What is SAF-T?
SAF-T, which stands for "Standard Audit File for Tax," is an international standard for electronic exchange of reliable accounting data from companies to a tax authority or external auditor. The purpose behind the SAF-T system is to facilitate and streamline the process of conducting tax audits by tax authorities and to reduce the administrative burden on businesses.
The SAF-T format includes standardized data structures that represent a company's accounting records, such as general ledger entries, customer and supplier details, invoices, payments, etc. By having businesses report their accounting data in a consistent manner, tax authorities can more efficiently analyze the data for compliance and other audit purposes.
Several countries have adopted or adapted the SAF-T standard as part of their tax regulations (e.g., Hungary, Lithuania, Norway, Portugal. Romania), requiring companies to generate and provide data in this format when requested by tax authorities. Each country might have its own specific requirements or variations of the SAF-T file, based on the OECD guidelines.
SAF-T in different European Countries
While not yet mandatory across the entire EU, SAF-T has gained significant traction in several member states, each implementing it with its own nuances:
KSeF is to become mandatory for taxable persons from July 2024 and from January 2025 also for those who fall under the subject-related VAT exemption. From this date, KSeF will only be used for structured documents in e-invoicing. In future, only selected data will be transmitted to the tax authority using SAF-T, unlike in Italy, for example, where the entire invoice with all data is sent to the authority.
Hungary started its SAF-T journey at the end of 2019 when local tax authorities (NAV) published a proposal to introduce a SAF-T structure. Initially, the introduction of SAF-T was set to take place in 2021 but was postponed due to the COVID-19 pandemic.
SAF-T Hungary is divided into many structures covering various areas of taxpayer finance and accounting. That model is similar to the Polish SAF-T (JPK), although SAF-T HU features more different structures. NAV underlines that such a design will simplify the generation of SAF-T files from various sources, such as ERP, warehouse systems, billing systems, etc
Being a European Union member state, Lithuania employs the VAT system, which is a fundamental component of its economic structure. As of 2024, the standard VAT rate in Lithuania is 21%. Additionally, Lithuania implements three reduced VAT rates of 9%, 5%, and 0%, which are applicable to specific goods and services.
Romania introduced the SAF-T reporting obligation as of January 1, 2022 for Romanian legal entities and Romanian non-legal entities of foreign companies using the double-entry accounting system, as well as for non-resident companies registered for VAT purposes in Romania.
Austria implemented its version of SAF-T in 2009. This is a transaction level analysis (XML Schema Definition (XSD)) of accounting and tax data in a standard schema to enable easy and efficient data transfer to the tax authorities.
Austria introduced the Standard Audit File for Tax (SAF-T) on January 31, 2009. Currently, the Austrian SAF-T is only required by the tax authorities upon request, usually prior to a VAT audit by the Austrian Federal Ministry of Finance. The new version of the OECD's Standard Audit File for Tax (SAF-T) was re-introduced with the plan to be implemented from March 2024.
This file - SAF-T accounting - will come into force in 2025 and will allow the Tax Authority to pre-fill the IES (Simplified Business Information). This file was originally due to be delivered by 2024, but has been postponed again, meaning that companies have more time to prepare for this obligation.
Foreign traders carrying out taxable and/or VAT-liable activities in Norway are required to keep accounts in accordance with the Bookkeeping Act. The requirement for SAF-T Accounting applies regardless of whether a company has an obligation to register in the VAT Register with a representative or not. This also includes the requirement that the accounting information must be available in a standardized form, known as SAF-T accounting.
SAF-T for Businesses: Savior or Curse?
SAF-T has the potential to make a significant contribution to improving tax compliance and efficiency for companies. Here are some of the benefits which SAF-T brings to the organisations:
• Reduced administrative burden: No more manual data submission, saving time and resources.
• Improved accuracy: Standardized format minimizes errors and data inconsistencies.
• Enhanced transparency: Clearer communication with tax authorities fosters trust and collaboration.
• Simplified audits: Easy data access for authorities leads to faster and less intrusive audits.
SAF-T represents a significant step towards a more harmonized and efficient tax system within the EU. While challenges remain, the benefits for businesses and authorities are undeniable. As technology advances and harmonization efforts progress, SAF-T is poised to become a cornerstone of future EU tax compliance.
However, the companies can't ignore the challenges and costs associated with its implementation. Ultimately, whether SAF-T is a savior or curse depends on individual business circumstances, preparedness, and ability to adapt to the new format.