Question CRS for invoices in EU and worldwide

[newNomad]

Hi guys
was wondering if there is something like CRS for invoices data, i.e. interchange of invoicing data between EU countries or such

I explain, in some EU countries electronic invoices are already mandatory so if company A invoices company B any amount the TO (tax office) would expect this amount to neccessarily show up as Revenue in company B decleration
Now what about if the companies are located in two different EU countries? Is VIES playing a role there or it's irrelevant?

What if we have a company A in an EU country invoicing a company B which is outside EU (such as Switzerland for example), now the company B will put this invoice into their accounting as Expenses and the question is whether this tax authority of Switzerland knows that this item is linked to the VAT code FR123456789 (example of France) and if so whether this information in some way can flow to French TO?

The effective cash flow in this analysis is irrelevant, i.e. the transaction is maybe settled in cash, crypto or using an offshore account in jurisdiction Z; what is of relevance is any other bookkeeping/accounting flow which exposes the transaction even if CRS which monitors the electronic cash flows (not hard bag cash) reveals nothing

 

[Martin Everson]

What if we have a company A in an EU country invoicing a company B which is outside EU (such as Switzerland for example), now the company B will put this invoice into their accounting as Expenses and the question is whether this tax authority of Switzerland knows that this item is linked to the VAT code FR123456789 (example of France) and if so whether this information in some way can flow to French TO?

What you need to be aware of is that even though Switzerland is not part of EU it does follow the 6th VAT Directive of the EU and has a Bilateral II Agreement with EU which has a section aimed at fighting fraud including VAT Fraud etc.

VAT fraud is something taken seriously by EU. Although I do not know if this is an automatic process of sharing info they are working together.

 

[newNomad]

@Martin Everson Well I was not referring necessarily to VAT in particular, under some limits there are many possibilities not to charge VAT (but also not claim it back), but I do not know how granular are any potential checks on foreign partner invoices i.e. if the company B is getting audited can someone pickup that particular invoice, check the VAT code and the address of the company A and then proactively investigate with the country A's tax authorities whether the company A is in compliance (not just with VAT, but in general reported revenues)

What I have heared is that some companies, even medium sized, have a well structured compliance department checking all the time on their suppliers (i.e. if you are a supplier they demand certificates, tax residency certificates, insurance policies and such, IBAN changes or even smallest mistakes on the invoices are taken seriously and you are called back to explain the 'discrepancy' or reason for change)
I was wondering why would a company spend resources on checking compliance of their suppliers all the time - must be there is something which 'pushes' them to work only with 100% compliant suppliers? Why obsess on checking on your supplier all the time and not just dump the invoices in the accounting, anyway if something's off it's the supplier's problem, no?

 

[Sols]

What I have heared is that some companies, even medium sized, have a well structured compliance department checking all the time on their suppliers (i.e. if you are a supplier they demand certificates, tax residency certificates, insurance policies and such, IBAN changes or even smallest mistakes on the invoices are taken seriously and you are called back to explain the 'discrepancy' or reason for change)
I was wondering why would a company spend resources on checking compliance of their suppliers all the time - must be there is something which 'pushes' them to work only with 100% compliant suppliers? Why obsess on checking on the supplier's invoices all the time and not just dump them in the accounting, anyway if something's off it's the supplier's problem, no?

Probably because they are or expect to be audited. This can be a for a range of different reasons. For you, what it means you need to have your paperwork in order if you want to work with these large clients.

Changes in IBANs are also a risk of fraud. Impersonating a vendor/supplier and providing real-looking invoices with the scammer's is a very common fraud used against businesses