eVAT web interface
The eVAT web interface may be suitable primarily for businesses with a lower number of transactions and simpler domestic transactions. The tax authority compiles the basis for VAT analytics and the draft return from the transaction data at its disposal. This data mainly comes from the Online Invoice system, online cash register data, and customs documents.
The draft must be checked by the taxpayer, as the tax authority does not necessarily have all the information necessary for correct VAT treatment. The data can be manually modified and supplemented on the interface, including correcting the tax code, recording the taxpayer’s decision regarding the right to deduct, and adding data not included in the online systems (e.g. invoices for community transactions). After checks, the system prepares a draft return from the finalized analytics that can be submitted directly.
Instead of manually editing the data as described above, it is also possible to upload the return in XML format on the interface. The uploaded XML file must comply with the technical schema published by the tax authority and must contain the appropriate data and tax codes of the invoices on which the return is based. The tax authority provides software that can be used to generate an XML file from Excel data. XML upload reduces the time required and potential errors of manual data recording, but the generation, upload and error handling of the file still require user interaction.
What does M2M solution mean?
Machine-to-Machine (M2M) connectivity allows companies to communicate with the tax authority’s eVAT system from their own systems using structured data files. VAT analytics and related transaction data can be automatically processed and verified, while the system provides feedback on potential discrepancies and risks before the return is submitted.
The M2M solution is recommended specifically for businesses, which:
- work with a larger number of VAT transactions
- handle complex tax decisions,
- use a digitalized accounting or ERP system,
- would like to automate the VAT return processes.
How does the M2M solution work?
By using M2M, or machine-to-machine, the VAT declaration process can be directly linked to the company’s financial, accounting or corporate management system. The solution can be beneficial primarily for companies with a higher number of transactions, more complex VAT management or multiple data sources. However, in a digitalized accounting environment, its use can also be justified with a lower number of invoices.
The M2M process can be divided into three main stages: data generation, data processing and verification, and automated filing of the return.
- The starting point of the M2M process is the transaction data available in the company’s own systems. The input typically consists of accounting data, invoice management programs, and tax authority online invoice data, so in this regard it is necessary to examine the structure of the data used for VAT returns to see how they can be integrated into the M2M process.
- One of the most important professional tasks of M2M implementation is to match the own tax codes of the company to the standard tax codes defined by the tax authority. This mapping does not mean merely a technical recoding. A company tax code can be based on several economic events, VAT treatment or declaration positions, therefore, in order to determine the appropriate tax authority tax code, it is necessary to review each transaction type. Special attention is required in cases where the same company tax code is used for different types of transactions, or when the selection of the correct tax authority VAT code depends on additional data, such as the partner status, place of performance, invoice direction or the applied deduction rule.
- After standardizing the source data and matching the tax codes, VAT analytics with the structure expected by the tax authority can be produced, during which checks can also be performed on the return data.
- Properly prepared and verified VAT analytics can be transferred to the tax authority’s system in a structured, XML-based format using a technical user. Self-checks and corrections can also be performed on the returns through the M2M connection.
The real challenge of the transition: mapping the tax codes
In connection with the introduction of M2M, there has been a lot of talk about the technical details of XML files, since in the M2M system this file practically serves as a VAT return, so special attention must be paid to the production of the XML file. The most critical problem for the proper production of XML files is the tax codes. Companies must match the tax codes of their own ERP or accounting system to the standard tax code structure used by the tax authority. This mapping determines whether individual transactions appear correctly in the eVAT system. In case of incorrect matching, inaccurate VAT analytics are produced, validation errors may occur, and ultimately an incorrect VAT return will be produced, if the return is technically submitted at all.
The situation can be particularly complex for companies, which:
- use significant number of tax codes,
- compile the VAT return from multiple sources, even multiple ERP systems,
- have group-level or international transactions.
Why is it worth starting your preparation on time?
The successful implementation of an M2M system typically requires the cooperation of multiple areas, and effective collaboration is needed between accountants, ERP program developers, accounting and tax experts.
Before the technical implementation, it is advisable to assess the current VAT return preparation process, the applied tax code structure, and the quality of the VAT listings. The earlier the preparation starts, the lower the future business risk arising from the transition to the eVAT system.
If you would like to assess which eVAT solution might be right for your company, or need support in tax code mapping and M2M preparation, our experts are available for a preliminary consultation.
