SAF-T coming to Romania: All the crucial questions answered

Romania has confirmed it is introducing obligatory SAF-T reporting, known officially as the D406 Informative Declaration, from January 2022.

It joins a growing list of European countries to adopt SAF-T, including Poland, Portugal, Norway, Hungary and Austria.

What is SAF-T reporting?

SAF-T – or Standard Audit File for Tax – is the international standard for digitally sharing reliable accounting data between organisations and national tax authorities. SAF-T is defined by the Organisation for Economic Cooperation and Development.

Why is Romania implementing it?

While the country already has VAT reporting requirements in place in the form of its D394 form, it is believed to be turning to SAF-T due to the more comprehensive coverage it offers and its ability to include data beyond the realms of VAT transactions.

To ensure VAT reporting does not become burdensome for businesses following the arrival of SAF-T next year, Romania is thought to be considering abolishing D394 once SAF-T is up and running.

How often will businesses have to report under SAF-T?

For large taxpayers, reporting is typically completed on a monthly basis. SAF-T files will need to be sent to tax authorities by the end of the month following the reporting period.

Who will have to comply with SAF-T?

SAF-T in Romania will be imposed on all foreign entities that are registered in the country for VAT purposes, meaning even organisations headquartered elsewhere that trade in Romania will be affected.

Is there a grace period?

There is a three-month grace period, so non-compliance with SAF-T rules will not initially be penalised. However, files for January, February and March 2022 will be legally required by the end of April 2022 at the latest. From that point, failure to submit within the specified deadlines will incur fines of up to RON 5,000.

Are there any technical requirements to note?

Yes, one peculiarity of the Romanian SAF-T system is that Romanian authorities will expect the final D406 report to be submitted as a PDF with an XML file attached. The initial Standard Audit File can be submitted in XML format though, as is frequently the case among SAF-T schemes across the world.

What are the challenges for businesses?

The comprehensive nature of SAF-T reporting means businesses will be expected to file incredibly detailed documents with hundreds of fields completed. While some items (including assets) are excluded from regular reporting, issues to document on a monthly basis – such as general ledger entries, sales invoices and purchase invoices – are still vast.

For an accurate and compliant D406 file to be generated, taxpayers must perform a large number of mappings, taking into consideration that many SAF-T data fields accept only strictly defined values. It is imperative that users ensure data within their ERP is entirely accurate and that it can be mapped effectively.

Our verdict…

Romania is the latest in a long list of countries to put its faith in SAF-T reporting for ensuring accuracy in its VAT data and ultimately maximising its revenues. We expect many more national tax authorities to follow suit over the years to come.

Businesses trading in Romania have the benefit of a three-month grace period when SAF-T is implemented in the new year, but that should not lull them into a false sense of security. Instead, we strongly recommend preparing for SAF-T reporting immediately and ideally to be submitting in this form prior to the deadline.

Retrieving the vast quantities of data required to fill SAF-T reports from an ERP is a major challenge in itself – and that’s before tax leaders consider how to ensure their source data is complete and accurate.

The only way to navigate this business-critical task is to invest in cutting-edge tax technology and work with a specialist that can ensure a successful implementation that delivers entirely accurate tax data. For more information on our successful projects in this space or to discuss your requirements in more detail, get in touch with us today.

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