers and tax authorities can have equal confidence in the
data that’s collected.
• For tax departments today, the scale and detail of data that is
required by tax authorities is a real challenge. Front office systems are
generally set up from the point of view of information that’s useful to
the organisation, and not necessarily from the point of view of
compliance; it’s transaction, rather than compliance-based
information. Blockchain should allow you to capture information from
multiple perspectives – information that’s been verified by everyone
using it. The result is more detail, more useful information and more
certainty.

Design
for
Margin
Why content compliance matters for
platform service providers
When Content compliance’ is the heart,
and ‘Form compliance’ is the surface area, what
makes that services providers are not exploring the
haert?
10

‘Content compliance’ is the heart,
‘Form compliance’ is the surface area
11
E-invoicing compliance refers to Five obligation:
• accurately reflect actual supplies of goods and
services,
• The content should meet the legal obligations on
mandatory fields but also the correct application
of international VAT-rules (ex: exemptions, use
and enjoyments, reverse charge, etc.).
• authenticity (invoice sender and receiver are
known),
• the integrity of content (content is unchanged)
• the legibility of invoices (human-readable) are
ensured from their issue until the end of the
period of storage.
• Depending on local regulations either business
controls, EDI or Digital Signatures are required to
ensure compliance.
Most Service Provider and e-platforms do not active support proof of Actual supply
and whether the content of the mandatory fields are respecting the international
VAT-legislation and other legislative obligations on invoices (correct Rules applied).
Invoice
Archive
Integrity
of content
Authenticity
of partners
Invoice
content
Actual
Supply

• Due to intense media scrutiny of
the current principles of
international taxation, base
erosion and profit sharing (BEPS)
issues have been high on the
political agenda in the recent
months
• Data mining is hot
• VAT returns to be filed in Spain
electronically in real time 2017
• Periodical SAF-T files in PT 2014
• SAF-T capability in FR and Lux
• DaRT capability in Germany
GoBD 2015
• Ecommerce is in the focus of
the Taxmann and is complex
and also important in BtoB
Why an VAT Engine and content
compliance

Content compliance is the heart,
Form compliance is the surface area
13

Basware webinar dec
2015
Why an iVAT Engine and content compliance

VAT AND NEW BUSINESS
MODELS
What is the impact of the new models as E-
commerce, Share-economy and crowd sourcing?
15

The new
school
Legal compliance:
A challenge that will be put to the
platforms
16
Old School model: Church Tower to World
Linear successive controlled development of international trade and
compliance (blow church, town, region, country, neighbor states, rest of world)
New school : Centrifugal model from world to the church or Jail
Centrifugal development cross all nations and full compliance complexity
Theoldschool

e-Market Complexity: From Germany to
Germany through Poland
• German merchant revolt over a new Amazon
Strategy: According to information obtained by
SPIEGEL ONLINE, the Group urges partners to
send their goods through Eastern Europe - even
if they go to customers in Germany.
• If a German company relocate goods for
example, to Amazon consignation Warehouse
in Poland, it must execute VAT-declarations
under Polish law. This means that a German
company selling goods via Amazon to a
German customers, now needs Polish Tax
advisors in order to handle these transactions.
• Amazon pointed out it the sellers in a letter:
"Please note that due to the storage of your
goods in Poland and / or the Czech Republic a
VAT registration in these countries is necessary.
You are responsible for this application and to
be compliant with the fiscal conditions. "The
invoice with the valid local VAT rate is strictly
observed."

Design
for
Margin
All governments are looking to
getting involved in the transactions
The governmental recipe to fight the VAT-GAP
• Data Mining
• Platformisation
• Blockchain
18

VAT returns to be filed in Spain
electronically in real time
What does the Immediate Information Sharing system consist of ?
The so-called IIS (SII) is a VAT (Value Added Tax) management platform,
based on the real-time reporting of company business transactions.
Every time a company issues or receives an invoice, they must send the
information to the Tax Office within a maximum of 4 working days.
These invoice details will be provided in the form of VAT record books,
which contain the essential information on the invoices and can be
managed through the electronic systems and solutions linked to the Tax
Agency platform.
With the new system it will be possible to manage VAT electronically,
streamlining tax compliance and cutting indirect costs, as with SII/ISS
(Immediate Information Sharing) declaring the tax withheld on each
invoice can be automated and take place at the same time as an
invoice is recorded, doing away with the need for additional counting
tasks currently required to comply with these obligations.
In addition, it increases the deadline for VAT payments by 10 days and
should foreseeably speed up delivery of tax rebates.
This is mainly because administrations will be able to check and validate
the documents more quickly.

France:FactureMixteCollaborationFranco-AllemandePourquoi?Comment?Cyrille
Sautereau,AdmarelConseil,FNFE-MPE.CollaborationFranco
Allemande©CopyrightAdmarelConseil
18Juin2015CyrilleSautereau
Tel:+33607533285
Email:cyrille.sautereau@admarel.com
AdmarelConseil
www.admarel.fr

HMRC could seek new powers to force
online marketplaces to provide
information on traders using their sites.
Not our problem. Online marketplaces such as Amazon and eBay point out that
online retailers are independent traders responsible for their own tax affairs and that
they provide tools and information to assist sellers with their compliance. However,
they don’t have the authority to review their tax affairs or force them to register, but
they say they will co-operate with HMRC in any fraud investigations.
EU law. However, under EU law Amazon, eBay and other online marketplaces could
be held jointly liable for all unpaid VAT, along with the offending traders, if action was
taken against them. If they knew that fraud was being committed they could be
jointly and severally liable. They have given assurances that they will tackle any sellers
that are giving false VAT numbers or don’t have their VAT number registered on the
system. The legislation provides a safe harbour defence for intermediaries up until the
point they become aware of that illegality.
On the horizon. HMRC wants to extend its powers to collect more data on companies
and individuals it suspects of tax evasion. It has also said this would apply to
intermediaries such as Amazon and eBay. This means that online marketplaces could
become de facto tax inspectors. It says “We are developing better intelligence
around the nature and scale of suspected fraud in this area.”
With up to £2 billion of VAT at stake, HMRC could seek new powers to identify online
sellers that are not registered for VAT and force online marketplaces to police the
rules.
http://businessdatabase.indicator.co.uk/business_advice_directory/articles/hmrc_po

E-commerce businesses targeted in Denmark
• We understand that the Danish tax authority have been granted new powers to help
them ensure that non-established traders pay their share of VAT due on sales in
Denmark.
• The e-commerce industry is going to be specifically targeted and to this end, payment
solution providers and credit card suppliers will have to provide the tax authority with
details on the amounts received by remote vendors (i.e. businesses established outside
of Denmark) from customers in Denmark. This will help the tax authority to identify
traders who have breached the distance sales threshold in Denmark and, with this
information to hand, the tax authority can pursue them more effectively if registrations
and VAT have not been declared correctly.
• Whilst we have not seen any traders specifically targeted by the Danish tax authority
on this basis, it does follow the recent trend of countries looking to protect their tax
revenues more vigorously and also level the playing field for their established traders.
• On the assumption that the Danes will be using these new powers more extensively as
the year progresses, businesses selling to customers in Denmark should review their
position in order to confirm if they have any liabilities and, if they do, take action to
correct their position ahead of the tax authority potentially contacting them.
9 March 2016 Rob Janering; Denmark, VAT News: www.accordancevat.com/e-commerce-businesses-targeted-denmark/

The issues of third
party liability are
now increasingly
affecting the
warehouse
providers
• Taxing issues’ in Logistics Business
Magazine: 3 March 2016
• Responsibilisation is becoming
more common in the EU, and the
issues of third party liability are now
increasingly affecting the
warehouse providers.
• In the very recent past the German
tax authority has asked Amazon for
details of its FBA and e-commerce
clients
• whilst the Netherlands has already
attempted to sue a warehouse
keeper for millions of euros of VAT
left unpaid by a client.
• http://logisticsbusiness.com/magazi
ne/digital/2016_03/#/26/zoomed

Portugal: SAF-T and Invoice Gamification

• Wiebe The Dutch State Secretary Finance presented
23th April 2016 a system where data are exchanged
between countries on international transactions.
Based on a technical analysis of these data, the fraud
can be detected much faster. "Not within months, but
within a few days,".
Dutch Governement approach VAT fraud with
New Technologies: big data, Blockchain etc.
25

Poland:Digitalization of VAT-Complinace
Starting from 1 July 2016, SAF-T will be implemented for "large" taxpayers. For the
other taxpayers "medium, small and micro", it will become mandatory as from I
July
2018.
The definition of a "large" taxpayer has been further clarified. In scope are
companies having either more than 250 employees or exceeding EUR 50m of net
turnover and EUR 43m of assets (in at least one of the 2 preceding fiscal years).
"Large" taxpayers will be obliged to provide the tax authorities upon their demand
all their books in a specifically determined electronic format i.e. via structured XML
files named JPK — "Jednolity Plik Kontrolny". These xml files were published by
the Ministry of Finance on March 9 and are 7 separate files corresponding to
seven different areas.

Lithuania plans to mandate enhanced
electronic reporting from October 2016 i.MAS
The Lithuanian State Tax Inspectorate is implementing the smart tax
administration system i.MAS.
The inspiration for this project came from Portugal. The objectives are to
reduce the administrative burden for taxpayers, improve the efficiency of tax
administration and increase tax revenue by reducing the shadow economy.
The subject of this obligation will be the monthly reporting of invoice data
(issued and received) and a system to facilitate the issuing, transfer and use
of electronic waybills for land transportation in real-time. The exact file
specifications shall be prepared and approved by April 2016.

Germany: DaRT:Data Retention Tool"(DaRT)

Germany: DaRT: extensive tax-relevant
data extraction, Line Item based ready
for analytics

Design
for
Margin
Content compliance is only a
fingertip away from service providers
30
Nick Castellina, Research Director, Business Planning & Execution at
Aberdeen Group at an Avalara Webinar 2016

The Holy trinity of content compliance of
invoices
Product
Service
classification
VAT
status of
partners
Platform
Invoicing
Content
compliance
31
The
logistic
scenario
Jos.feyaerts@compl-aas.com

GS1 GLNs are a key concept in EDI. They provide the globally
unique identification needed to securely exchange business
information on the Internet as well as unambiguously identifying all
legal entities, physical / operational locations described in business
documents.
GLNs ensure lean and efficient communication and processing
since names, addresses and other information about particular
locations do not need to be communicated with every transaction.
The necessary information is communicated only once, stored in
the relevant system (e.g. Enterprise Resource Planning system) and
subsequently retrieved by referring to a globally unique GLN.
The GL-number is a unique identifier for sender
or receiver within PEPPOL.
32

The Global Location Number can be used by companies to identify
their locations, giving them complete flexibility to identify any type or
level of location required. Its assigned by GS1.
– The GLN can identify a company’s physical locations, for example a
store, a warehouse, or a berth in a port.
– The GLN can be used to identify an organization as a corporate entity.
– The GLN can also identify a company’s legal and functional entities
engaging as parties in a particular business transaction, for example as
buyer, seller, or carrier.
– The GLN can be used in electronic messages and registries to inform
trading partners about companies and their corresponding GLNs and
associated GLN information.
– The GLN is also used by organizations in the public sector. In fact,
various applications exist where governments use GLNs, either to
identify their own agencies or to identify companies using central
government databases.
The GL-number is a unique identifier for sender
or receiver within PEPPOL.
33

iVAT Linked
iVAT Linked an crowdsourcing open central repository (yellow pages) for
VAT information about your business partners.
Why iVAT Linked?
• Everybody maintain only his data and share it with all business Partner,
providing them with the correct accurate data, necessary to issue a
correct invoice (VRM: vender relation management).
• Linked makes it possible to check whether a taxable person is registered
in more than one country.
• You can also use it to find out where a taxable person is established or
has a fixed establishment, has appointed a tax representative or is
registered directly for VAT.
• Sometimes you also need to know your customer’s general tax number.
You can manage, protect and update the individual numbers by logging
in with your email address.
You can now make changes and add other VAT numbers for other
countries for this company. Go to http://linked.i-vat.com

The PEPPOL Central Registry: Service
Metadata Locator (SML)
35
• In order to deliver electronic documents from a sender to the
correct recipient, all PEPPOL Access Points need to know about
each other and the participants they support.
• To do this PEPPOL maintains one centralized service, called
the Service Metadata Locator (SML). The PEPPOL SML defines
which Service Metadata Publisher (SMP) to use for finding out the
delivery details of any PEPPOL participant.
This is a similar approach to how the World Wide Web is able to
find websites based on their domain names.
• The PEPPOL SML is a core service that identifies all PEPPOL trusted
Access Points and SMPs.

The NHS eProcurement Strategy
Keystones of the initiative
36
This is one of the reasons the eProcurement Strategy
stipulates the mandatory use of GS1 and
PEPPOL international standards.
GS1 Global Location Numbers (GLN) system.
This means that there will be a single code to designate each
supplier throughout the entire supply chain, from factories to
clinical departments, which will facilitate electronic data
interchange and synchronization.
each of the products in the data pool by GS1 Global Trade
Identification Number (GTIN).
This is a unique number that will be assigned to products and
packages for the NHS. This code will include information such
as the article description, manufacturer’s code, weights and
measures, etc.
Source:

VAT returns to be filed in Spain electronically in
real time
Spanish Tax Agency encourages creation of the SII/IIS (Immediate
Information Sharing), an electronic VAT statement system requiring
companies paying tax in Spain to file their Value Added Tax returns
electronically for every invoice issued and received as of 2017.
This platform lets users file VAT returns in real-time, replacing the system
currently employed.
Although the new system will not come into force until 2017 (delayed to
2018, no in 2016government), the AEAT plans to start the ball rolling with
a pilot project in January next year.
As of January 1, 2017, in a start-up phase the Spanish Tax Agency will
require 62,000 businesses to use the IIS. This starter group is composed of:
Large companies, with an annual turnover above 6,010,121.04 euros.
Groups of companies for VAT purposes (Value Added Tax).
Taxpayers subscribed in the (‘Redeme’) monthly refund regime.
The remaining companies not affected by this first obligation may sign up to
the new system voluntarily, with the option of cancelling their subscription at
the end of each year.

iVAT Engine
ActiveX
component
ERP System
Logistical
Module
Financial
Module
•Ship From
•Ship To
•Item
•Supplier / Customer
•…
•Tax code
•Amounts
•Mentionins
•Sample invoice
•…
Quality of data
E-commerce and BtoB platform
compliance wit iVAT
iVAT Engine, an engine that calculates the correct VAT
iVat is able to analyses incoming invoices on compliance.
Determine tax code to book the documents in the ERP system.
iVAT Engine to report to the different tax authorities in the different countries in the appropriate format.
More info: http://www.vatat.com/our-solutions/ivat-engine-integration/

VAT Engine
ActiveX componentinput output
VAT Code
VAT Rate
Reporting
Indication
Reporting
Indication
Mentionings
Second VAT Code
Sample Invoice
Electronic Invoice
Extra Information
Decision Log
Supplier
Customer
VAT Numbers
VAT Numbers
Types
VAT Numbers
Types
Item Classification
Ship From / Ship
To
Ship From / Ship
To
Country Operation
Transporter
….
VAT Analysis in Europe and abroad
iVATEngineInput.XML iVATEngineResponse.XML
E-commerce and BtoB platform
compliance wit iVAT Jos.feyaerts@compl-aas.com

BtoB Platforms:
Principal Concept with buyer platform
40
EDI
Web
I/F
(Manual
transactio
n; PO-Flip)
File
conver
sion
Mapping
TO Buyer
format
BtoB Plt
Validation
BtoB Plt
Enrichment
Legal
archiving
Digital
signature
As
Trustweaver
iVAT
Validation
ERP
Error
Message
Master data &
process data
iVAT
PlatformJos.feyaerts@compl-aas.com

International VAT filling in all countries with
content compliance
41
Data
extractors
International
VAT
reporting
and filing
Spain SII
Only correct
invoices with
ERP-Tax-codes
FR
NL
BE
PT + SAF-T
Reporting
CH
Etc.
Service
provider
SII
Increased visibility on single record, makes content
compliance check important before delivery of
invoice to the buyer ERP
Filling in
other
countries
possible, as
monthly
SAF-T in PTContent
Compliance
Form
Compliance
Service provider
D4M
VAT
engine
D4M
VAT
Reporting
tool
D4M
Data
Extractor

The End
“Think big, start up small, scale up fast!”
If you have a problem and nobody else can help you,
Jos Feyaerts
Design For Margin D4M
@ InCoPro BvBA
A digitalization guide for your financial Supply Chain
Mob:+32-473 38 16 13 Skype: FeyJos
Jos.feyaerts@incopro.be
please find us:
42

You can follow us on LinkedIn.
43
www.linkedin.com/in/JosFeyaerts
WWW.slideshare.com/josfeyaerts
Soon:
WWW.designformargin.com
WWW.Thefinancialsupplychain.com

The Future of VAT in a digital platformized
World?
• How the Taxman will become partner in the end to
end business process record?
– Inline (as Latin America )
– outline (parallel process as PT and ES)
– Data Mining and Blockchain
• The EU and national VAT-Action plans, what are the
challenges and opportunities for service providers?
• When Content compliance’ is the heart,
and ‘Form compliance’ is the surface area what
makes services providers are not exploring it ?
• Why, How, What Can we do to realize content
compliance services with Vat-engines integrate in the
B2B platforms?.
44

The future of vat exchange summit bcn 10 oct-2016_jfs_v2

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