January 22, 2021

Y M L P-226

Solutions For a Small Business

Interstat Sales Tax Options in the Right Note

For many years, the Intrastat and VAT returns have been seen as separate returns. The Intrastat returns are usually submitted to a national statistical institute (such as Statistics Netherlands in the Netherlands) and the VAT returns to the national tax authorities. As a result of this separation at the authorities, companies have come to see these obligations separately from each other. The Intrastat obligation is often dismissed as “Just a statistical obligation”. This is starting to change!

VAT fraud

More and more governments are using the Intrastat declaration to detect VAT fraud. This development has significantly increased the focus of companies. Where the Intrastat declarations were previously seen as a compulsory charge that was not submitted or submitted without much attention, nowadays it is increasingly important to pay the correct attention to the Intrastat declaration and to submit it correctly and to link it with your VAT returns. This also leads to differences in the declaration value. Nevertheless, the returns are consistent if the correct transaction code is used. This explains and eliminates differences for the tax authorities. When you learn how to calculate sales tax then also make sure of these fraud cases and take proper precautions

Risks

The intra-Community deliveries and acquisitions that are stated in both the Intrastat declaration and the VAT declaration are taken into account. If this connection is not available, the authority is triggered to submit declarations to another inspection. This will first result in questions to explain the differences, but may result in audits and the imposition of any additional assessments and fines.

Responsibility?

Who is responsible? The VAT declaration is often well arranged at companies. The question of who is responsible for Intrastat often remains an issue. Traditionally, the responsibility lay with the customs department of the companies. After all, when the EU internal borders were opened in 1993, Intrastat was introduced as an alternative to obtain customs information. Often the obligation is parked at a logistics department because it relates to the movement of physical goods. Fortunately, we now see the tendency that the importance of the connection between Intrastat and VAT is recognized and the VAT department assumes the obligation or at least guarantees that the declaration is consistent.

Conclusion

It is clear that increased control and the stimulus given to authorities by the increased budget deficit is calling on organizations to take action. Internally, this means that there must be a focus on the declaration process and that the Intrastat obligation is no longer seen as “just a statistical obligation”. If the quality cannot be adequately or insufficiently cost-effective internally, outsourcing is the logical alternative.