VAT Management Use Cases
– by Guy de Cordes, Attorney
The blockchain makes it possible to establish the existence of a link between the physical / logistic flows (transport and delivery of the good) and invoicing flows based on the purchase order/contract so as to provide all stakeholders and tax administrations with proof of the execution of the transaction in accordance with the agreed terms.
Smart contract aims to test the consistency of the information flows between the stakeholders, thereby allowing to certify the reality of a supply of goods or services, and possibly to validate its tax treatment.
There are numerous use cases where the tax authorities expect suppliers/customers to be able to prove a link between the physical flows of goods/services (“ship from”/ “ship to”) and their legal, administrative, accounting and tax reality (“bill from” / “bill to”).
– IC supplies can be VAT exempt provided that the supplier is able to prove that goods left the EU member State of departure. Suppliers may face difficulties in case of EXW supplies where transport is made by or on behalf of their clients, hence the need of a tracking tool allowing to certify that the client takes to the goods outside the country of departure of transport;
– In the past, businesses needed to prove that they held the original copy of their purchase invoices for the exercise of the right to deduct VAT on their expenses. Today, the original copy is no longer linked to the (paper/electronic) format of invoice but to the ability to establish “a reliable audit trail” between the underlying supply and purchase invoices.
– Article 153 of the Finance Law for 2020 provides for new obligations for companies to prepare electronic invoices and transmit data to the tax services by 2023 – 2025 (modalities currently under evaluation.)
Veritise Tax & Legal Subdivision
The Veritise Tax and Legal sub division with Guy de Cordes, an expert in the sector, will build solutions on its blockchain that is a way for a business to improve its communication with its suppliers and customers (reliability of information related to the supply chain), possibly to automate and simplify its VAT compliance, and to facilitate the resolution of disputes with tax administrations.