{"id":13655,"date":"2024-08-26T14:04:47","date_gmt":"2024-08-26T14:04:47","guid":{"rendered":"https:\/\/taxops.com\/?p=13655"},"modified":"2025-09-09T16:06:39","modified_gmt":"2025-09-09T16:06:39","slug":"mastering-international-vat-insights-from-florian-hanslik-2","status":"publish","type":"post","link":"https:\/\/taxops.com\/mastering-international-vat-insights-from-florian-hanslik-2\/","title":{"rendered":"Mastering International VAT: Insights from Florian Hanslik, Partner at terraVAT GmbH (Part 2)"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.17.4&#8243; _module_preset=&#8221;default&#8221; background_color=&#8221;#003254&#8243; custom_padding=&#8221;7px||5px|||&#8221; global_colors_info=&#8221;{}&#8221;][et_pb_row column_structure=&#8221;3_5,2_5&#8243; make_equal=&#8221;on&#8221; custom_padding_last_edited=&#8221;on|desktop&#8221; padding_top_bottom_link_1=&#8221;false&#8221; padding_top_bottom_link_2=&#8221;false&#8221; padding_left_right_link_1=&#8221;true&#8221; 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_module_preset=&#8221;default&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<div style=\"width: 100%; height: 200px; margin-bottom: 20px; border-radius: 6px; overflow: hidden;\"><iframe class=\"lazyload\" style=\"width: 100%; height: 200px;\" frameborder=\"no\" scrolling=\"no\" allow=\"clipboard-write\" seamless data-src=\"https:\/\/player.captivate.fm\/episode\/377abe82-059a-4c3a-aab8-8d51d0176a34\/\"><\/iframe><\/div>\n<p>[\/et_pb_code][\/et_pb_column][et_pb_column type=&#8221;2_5&#8243; _builder_version=&#8221;4.16&#8243; background_color=&#8221;#A0CD46&#8243; custom_padding=&#8221;8vw|5%||5%&#8221; custom_padding_tablet=&#8221;8vw|10%||10%||true&#8221; custom_padding_phone=&#8221;&#8221; custom_padding_last_edited=&#8221;on|tablet&#8221; global_colors_info=&#8221;{}&#8221; padding_tablet=&#8221;8vw|10%||10%||true&#8221; padding_last_edited=&#8221;on|tablet&#8221; custom_padding__hover=&#8221;|||&#8221; padding_phone=&#8221;8vw|10%||10%||true&#8221;][et_pb_text _builder_version=&#8221;4.17.4&#8243; 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background_color_gradient_stops__hover=&#8221;#2b87da 0%|#29c4a9 100%&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;4.16&#8243; custom_padding=&#8221;|||&#8221; global_colors_info=&#8221;{}&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text _builder_version=&#8221;4.16&#8243; text_font=&#8221;||||||||&#8221; header_font=&#8221;||||||||&#8221; header_2_font=&#8221;Lato|700|||||||&#8221; header_2_text_color=&#8221;#003254&#8243; header_2_font_size=&#8221;52px&#8221; header_2_line_height=&#8221;1.2em&#8221; background_layout=&#8221;dark&#8221; header_2_font_size_tablet=&#8221;&#8221; header_2_font_size_phone=&#8221;36px&#8221; header_2_font_size_last_edited=&#8221;on|phone&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2><strong>What You Will Discover:<\/strong><\/h2>\n<p>[\/et_pb_text][et_pb_divider color=&#8221;#A0CD46&#8243; divider_weight=&#8221;5px&#8221; _builder_version=&#8221;4.16&#8243; max_width=&#8221;120px&#8221; locked=&#8221;off&#8221; 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header_2_text_color=&#8221;#003254&#8243; header_2_font_size=&#8221;52px&#8221; header_2_line_height=&#8221;1.2em&#8221; background_layout=&#8221;dark&#8221; header_2_font_size_tablet=&#8221;&#8221; header_2_font_size_phone=&#8221;36px&#8221; header_2_font_size_last_edited=&#8221;on|phone&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2><strong>Topics Discussed in this Episode:<\/strong><\/h2>\n<p>[\/et_pb_text][et_pb_divider color=&#8221;#A0CD46&#8243; divider_weight=&#8221;5px&#8221; _builder_version=&#8221;4.16&#8243; max_width=&#8221;120px&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;][\/et_pb_divider][et_pb_text _builder_version=&#8221;4.17.4&#8243; _module_preset=&#8221;default&#8221; ul_text_color=&#8221;#003254&#8243; ul_font_size=&#8221;16px&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<ul>\n<li><strong>EU VAT Directive and Adaptation:<\/strong> The VAT Directive sets standard guidelines that EU countries must implement but allows for local adaptations, leading to significant variations in VAT rates and regulations.<\/li>\n<li><strong>Role of the EU Court of Justice:<\/strong> The Court ensures uniform application of the VAT laws across member states, influencing national legislation and compliance practices.<\/li>\n<li><strong>Digitalization of VAT Compliance:<\/strong> Moving towards a unified e-invoicing system by 2035 to streamline trade within the EU, despite countries like Poland and Italy having already implemented their systems.<\/li>\n<li><strong>VAT Audits in Different Jurisdictions:<\/strong> Distinct audit practices in countries like Switzerland, Germany, and Italy, showcasing a range of approaches from trust-based to more bureaucratic methods.<\/li>\n<li><strong>Future Trends in VAT:<\/strong> Increasing digitalization is anticipated to simplify audit processes and compliance but may also bring challenges related to data privacy and system integration.<\/li>\n<\/ul>\n<ul><\/ul>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=&#8221;4.16&#8243; 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header_2_font_size_last_edited=&#8221;on|phone&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2>Transcript<\/h2>\n<p>[\/et_pb_text][et_pb_divider color=&#8221;#A0CD46&#8243; divider_weight=&#8221;5px&#8221; _builder_version=&#8221;4.16&#8243; max_width=&#8221;120px&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;][\/et_pb_divider][et_pb_text _builder_version=&#8221;4.17.4&#8243; text_text_color=&#8221;#000000&#8243; text_font_size=&#8221;15px&#8221; text_line_height=&#8221;2em&#8221; link_font=&#8221;||||||||&#8221; link_text_color=&#8221;#fe4943&#8243; background_layout=&#8221;dark&#8221; max_width=&#8221;800px&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<div id=\"fbxt-wrap\" >\r\n\t<div id=\"fbxt-wrap--inner\" class=\"fbxt-extra-class\">\r\n\t\t<div class=\"fbxt-header\">\r\n\t\t\t<div class=\"fbxt-header--logo\">\r\n\t\t\t\t<svg width=\"24\" height=\"25\" viewBox=\"0 0 24 25\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n<circle opacity=\"0.05\" cx=\"11.6406\" cy=\"12.3918\" r=\"11.6406\" fill=\"#C60808\"\/>\n<path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16.6445 10.2899H6.63672V9.04663H16.6445V10.2899Z\"\/>\n<path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16.6445 13.3421H6.63672V12.0989H16.6445V13.3421Z\"\/>\n<path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M12.7025 16.395H6.63672V15.1518H12.7025V16.395Z\"\/>\n<\/svg>\n\r\n\t\t\t\t<span class=\"fbxt-header-text\">Transcript<\/span>\r\n\t\t\t<\/div>\r\n\t\t\t<div class=\"fbxt-header--nav\">\r\n\t\t\t\t<a\r\n\t\t\t\t\tclass=\"fbxt-header--nav-item fbxt-nav-email\"\r\n\t\t\t\t\thref=\"#\"\r\n\t\t\t\t\tstyle=\"display:none\"\r\n\t\t\t\t>\r\n\t\t\t\t\t<svg width=\"16\" height=\"12\" viewBox=\"0 0 16 12\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n<path d=\"M14.5 0H1.5C0.65625 0 0 0.6875 0 1.5V10.5C0 11.3438 0.65625 12 1.5 12H14.5C15.3125 12 16 11.3438 16 10.5V1.5C16 0.6875 15.3125 0 14.5 0ZM14.5 1.5V2.78125C13.7812 3.375 12.6562 4.25 10.2812 6.125C9.75 6.53125 8.71875 7.53125 8 7.5C7.25 7.53125 6.21875 6.53125 5.6875 6.125C3.3125 4.25 2.1875 3.375 1.5 2.78125V1.5H14.5ZM1.5 10.5V4.71875C2.1875 5.28125 3.21875 6.09375 4.75 7.3125C5.4375 7.84375 6.65625 9.03125 8 9C9.3125 9.03125 10.5 7.84375 11.2188 7.3125C12.75 6.09375 13.7812 5.28125 14.5 4.71875V10.5H1.5Z\" \/>\n<\/svg>\n\r\n\t\t\t\t\t<span class=\"fbxt-nav-text\">Email<\/span>\r\n\t\t\t\t<\/a>\r\n\t\t\t\t<a\r\n\t\t\t\t\tclass=\"fbxt-header--nav-item fbxt-nav-download\"\r\n\t\t\t\t\thref=\"#\"\r\n\t\t\t\t>\r\n\t\t\t\t\t<svg width=\"18\" height=\"16\" viewBox=\"0 0 18 16\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n<path d=\"M16.5 9H13.5938L15.0625 7.5625C16 6.625 15.3125 5 14 5H12V1.5C12 0.6875 11.3125 0 10.5 0H7.5C6.65625 0 6 0.6875 6 1.5V5H4C2.65625 5 1.96875 6.625 2.9375 7.5625L4.375 9H1.5C0.65625 9 0 9.6875 0 10.5V14.5C0 15.3438 0.65625 16 1.5 16H16.5C17.3125 16 18 15.3438 18 14.5V10.5C18 9.6875 17.3125 9 16.5 9ZM4 6.5H7.5V1.5H10.5V6.5H14L9 11.5L4 6.5ZM16.5 14.5H1.5V10.5H5.875L7.9375 12.5625C8.5 13.1562 9.46875 13.1562 10.0312 12.5625L12.0938 10.5H16.5V14.5ZM13.75 12.5C13.75 12.9375 14.0625 13.25 14.5 13.25C14.9062 13.25 15.25 12.9375 15.25 12.5C15.25 12.0938 14.9062 11.75 14.5 11.75C14.0625 11.75 13.75 12.0938 13.75 12.5Z\" \/>\n<\/svg>\n\r\n\t\t\t\t\t<span class=\"fbxt-nav-text\">Download<\/span>\r\n\t\t\t\t<\/a>\r\n\t\t\t\t<a\r\n\t\t\t\t\tclass=\"fbxt-header--nav-item fbxt-nav-new_tab\"\r\n\t\t\t\t\thref=\"#\"\r\n\t\t\t\t>\r\n\t\t\t\t\t<svg width=\"14\" height=\"14\" viewBox=\"0 0 14 14\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n<path d=\"M12.5 0H1.5C0.65625 0 0 0.6875 0 1.5V12.5C0 13.3438 0.65625 14 1.5 14H12.5C13.3125 14 14 13.3438 14 12.5V1.5C14 0.6875 13.3125 0 12.5 0ZM12.3125 12.5H1.6875C1.5625 12.5 1.5 12.4375 1.5 12.3125V1.6875C1.5 1.59375 1.5625 1.5 1.6875 1.5H12.3125C12.4062 1.5 12.5 1.59375 12.5 1.6875V12.3125C12.5 12.4375 12.4062 12.5 12.3125 12.5ZM10.625 3L6.375 3.03125C6.15625 3.03125 6 3.1875 6 3.40625V4.25C6 4.46875 6.15625 4.65625 6.375 4.625L8.1875 4.5625L3.09375 9.65625C2.9375 9.8125 2.9375 10.0312 3.09375 10.1875L3.8125 10.9062C3.96875 11.0625 4.1875 11.0625 4.34375 10.9062L9.4375 5.8125L9.375 7.625C9.34375 7.84375 9.53125 8 9.75 8H10.5938C10.8125 8 10.9688 7.84375 10.9688 7.625L11 3.375C11 3.1875 10.8125 3 10.625 3Z\" \/>\n<\/svg>\n\r\n\t\t\t\t\t<span class=\"fbxt-nav-text\">New Tab<\/span>\r\n\t\t\t\t<\/a>\r\n\t\t\t<\/div>\r\n\t\t<\/div>\r\n\r\n\t\t<div class=\"fbxt-content\">\r\n\t\t\t<div class=\"fbxt-content--inner\">\r\n\t\t\t\t<p><b>Mastering International VAT:<\/b> Insights from Florian Hanslik, Partner at terraVAT GmbH Part 2<\/p>\n<p>===<\/p>\n<p><b>[00:00:00] Meredith:<\/b> Welcome to SALTovation. The SALTovation show is a podcast series featuring the leading voices in salt, where we talk about the issues and strategies to help you make sense of state and local tax. We <\/p>\n<p>[00:00:14] have similar issues, you know, on the sales tax side, right. Where our states, you know, all tax things a little differently, right.<\/p>\n<p>[00:00:22] You know, so state of Colorado where Meredith and I sit, tax software, but. You know, our neighbors in Utah might, right. It's a similar situation, right, where you have to also have similar conversations with clients about, okay, these, these are your facts. This is the law applied to your facts. What do you want to do about it?<\/p>\n<p><b>[00:00:49] Florian:<\/b> Right, and then you have to take them at the hand and say, Okay, now, uh. Let's first question, what do you want to do? These are the facts. Let's go to the right side or to the left side. Yeah. Let's say yes. Let's say no, because it will be difficult for them to decide. So you have to take their hand and guide them through.<\/p>\n<p><b>[00:01:06] Stacey:<\/b> Yep, exactly. So it's a similar, similar, we operate very similarly. <\/p>\n<p><b>[00:01:13] Meredith:<\/b> Are there any particular European jurisdictions that tend to be trendsetters or, um, kind of will try to do something first from either maybe like a tax perspective or just a regime that they they'll try it and then the other kind of countries will see how that plays out or take kind of some notes from that like for example In the U.<\/p>\n<p>[00:01:42] S., we often look at, like, our larger states, like a Texas, a California, a New York, Illinois, Florida, kind of see what they're doing and then, you know, if someone's going to, bigger companies are going to be there, they're going to litigate and then see what kind of comes out of the litigation to see if we can actually do that, right?<\/p>\n<p>[00:02:00] Are there, is there, are there European countries that kind of. are kind of a first. <\/p>\n<p><b>[00:02:06] Florian:<\/b> It's, it's an, it's an interesting question, right? From, from a, from a system, I don't know, I don't know the, the U. S. system, but in, in Europe, we have the VAT directive. The VAT directive, as the name already says, it's a guideline for all the European, for the EU countries, for the EU countries, currently 27.<\/p>\n<p>[00:02:26] Um, so they have, they have to implement the, the directive. into local law, they have to follow the regulations in the directive. But sometimes the directive is a little bit imprecise. And then they can be in the local legislation, they can be a little bit more precise, but they always have to follow the guideline.<\/p>\n<p>[00:02:48] Typical example is that the director says, okay, the lowest vet rate has to be doesn't have to be lower than 15 percent. Everything above is possible, but not below 15 percent. That's the reason why now we have Luxembourg with 17 percent as the lowest one, and Hungary with 27 percent of VAT. So there are 10 percent digits, uh, in between.<\/p>\n<p>[00:03:14] And then, well, all, every country can have, well, Anything not lower than 15%. On an invoice, there are some precise guidelines in the directive, how an invoice has to look like, but you can put more, not less, you can put more requirements, uh, than actually the directive says. So for example, uh, in Poland, there are much more requirements than let's say in Germany or in France, and that makes everything well, every, every country has to follow the directive.<\/p>\n<p>[00:03:51] But, um, can be more strict, but not less strict. And, uh, now saying, okay, is there one country that is in the lead? I don't think so. We have the directive and then we have the European court of justice. The European Court of Justice is very similar to the US as some kind of, uh, case law. It's, it's very similar to case law system, everything.<\/p>\n<p>[00:04:16] But we have the directive, but we also have the cases decided by the European Court of Justice. And depending on what the court of court is deciding against which country all the countries have to follow. Not only the directive, but also the of justice. Uh, so from a material perspective, I think. country that is leading.<\/p>\n<p>[00:04:39] Now we have an issue with e invoices, for example, because the aim of the European Commission is to have a common e invoicing system for the whole European Union to make trade a little bit easier. However, a couple of countries started already with e invoicing systems, with their own ones. And now, of course, if there is They say, well, why should we change or amend our e invoicing system that is working to the Europe, to the one that is the European commission saying, when we invested millions and millions of euros to set up our own e invoicing system.<\/p>\n<p>[00:05:18] And here we can say, yes, uh, Poland was very going, was, was pushing the, the e invoicing in this very, it's, it's, it's very strong in this the same as Spain or Italy, they have their own e invoicing systems. And they are pushing that actually the European Commission is now not setting up a European mandatory e invoicing system as per tomorrow.<\/p>\n<p>[00:05:44] Now, this has been postponed now and postponed and postponed. I think it's very difficult to set up an e invoicing system, obviously. There are many countries working on it and many countries are postponing on this. But these countries, they have it already. They try to push it as back as possible. And now I think the, the, the latest deadline set by the European Commission is, is, is 2035 to have a common European wide e invoicing system, then another 11 years or 10 and a half years.<\/p>\n<p>[00:06:15] But again, everything is so, I don't know if they will ever be able to manage it, but of course it would facilitate trade in the European Union and having, now you have to think you have several registrations. We achieve registrations in the countries with different e invoicing systems, so you have to follow the e invoicing systems worst case scenario of in the future 27 different e invoicing systems.<\/p>\n<p>[00:06:41] Well, it's ridiculous because where's the common trait? We'll see. We'll see. I don't, I don't think so that there's one country, one specific country I can, I can mention that is really pushing the legislation to, uh, forward or yeah, either way, or, uh, Yeah, the validation, the evaluation of, of, of the current system, what we have now.<\/p>\n<p><b>[00:07:03] Meredith:<\/b> It's interesting if by 2035, there's kind of like a streamlined unified e invoice system. It's like, what's technology going to look like in 11 years? Like, just trying to think through like, what, like, what is that going to be? How <\/p>\n<p><b>[00:07:21] Florian:<\/b> did technology look like 11 years ago? <\/p>\n<p><b>[00:07:24] Meredith:<\/b> Exactly. It certainly didn't look like the platform that we're talking on right now.<\/p>\n<p><b>[00:07:30] Stacey:<\/b> Things are changing every second, right? Yes. Yes. So I wanted to start with that directive, if you don't mind. So, you know, we have different kinds of quasi governmental bodies here in the US that set up, um, you know, kind of rules that states can decide to follow So desire. So what govern governing bodies do they come together in the EU to make up these VAT directives?<\/p>\n<p>[00:08:00] Or how does that work? <\/p>\n<p><b>[00:08:03] Florian:<\/b> Well, we have, we have the European Commission that is suggesting any new legislation. Only the European Commission can suggest new legislation. Then we have the European Parliament that is involved in the process. Without the European Parliament, no legislation, new legislation is possible.<\/p>\n<p>[00:08:18] And then we have the, uh, I think the English word is European Council. Uh, the European Council is made out of the, the, the, the ministers of the, of, uh, well, ministry of, of, of taxation, uh, financial, financial, uh, taxation, I would say, or foreign affairs. So we have different European councils for, uh, VAT perspective.<\/p>\n<p>[00:08:43] So the ministry, uh, the, the council for, I guess, Well, taxation, financial body, or something like this, they have to find a solution together with the European Parliament on the suggested new legislation of the European Commission. And if they don't find a compromise, then, well, they have a certain period of time.<\/p>\n<p>[00:09:07] If this is, if they don't find a compromise, then the suggested, uh, legislation by the European Commission is being thrown away and they have to set up a new, a new suggestion. That's how it is working. This takes some time, of course. There are lobbyists all over the place, of course, and they would like to have this specific legislation into their directive or this specific legislation.<\/p>\n<p>[00:09:32] I think this is everywhere exactly the same. But, uh, I think what is really interesting is that, uh, these two bodies, they have to find a common, a compromise. Uh, very often they find some, but, uh, Well, if you ask me, from my opinion, I think that this European Council is way too strong. I don't want that actually the ministers of the countries are involved in the whole process.<\/p>\n<p>[00:10:01] The European Parliament is elected by the European people for five years, and, uh, I think it's a little bit schizophrenic also to have in this whole process, the European Council and the European ministers, or the local ministers of the countries involved in this whole process. But this is how the European Union is set up.<\/p>\n<p>[00:10:21] We cannot change it that fast. And so every minister, of course, is fighting for their own clients in their country and, uh, what is on the, on the country, the European parliament is rather really a pan European parliament. They try to find a solution for the European union and, uh, I'm not so much looking for the support, uh, What they actually have to report to the, to the people they have been voted for.<\/p>\n<p>[00:10:50] They have to, well, they have to defend whatever they decide to the, to the European people and not to politics, to, I don't know, to, to the clientele in, in the countries. <\/p>\n<p><b>[00:11:03] Meredith:<\/b> Yeah, it stays. So <\/p>\n<p><b>[00:11:04] Florian:<\/b> it's a, it's a, it's a long process. It's a very long process. It's a very complicated process. <\/p>\n<p><b>[00:11:08] Stacey:<\/b> Right. And it's not really that different from how they operate, to be honest.<\/p>\n<p>[00:11:12] Right. Because a lot of our states have, you know, there's lobbyists. You know, there's certain states that, you know, lobbyists have been successful where they, there's certain exemptions maybe that apply, um, you know, favorable taxation, et cetera. Uh, and you know, they all have their process, administrative process in order to even pass laws.<\/p>\n<p>[00:11:34] So it's not, it's not that much different to be honest. Well, I think it's everywhere and it all takes time. <\/p>\n<p><b>[00:11:43] Florian:<\/b> That is true. That is true. Sometimes too much, too long. <\/p>\n<p><b>[00:11:46] Stacey:<\/b> Um, indeed. Indeed. Um, and then yet, and we also have our federal government that really kind of oversees, right? But doesn't, doesn't dabble in tax too often, right?<\/p>\n<p>[00:11:58] Because the states are slow. But there are some federal laws out there that the states You know, have to follow, and even those are subject to interpretation at the state level. That's true. So, not that much different than how the states operate, to be honest. <\/p>\n<p><b>[00:12:16] Florian:<\/b> Right, and then we have the Court of Justice somewhere flying around.<\/p>\n<p>[00:12:20] So, if one country is not applying, then the European Commission can start a lawsuit against the country. <\/p>\n<p><b>[00:12:28] Meredith:<\/b> Well, that might be a good segue kind of into kind of the next kind of question is how do VAT audits work? Are they kind of, or one, do companies get audited for or kind of checked on their VAT? VAT compliance and who does that?<\/p>\n<p>[00:12:53] Is it local country? Is it the directive or a, you know, a group within the directive? How does, how does kind of the government make sure that businesses are compliant with their VAT obligations? <\/p>\n<p><b>[00:13:08] Florian:<\/b> This is always in the components of the countries. So this is, this is, this is very clear. So when you have a registration or when you have a company in a country that it's the local tax authority that is auditing you.<\/p>\n<p>[00:13:22] In Switzerland, What is amazing, the tax authorities to really trust the companies, they trust the companies that they are doing everything correct. They are understaffed. They will not be able to audit all the companies within a year or within as well. It takes years. Well, there are bigger companies and there are smaller companies.<\/p>\n<p>[00:13:45] On the one hand side, there are companies that are red flagged probably, or some that are not red flagged. If you have a refund. Then you usually automatically get a phone call or an email. Please explain. Uh, and when. The answer is understandable, is plausible, then they trust you. In other countries, it's not like this.<\/p>\n<p>[00:14:09] And, uh, for example, well, I don't know, in Germany, you are audited on a regular basis. In Italy, you have the system where everything is audited when, when you do, when you file the VAT, the VAT filing. So every country does it a little bit different. And, uh, But I love Italy, Italia, well, Italian language is the most beautiful language in the world.<\/p>\n<p>[00:14:33] But dealing with Italian tax authorities can be really cumbersome and time consuming, uh, but uh, that's how it is working. And the further you go to the east, the more difficult it will get. So, I remember times when, uh, everybody, all the new companies headquarters were set up in Poland, in the Czech Republic, in Slovakia, in Romania, in Bulgaria, because of the cheap labor work.<\/p>\n<p>[00:14:59] But then they found out, well, to deal with tax authorities is really difficult. They don't speak any English, they speak, uh, Polish, they speak Hungarian, Czech, uh, Romanian and Bulgarian, nothing else. So, there will be additional costs in case of, uh, tax questions, and many of them will These companies that were really excited to set up a company At central and eastern europe.<\/p>\n<p>[00:15:22] They left again because it's getting too complicated and too bureaucratic so um, this is probably going to change now again, but It's always well times are changing and uh But again, I think the key question was, who is in charge of this? It's always the local tax authority. You have to deal with the local tax authority.<\/p>\n<p>[00:15:43] You have to, uh, the local tax authority has to write that all the documents, all the papers, uh, in the country within a certain period of time. And now, depending on the country, does it have to be immediately there? Or can we wait two months until it is there? Again, country per country, it's different. <\/p>\n<p><b>[00:16:02] Meredith:<\/b> Yeah, and not too dissimilar, right?<\/p>\n<p>[00:16:04] There are some states that we know that are easier to deal with than others. And even here in Colorado, 60, more than 65 of our cities have the authority to do what they want separate and apart from the state. And we find that some jurisdictions are, you know, easier to deal with than others. And a lot of that similarly, right, has to do with staffing.<\/p>\n<p>[00:16:26] You know, one of the smaller mountain towns doesn't have, you know, the 40, 50 person audit staff that the city and county of Denver has, right? So they're, you know, kind of doing the best that they can with the resources that they have and, you know, sometimes picking on larger companies. You know, because they know that the materiality is going to be there.<\/p>\n<p>[00:16:46] You know, Joe's souvenir shop in a mountain town isn't going to have quite the obligations as you know, a larger, you know, conglomerate like Walmart or something. So it's very. Of course. Just every kind of question can kind of identify the similarities that, you know, the VAT system in Europe that we've kind of been focusing on has with our U.<\/p>\n<p>[00:17:14] S. indirect tax system. And so, yes, very, very interesting. Um, and I also, it's interesting. When you say that Switzerland kind of has the kind of trust of, you know, we, we kind of think that you're doing it right. The presumption is that you're doing it right where, you know, we come in while in our court of law, you have your innocent until proven guilty under audits, you are wrong unless you prove us otherwise.<\/p>\n<p>[00:17:48] And so just hearing kind of that different, the different approaches, just, you know, It's just really interesting, especially kind of just tying it to maybe individual perceptions of how countries might operate, right? Or kind of like a stereotypical, you know, it's like, oh, maybe as an American, oh, maybe that makes sense that Switzerland is like, yeah, you're probably good.<\/p>\n<p>[00:18:13] I trust you. <\/p>\n<p><b>[00:18:16] Florian:<\/b> What, what I'm doing now also, uh, accompanying audits now for almost 20 years here in Switzerland, working with the tax authorities is really nice. They don't, they don't want anything mean. I always, I always have the impression, well, it's not easy for them to enter to a company and say, okay, please provide me with all the papers you have.<\/p>\n<p>[00:18:38] Uh, they're really. They try to find a solution. They try to find if something went wrong. Okay, well, we have to fix it. But, uh, they always, what, what I really like here in Switzerland is, uh, they, they, uh, talk about their clients. The tax authority is talking about their clients when we talk, when they talk about the companies they have to audit.<\/p>\n<p>[00:19:00] And it's really a client, it's a client system. And, uh, they don't want to act mean. They don't want to be mean. They would like that everything is done correctly, of course. And if the incorrect bookings or incorrect declarations, of course, they have to be corrected. And late payment interests are going to be charged.<\/p>\n<p>[00:19:20] But they also would like to ensure that going forward, it will be done correctly. It's not the presumption that, well, everybody is mean, everybody would like to, uh, avoid taxes, and therefore we are going to fine someone. It's not this behavior. While in other countries, it seems to be sometimes that people, all of this, come with this approach and with this manner.<\/p>\n<p>[00:19:42] Uh, two companies say, okay, now we are going to find something. <\/p>\n<p><b>[00:19:46] Stacey:<\/b> Yeah. It sounds in Switzerland that it's more of a collaborative approach, right? Like I like when you mentioned that the government looks at taxpayers as their clients. <\/p>\n<p><b>[00:19:57] Florian:<\/b> Yeah. It's really nice. <\/p>\n<p><b>[00:19:58] Stacey:<\/b> Yes. It's nice. It's a, it, but it's a different approach than, you know, another country and or state that would say those are taxpayers.<\/p>\n<p>[00:20:07] They owe us money. Yes. It's a different relationship when you say, these are our clients. <\/p>\n<p><b>[00:20:17] Florian:<\/b> They even pick up the phones. If you have a question, you can call them. That is really nice. <\/p>\n<p><b>[00:20:22] Stacey:<\/b> Yes, um, yeah. Some of our jurisdictions here in the U. S. are, they pick up the phone more often than others as well. So, uh, we're familiar with that.<\/p>\n<p>[00:20:32] For the most part, not to say there's an adversarial relationship just going in, but I would say that you know, a lot of our jurisdictions here in the U. S., it's, uh, It's their taxpayers. They owe the money. And that's really kind of where that relationship ends, you know, it's not very collaborative all the time.<\/p>\n<p><b>[00:20:52] Florian:<\/b> No. Okay. Well, no, we are lucky. Honestly speaking. We are lucky. Yeah. How does work in Switzerland and also in the European Union? It's not everywhere. The same. <\/p>\n<p><b>[00:21:01] Stacey:<\/b> Fair. <\/p>\n<p><b>[00:21:03] Meredith:<\/b> Well, and Florian, as we kind of wrap up, we often like to kind of look towards the future. You know, you talked about one shift coming for European VAT in 2025, but do you see any other emerging trends or see anything that you think might be on the horizon from a tax standpoint?<\/p>\n<p>[00:21:29] From a tax perspective? <\/p>\n<p><b>[00:21:31] Florian:<\/b> I think the biggest change in Europe is, is, uh, make the system electronically applicable. until 2035. And I think there's a lot coming up to companies that the tax authorities would like to after the tax authority that the companies are doing, like the invoicing, like, uh, uh, the standard audit file, for example, what many countries have already that there's a specific audit file that is, uh, Everywhere exactly the same in the European Union for 27 countries to have this kind of audit file or standard system, standard file.<\/p>\n<p>[00:22:11] Uh, I think, I think this, uh, um, electronization is, is, is, is still probably a challenge for, uh, The body, the governmental bodies, but sooner or later we have to deal with it and we have to familiarize with it. Uh us tax consultants, but also convinced the companies. Okay, you have you have to follow these regulations Now another example also here in switzerland while in the european union you were able to file electronically Be it he returns now for many many years Switzerland was one of the last countries, and now I think, uh, I received, uh, the information that as per 2025, hard copy, where you actually have to, uh, fill the numbers with a, uh, typing machine and sign it.<\/p>\n<p>[00:23:02] This will not be possible anymore as per 1st of January 2025. I think this is way too long. Switzerland is, with this regard, is too slow. But we are going in this direction. And what I want to say is, um, I think we are going in this world of digitalization, commuting with the tax authorities. In many countries, it is already, I think it is in Hungary, where invoices are being issued to the customer.<\/p>\n<p>[00:23:32] It will be first issued to the tax authorities before it goes to the customer, so the tax authorities know, okay, what is actually What has been sold. So the text authorities has all this information and, uh, Audits will be much easier, number one, but also Big Brother, of course, is watching you. Uh, I think you have to, yeah, there, there's a lot you have to be, you have to be aware of.<\/p>\n<p>[00:23:58] So I think this is, this is key to be aware of for all the companies going forward. Whenever you have a VAT registration in the country, you have to be aware of that there are major changes going on within the next 10 years from a digital perspective. And I think, I'm sure it will be very similar to the U.<\/p>\n<p>[00:24:15] S. <\/p>\n<p><b>[00:24:16] Meredith:<\/b> Let's hope not, that real time transaction going to the U. <\/p>\n<p><b>[00:24:20] Stacey:<\/b> S. That, that part, I think some, you know, some of our viewers might, your listeners might be surprised by, right? And I mean, again, like to your point, right, it takes kind of the, takes some of the work out of it. it. However, the big brother looking at you is that is an obvious I think for some taxpayers, so, <\/p>\n<p><b>[00:24:50] Florian:<\/b> uh, definitely, definitely, but also from a, from a consulting perspective, an audit always takes a lot of time and a lot of money.<\/p>\n<p>[00:24:58] It costs a lot of money. You, as a tax consultant, you have to follow this audit. This audit can, take one day, can take two days, can take <\/p>\n<p><b>[00:25:07] Meredith:<\/b> a week, can take <\/p>\n<p><b>[00:25:09] Florian:<\/b> years, and the bill will rise and rise and rise. So with this system, of course, it will facilitate life of the companies also because this presence of the, of the, of the consultants will not be that eminent anymore as it is currently.<\/p>\n<p>[00:25:27] So there are positive effects and there are negative side effects. Well, when the sun is shining, there's always shadow, of course. But we had this, this, uh, I think, if I'm not totally mistaken, this use and enjoyment, I say now, use and enjoyment regulation from a VAT perspective, where actually a service is used and not where the recipient is, where a service is used, there it has to be, it has to be taxed.<\/p>\n<p>[00:25:51] I think we have a very similar approach now also in the U. S. that actually, Services are text where they're used and not where the recipient is. So, I think U. S. is probably looking at, at Europe, how this is moving on and probably taking, uh, the decisions that are necessary to, to be taken. <\/p>\n<p><b>[00:26:12] Meredith:<\/b> The U. S. will never admit that, but maybe.<\/p>\n<p>[00:26:19] Well, Florian, thank you so much for your time. And this was a really enlightening conversation. conversation. And so hopefully, you know, our listeners kind of gain more context. Certainly I have just from understanding and kind of, like I said, at the beginning, we have some clients to send your way. And I think now we have more to probably send your way.<\/p>\n<p>[00:26:44] So, you know, bringing it full circle back to that people business. We're really, you know, fortunate to have you within our people network and really look forward to building that relationship. And, um, you know, continuing to kind of partner with you and kind of, Yeah, just stay in touch and keep, keep our, keep our clients and our companies compliant as possible as whatever that looks like.<\/p>\n<p>[00:27:16] So thank you again for your time. No, <\/p>\n<p><b>[00:27:17] Florian:<\/b> so much. It was a lot of fun. It was, uh, I think it was great. It was a great idea to set up, set up something like this. It was a lot of fun for me and it's always, well, When you speak to the people and explain things, um, sometimes you realize how complex this may be.<\/p>\n<p>[00:27:36] And, uh, I think probably VAT is also for you as ears is, is very complex and, uh, not really understandable, but the more we talk about it, the better it is probably understood. And, uh, no, thank you very much for the invite and for the opportunity. <\/p>\n<p><b>[00:27:52] Meredith:<\/b> Yes, absolutely. And until next time, this is SALTovation. This podcast is for educational purposes only, and is not intended, nor should it be relied upon as legal tax accounting or investment advice to consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.<\/p>\n<p>\n\r\n\t\t\t<\/div>\r\n\t\t\t<div class=\"fbxt-content--footer\">\r\n\t\t\t\t<a href=\"#\">\r\n\t\t\t\t\t<svg width=\"9\" height=\"11\" viewBox=\"0 0 9 11\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n<path d=\"M0.5625 0.25C0.234375 0.25 0 0.507812 0 0.8125V1.375C0 1.70312 0.234375 1.9375 0.5625 1.9375H8.4375C8.74219 1.9375 9 1.70312 9 1.375V0.8125C9 0.507812 8.74219 0.25 8.4375 0.25H0.5625ZM2.10938 6.83594L3.65625 5.28906V10.1875C3.65625 10.5156 3.89062 10.75 4.21875 10.75H4.78125C5.08594 10.75 5.34375 10.5156 5.34375 10.1875V5.28906L6.86719 6.83594C7.10156 7.04688 7.45312 7.04688 7.66406 6.83594L8.0625 6.4375C8.27344 6.22656 8.27344 5.85156 8.0625 5.64062L4.89844 2.47656C4.66406 2.24219 4.3125 2.24219 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The SALTovation show is a podcast series featuring the leading voices in salt, where we talk about the issues and strategies to help you make sense of state and local tax. We \r\n\r\n<p>[00:00:14] have similar issues, you know, on the sales tax side, right. Where our states, you know, all tax things a little differently, right.\r\n\r\n<p>[00:00:22] You know, so state of Colorado where Meredith and I sit, tax software, but. You know, our neighbors in Utah might, right. It's a similar situation, right, where you have to also have similar conversations with clients about, okay, these, these are your facts. This is the law applied to your facts. What do you want to do about it?\r\n\r\n<p><b>[00:00:49] Florian:<\/b> Right, and then you have to take them at the hand and say, Okay, now, uh. Let's first question, what do you want to do? These are the facts. Let's go to the right side or to the left side. Yeah. Let's say yes. Let's say no, because it will be difficult for them to decide. So you have to take their hand and guide them through.\r\n\r\n<p><b>[00:01:06] Stacey:<\/b> Yep, exactly. So it's a similar, similar, we operate very similarly. \r\n\r\n<p><b>[00:01:13] Meredith:<\/b> Are there any particular European jurisdictions that tend to be trendsetters or, um, kind of will try to do something first from either maybe like a tax perspective or just a regime that they they'll try it and then the other kind of countries will see how that plays out or take kind of some notes from that like for example In the U.\r\n\r\n<p>[00:01:42] S., we often look at, like, our larger states, like a Texas, a California, a New York, Illinois, Florida, kind of see what they're doing and then, you know, if someone's going to, bigger companies are going to be there, they're going to litigate and then see what kind of comes out of the litigation to see if we can actually do that, right?\r\n\r\n<p>[00:02:00] Are there, is there, are there European countries that kind of. are kind of a first. \r\n\r\n<p><b>[00:02:06] Florian:<\/b> It's, it's an, it's an interesting question, right? From, from a, from a system, I don't know, I don't know the, the U. S. system, but in, in Europe, we have the VAT directive. The VAT directive, as the name already says, it's a guideline for all the European, for the EU countries, for the EU countries, currently 27.\r\n\r\n<p>[00:02:26] Um, so they have, they have to implement the, the directive. into local law, they have to follow the regulations in the directive. But sometimes the directive is a little bit imprecise. And then they can be in the local legislation, they can be a little bit more precise, but they always have to follow the guideline.\r\n\r\n<p>[00:02:48] Typical example is that the director says, okay, the lowest vet rate has to be doesn't have to be lower than 15 percent. Everything above is possible, but not below 15 percent. That's the reason why now we have Luxembourg with 17 percent as the lowest one, and Hungary with 27 percent of VAT. So there are 10 percent digits, uh, in between.\r\n\r\n<p>[00:03:14] And then, well, all, every country can have, well, Anything not lower than 15%. On an invoice, there are some precise guidelines in the directive, how an invoice has to look like, but you can put more, not less, you can put more requirements, uh, than actually the directive says. So for example, uh, in Poland, there are much more requirements than let's say in Germany or in France, and that makes everything well, every, every country has to follow the directive.\r\n\r\n<p>[00:03:51] But, um, can be more strict, but not less strict. And, uh, now saying, okay, is there one country that is in the lead? I don't think so. We have the directive and then we have the European court of justice. The European Court of Justice is very similar to the US as some kind of, uh, case law. It's, it's very similar to case law system, everything.\r\n\r\n<p>[00:04:16] But we have the directive, but we also have the cases decided by the European Court of Justice. And depending on what the court of court is deciding against which country all the countries have to follow. Not only the directive, but also the of justice. Uh, so from a material perspective, I think. country that is leading.\r\n\r\n<p>[00:04:39] Now we have an issue with e invoices, for example, because the aim of the European Commission is to have a common e invoicing system for the whole European Union to make trade a little bit easier. However, a couple of countries started already with e invoicing systems, with their own ones. And now, of course, if there is They say, well, why should we change or amend our e invoicing system that is working to the Europe, to the one that is the European commission saying, when we invested millions and millions of euros to set up our own e invoicing system.\r\n\r\n<p>[00:05:18] And here we can say, yes, uh, Poland was very going, was, was pushing the, the e invoicing in this very, it's, it's, it's very strong in this the same as Spain or Italy, they have their own e invoicing systems. And they are pushing that actually the European Commission is now not setting up a European mandatory e invoicing system as per tomorrow.\r\n\r\n<p>[00:05:44] Now, this has been postponed now and postponed and postponed. I think it's very difficult to set up an e invoicing system, obviously. There are many countries working on it and many countries are postponing on this. But these countries, they have it already. They try to push it as back as possible. And now I think the, the, the latest deadline set by the European Commission is, is, is 2035 to have a common European wide e invoicing system, then another 11 years or 10 and a half years.\r\n\r\n<p>[00:06:15] But again, everything is so, I don't know if they will ever be able to manage it, but of course it would facilitate trade in the European Union and having, now you have to think you have several registrations. We achieve registrations in the countries with different e invoicing systems, so you have to follow the e invoicing systems worst case scenario of in the future 27 different e invoicing systems.\r\n\r\n<p>[00:06:41] Well, it's ridiculous because where's the common trait? We'll see. We'll see. I don't, I don't think so that there's one country, one specific country I can, I can mention that is really pushing the legislation to, uh, forward or yeah, either way, or, uh, Yeah, the validation, the evaluation of, of, of the current system, what we have now.\r\n\r\n<p><b>[00:07:03] Meredith:<\/b> It's interesting if by 2035, there's kind of like a streamlined unified e invoice system. It's like, what's technology going to look like in 11 years? Like, just trying to think through like, what, like, what is that going to be? How \r\n\r\n<p><b>[00:07:21] Florian:<\/b> did technology look like 11 years ago? \r\n\r\n<p><b>[00:07:24] Meredith:<\/b> Exactly. It certainly didn't look like the platform that we're talking on right now.\r\n\r\n<p><b>[00:07:30] Stacey:<\/b> Things are changing every second, right? Yes. Yes. So I wanted to start with that directive, if you don't mind. So, you know, we have different kinds of quasi governmental bodies here in the US that set up, um, you know, kind of rules that states can decide to follow So desire. So what govern governing bodies do they come together in the EU to make up these VAT directives?\r\n\r\n<p>[00:08:00] Or how does that work? \r\n\r\n<p><b>[00:08:03] Florian:<\/b> Well, we have, we have the European Commission that is suggesting any new legislation. Only the European Commission can suggest new legislation. Then we have the European Parliament that is involved in the process. Without the European Parliament, no legislation, new legislation is possible.\r\n\r\n<p>[00:08:18] And then we have the, uh, I think the English word is European Council. Uh, the European Council is made out of the, the, the, the ministers of the, of, uh, well, ministry of, of, of taxation, uh, financial, financial, uh, taxation, I would say, or foreign affairs. So we have different European councils for, uh, VAT perspective.\r\n\r\n<p>[00:08:43] So the ministry, uh, the, the council for, I guess, Well, taxation, financial body, or something like this, they have to find a solution together with the European Parliament on the suggested new legislation of the European Commission. And if they don't find a compromise, then, well, they have a certain period of time.\r\n\r\n<p>[00:09:07] If this is, if they don't find a compromise, then the suggested, uh, legislation by the European Commission is being thrown away and they have to set up a new, a new suggestion. That's how it is working. This takes some time, of course. There are lobbyists all over the place, of course, and they would like to have this specific legislation into their directive or this specific legislation.\r\n\r\n<p>[00:09:32] I think this is everywhere exactly the same. But, uh, I think what is really interesting is that, uh, these two bodies, they have to find a common, a compromise. Uh, very often they find some, but, uh, Well, if you ask me, from my opinion, I think that this European Council is way too strong. I don't want that actually the ministers of the countries are involved in the whole process.\r\n\r\n<p>[00:10:01] The European Parliament is elected by the European people for five years, and, uh, I think it's a little bit schizophrenic also to have in this whole process, the European Council and the European ministers, or the local ministers of the countries involved in this whole process. But this is how the European Union is set up.\r\n\r\n<p>[00:10:21] We cannot change it that fast. And so every minister, of course, is fighting for their own clients in their country and, uh, what is on the, on the country, the European parliament is rather really a pan European parliament. They try to find a solution for the European union and, uh, I'm not so much looking for the support, uh, What they actually have to report to the, to the people they have been voted for.\r\n\r\n<p>[00:10:50] They have to, well, they have to defend whatever they decide to the, to the European people and not to politics, to, I don't know, to, to the clientele in, in the countries. \r\n\r\n<p><b>[00:11:03] Meredith:<\/b> Yeah, it stays. So \r\n\r\n<p><b>[00:11:04] Florian:<\/b> it's a, it's a, it's a long process. It's a very long process. It's a very complicated process. \r\n\r\n<p><b>[00:11:08] Stacey:<\/b> Right. And it's not really that different from how they operate, to be honest.\r\n\r\n<p>[00:11:12] Right. Because a lot of our states have, you know, there's lobbyists. You know, there's certain states that, you know, lobbyists have been successful where they, there's certain exemptions maybe that apply, um, you know, favorable taxation, et cetera. Uh, and you know, they all have their process, administrative process in order to even pass laws.\r\n\r\n<p>[00:11:34] So it's not, it's not that much different to be honest. Well, I think it's everywhere and it all takes time. \r\n\r\n<p><b>[00:11:43] Florian:<\/b> That is true. That is true. Sometimes too much, too long. \r\n\r\n<p><b>[00:11:46] Stacey:<\/b> Um, indeed. Indeed. Um, and then yet, and we also have our federal government that really kind of oversees, right? But doesn't, doesn't dabble in tax too often, right?\r\n\r\n<p>[00:11:58] Because the states are slow. But there are some federal laws out there that the states You know, have to follow, and even those are subject to interpretation at the state level. That's true. So, not that much different than how the states operate, to be honest. \r\n\r\n<p><b>[00:12:16] Florian:<\/b> Right, and then we have the Court of Justice somewhere flying around.\r\n\r\n<p>[00:12:20] So, if one country is not applying, then the European Commission can start a lawsuit against the country. \r\n\r\n<p><b>[00:12:28] Meredith:<\/b> Well, that might be a good segue kind of into kind of the next kind of question is how do VAT audits work? Are they kind of, or one, do companies get audited for or kind of checked on their VAT? VAT compliance and who does that?\r\n\r\n<p>[00:12:53] Is it local country? Is it the directive or a, you know, a group within the directive? How does, how does kind of the government make sure that businesses are compliant with their VAT obligations? \r\n\r\n<p><b>[00:13:08] Florian:<\/b> This is always in the components of the countries. So this is, this is, this is very clear. So when you have a registration or when you have a company in a country that it's the local tax authority that is auditing you.\r\n\r\n<p>[00:13:22] In Switzerland, What is amazing, the tax authorities to really trust the companies, they trust the companies that they are doing everything correct. They are understaffed. They will not be able to audit all the companies within a year or within as well. It takes years. Well, there are bigger companies and there are smaller companies.\r\n\r\n<p>[00:13:45] On the one hand side, there are companies that are red flagged probably, or some that are not red flagged. If you have a refund. Then you usually automatically get a phone call or an email. Please explain. Uh, and when. The answer is understandable, is plausible, then they trust you. In other countries, it's not like this.\r\n\r\n<p>[00:14:09] And, uh, for example, well, I don't know, in Germany, you are audited on a regular basis. In Italy, you have the system where everything is audited when, when you do, when you file the VAT, the VAT filing. So every country does it a little bit different. And, uh, But I love Italy, Italia, well, Italian language is the most beautiful language in the world.\r\n\r\n<p>[00:14:33] But dealing with Italian tax authorities can be really cumbersome and time consuming, uh, but uh, that's how it is working. And the further you go to the east, the more difficult it will get. So, I remember times when, uh, everybody, all the new companies headquarters were set up in Poland, in the Czech Republic, in Slovakia, in Romania, in Bulgaria, because of the cheap labor work.\r\n\r\n<p>[00:14:59] But then they found out, well, to deal with tax authorities is really difficult. They don't speak any English, they speak, uh, Polish, they speak Hungarian, Czech, uh, Romanian and Bulgarian, nothing else. So, there will be additional costs in case of, uh, tax questions, and many of them will These companies that were really excited to set up a company At central and eastern europe.\r\n\r\n<p>[00:15:22] They left again because it's getting too complicated and too bureaucratic so um, this is probably going to change now again, but It's always well times are changing and uh But again, I think the key question was, who is in charge of this? It's always the local tax authority. You have to deal with the local tax authority.\r\n\r\n<p>[00:15:43] You have to, uh, the local tax authority has to write that all the documents, all the papers, uh, in the country within a certain period of time. And now, depending on the country, does it have to be immediately there? Or can we wait two months until it is there? Again, country per country, it's different. \r\n\r\n<p><b>[00:16:02] Meredith:<\/b> Yeah, and not too dissimilar, right?\r\n\r\n<p>[00:16:04] There are some states that we know that are easier to deal with than others. And even here in Colorado, 60, more than 65 of our cities have the authority to do what they want separate and apart from the state. And we find that some jurisdictions are, you know, easier to deal with than others. And a lot of that similarly, right, has to do with staffing.\r\n\r\n<p>[00:16:26] You know, one of the smaller mountain towns doesn't have, you know, the 40, 50 person audit staff that the city and county of Denver has, right? So they're, you know, kind of doing the best that they can with the resources that they have and, you know, sometimes picking on larger companies. You know, because they know that the materiality is going to be there.\r\n\r\n<p>[00:16:46] You know, Joe's souvenir shop in a mountain town isn't going to have quite the obligations as you know, a larger, you know, conglomerate like Walmart or something. So it's very. Of course. Just every kind of question can kind of identify the similarities that, you know, the VAT system in Europe that we've kind of been focusing on has with our U.\r\n\r\n<p>[00:17:14] S. indirect tax system. And so, yes, very, very interesting. Um, and I also, it's interesting. When you say that Switzerland kind of has the kind of trust of, you know, we, we kind of think that you're doing it right. The presumption is that you're doing it right where, you know, we come in while in our court of law, you have your innocent until proven guilty under audits, you are wrong unless you prove us otherwise.\r\n\r\n<p>[00:17:48] And so just hearing kind of that different, the different approaches, just, you know, It's just really interesting, especially kind of just tying it to maybe individual perceptions of how countries might operate, right? Or kind of like a stereotypical, you know, it's like, oh, maybe as an American, oh, maybe that makes sense that Switzerland is like, yeah, you're probably good.\r\n\r\n<p>[00:18:13] I trust you. \r\n\r\n<p><b>[00:18:16] Florian:<\/b> What, what I'm doing now also, uh, accompanying audits now for almost 20 years here in Switzerland, working with the tax authorities is really nice. They don't, they don't want anything mean. I always, I always have the impression, well, it's not easy for them to enter to a company and say, okay, please provide me with all the papers you have.\r\n\r\n<p>[00:18:38] Uh, they're really. They try to find a solution. They try to find if something went wrong. Okay, well, we have to fix it. But, uh, they always, what, what I really like here in Switzerland is, uh, they, they, uh, talk about their clients. The tax authority is talking about their clients when we talk, when they talk about the companies they have to audit.\r\n\r\n<p>[00:19:00] And it's really a client, it's a client system. And, uh, they don't want to act mean. They don't want to be mean. They would like that everything is done correctly, of course. And if the incorrect bookings or incorrect declarations, of course, they have to be corrected. And late payment interests are going to be charged.\r\n\r\n<p>[00:19:20] But they also would like to ensure that going forward, it will be done correctly. It's not the presumption that, well, everybody is mean, everybody would like to, uh, avoid taxes, and therefore we are going to fine someone. It's not this behavior. While in other countries, it seems to be sometimes that people, all of this, come with this approach and with this manner.\r\n\r\n<p>[00:19:42] Uh, two companies say, okay, now we are going to find something. \r\n\r\n<p><b>[00:19:46] Stacey:<\/b> Yeah. It sounds in Switzerland that it's more of a collaborative approach, right? Like I like when you mentioned that the government looks at taxpayers as their clients. \r\n\r\n<p><b>[00:19:57] Florian:<\/b> Yeah. It's really nice. \r\n\r\n<p><b>[00:19:58] Stacey:<\/b> Yes. It's nice. It's a, it, but it's a different approach than, you know, another country and or state that would say those are taxpayers.\r\n\r\n<p>[00:20:07] They owe us money. Yes. It's a different relationship when you say, these are our clients. \r\n\r\n<p><b>[00:20:17] Florian:<\/b> They even pick up the phones. If you have a question, you can call them. That is really nice. \r\n\r\n<p><b>[00:20:22] Stacey:<\/b> Yes, um, yeah. Some of our jurisdictions here in the U. S. are, they pick up the phone more often than others as well. So, uh, we're familiar with that.\r\n\r\n<p>[00:20:32] For the most part, not to say there's an adversarial relationship just going in, but I would say that you know, a lot of our jurisdictions here in the U. S., it's, uh, It's their taxpayers. They owe the money. And that's really kind of where that relationship ends, you know, it's not very collaborative all the time.\r\n\r\n<p><b>[00:20:52] Florian:<\/b> No. Okay. Well, no, we are lucky. Honestly speaking. We are lucky. Yeah. How does work in Switzerland and also in the European Union? It's not everywhere. The same. \r\n\r\n<p><b>[00:21:01] Stacey:<\/b> Fair. \r\n\r\n<p><b>[00:21:03] Meredith:<\/b> Well, and Florian, as we kind of wrap up, we often like to kind of look towards the future. You know, you talked about one shift coming for European VAT in 2025, but do you see any other emerging trends or see anything that you think might be on the horizon from a tax standpoint?\r\n\r\n<p>[00:21:29] From a tax perspective? \r\n\r\n<p><b>[00:21:31] Florian:<\/b> I think the biggest change in Europe is, is, uh, make the system electronically applicable. until 2035. And I think there's a lot coming up to companies that the tax authorities would like to after the tax authority that the companies are doing, like the invoicing, like, uh, uh, the standard audit file, for example, what many countries have already that there's a specific audit file that is, uh, Everywhere exactly the same in the European Union for 27 countries to have this kind of audit file or standard system, standard file.\r\n\r\n<p>[00:22:11] Uh, I think, I think this, uh, um, electronization is, is, is, is still probably a challenge for, uh, The body, the governmental bodies, but sooner or later we have to deal with it and we have to familiarize with it. Uh us tax consultants, but also convinced the companies. Okay, you have you have to follow these regulations Now another example also here in switzerland while in the european union you were able to file electronically Be it he returns now for many many years Switzerland was one of the last countries, and now I think, uh, I received, uh, the information that as per 2025, hard copy, where you actually have to, uh, fill the numbers with a, uh, typing machine and sign it.\r\n\r\n<p>[00:23:02] This will not be possible anymore as per 1st of January 2025. I think this is way too long. Switzerland is, with this regard, is too slow. But we are going in this direction. And what I want to say is, um, I think we are going in this world of digitalization, commuting with the tax authorities. In many countries, it is already, I think it is in Hungary, where invoices are being issued to the customer.\r\n\r\n<p>[00:23:32] It will be first issued to the tax authorities before it goes to the customer, so the tax authorities know, okay, what is actually What has been sold. So the text authorities has all this information and, uh, Audits will be much easier, number one, but also Big Brother, of course, is watching you. Uh, I think you have to, yeah, there, there's a lot you have to be, you have to be aware of.\r\n\r\n<p>[00:23:58] So I think this is, this is key to be aware of for all the companies going forward. Whenever you have a VAT registration in the country, you have to be aware of that there are major changes going on within the next 10 years from a digital perspective. And I think, I'm sure it will be very similar to the U.\r\n\r\n<p>[00:24:15] S. \r\n\r\n<p><b>[00:24:16] Meredith:<\/b> Let's hope not, that real time transaction going to the U. \r\n\r\n<p><b>[00:24:20] Stacey:<\/b> S. That, that part, I think some, you know, some of our viewers might, your listeners might be surprised by, right? And I mean, again, like to your point, right, it takes kind of the, takes some of the work out of it. it. However, the big brother looking at you is that is an obvious I think for some taxpayers, so, \r\n\r\n<p><b>[00:24:50] Florian:<\/b> uh, definitely, definitely, but also from a, from a consulting perspective, an audit always takes a lot of time and a lot of money.\r\n\r\n<p>[00:24:58] It costs a lot of money. You, as a tax consultant, you have to follow this audit. This audit can, take one day, can take two days, can take \r\n\r\n<p><b>[00:25:07] Meredith:<\/b> a week, can take \r\n\r\n<p><b>[00:25:09] Florian:<\/b> years, and the bill will rise and rise and rise. So with this system, of course, it will facilitate life of the companies also because this presence of the, of the, of the consultants will not be that eminent anymore as it is currently.\r\n\r\n<p>[00:25:27] So there are positive effects and there are negative side effects. Well, when the sun is shining, there's always shadow, of course. But we had this, this, uh, I think, if I'm not totally mistaken, this use and enjoyment, I say now, use and enjoyment regulation from a VAT perspective, where actually a service is used and not where the recipient is, where a service is used, there it has to be, it has to be taxed.\r\n\r\n<p>[00:25:51] I think we have a very similar approach now also in the U. S. that actually, Services are text where they're used and not where the recipient is. So, I think U. S. is probably looking at, at Europe, how this is moving on and probably taking, uh, the decisions that are necessary to, to be taken. \r\n\r\n<p><b>[00:26:12] Meredith:<\/b> The U. S. will never admit that, but maybe.\r\n\r\n<p>[00:26:19] Well, Florian, thank you so much for your time. And this was a really enlightening conversation. conversation. And so hopefully, you know, our listeners kind of gain more context. Certainly I have just from understanding and kind of, like I said, at the beginning, we have some clients to send your way. And I think now we have more to probably send your way.\r\n\r\n<p>[00:26:44] So, you know, bringing it full circle back to that people business. We're really, you know, fortunate to have you within our people network and really look forward to building that relationship. And, um, you know, continuing to kind of partner with you and kind of, Yeah, just stay in touch and keep, keep our, keep our clients and our companies compliant as possible as whatever that looks like.\r\n\r\n<p>[00:27:16] So thank you again for your time. No, \r\n\r\n<p><b>[00:27:17] Florian:<\/b> so much. It was a lot of fun. It was, uh, I think it was great. It was a great idea to set up, set up something like this. It was a lot of fun for me and it's always, well, When you speak to the people and explain things, um, sometimes you realize how complex this may be.\r\n\r\n<p>[00:27:36] And, uh, I think probably VAT is also for you as ears is, is very complex and, uh, not really understandable, but the more we talk about it, the better it is probably understood. And, uh, no, thank you very much for the invite and for the opportunity. \r\n\r\n<p><b>[00:27:52] Meredith:<\/b> Yes, absolutely. And until next time, this is SALTovation. This podcast is for educational purposes only, and is not intended, nor should it be relied upon as legal tax accounting or investment advice to consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.\r\n\r\n<p>","footnotes":""},"categories":[723,229,226],"tags":[252,167,284,126,265,476,999,30,1007,80,141],"class_list":["post-13655","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcast","category-state-and-local","category-tax-news","tag-accountant","tag-california","tag-cfo","tag-cpa","tag-finance-professional","tag-franchise-tax","tag-public-law-86-272","tag-state-and-local-tax","tag-tax-cases","tag-tax-provider","tag-tax-returns"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2024\/08\/maxresdefault-10.jpg","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/13655","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=13655"}],"version-history":[{"count":5,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/13655\/revisions"}],"predecessor-version":[{"id":13660,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/13655\/revisions\/13660"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/13661"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=13655"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=13655"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=13655"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}