In this Part-1 of a two-part blog entitled – Intrastat Reporting simplified with SAP GTS, we will dive deep into knowing more about Intrastat Reporting and how Krypt can help businesses easily file intrastat reports and meet the requisite compliance.
What is Intrastat Reporting?
Intrastat reporting is one of the most essential & complex reports. Since movement of goods data are the starting point for the Intrastat reports, they are primarily based on the Sales & Distribution and the Materials Management modules, which is unlike VAT reporting based on the Financial accounting module.
Intrastat reporting is once-a-month obligation for businesses who move goods cross-borders in the EU (subject to value thresholds). It enables local governments and the EU to monitor trade transactions between countries for statistical purposes. Increasingly, it is also being used to track potential VAT fraud.
Like EC Sales Lists, although based on the same data, Intrastat reporting is separate from the EU VAT returns & reporting process.
The daunting challenge with SAP Intrastat reporting is related to completeness & correctness of the relevant Intrastat transactions. In standard SAP Intrastat –
- often transactions that are selected are those that should not have been selected (correctness) and ones that should have been selected are those that are not selected (completeness)
- there is no first-hand link with the VAT treatment of the Intrastat transactions
- manual corrections are time-consuming and sometimes impossible.
Additionally, the declarations required by the EU28 (EU27 in case of Brexit) for declaring reverse charge VAT and the transfer of goods, a supplementary filing that reports all EU movements of goods for customs purposes is also required. The collected statistics are transferred to European & International bodies such as Eurostat (the Statistical Office of the European Communities), the United Nations (UN) and the International Monetary Fund (IMF).
Who is it for?
Intrastat reporting is a legally obligatory report for all European Union (EU28) countries. It is also requisite for all businesses that have a Value Added Tax (VAT) declaration number in an EU28 country and a turnover over a certain threshold (viz., two thresholds: one each for revenue and purchasing value). All goods movement related to sales orders & purchase orders (i.e., all cross-border goods flows across the EU28 borders) must be mentioned in Intrastat. You can obtain the data used for the Intrastat reports on the foreign trade views of sales orders, sales invoices, purchase orders and purchase invoices.
EU companies must complete two Intrastat reports: one for the goods receipts and another one for dispatches, in which, the product’s value & weight are the most important data.
What goes into it?
Intrastat filings require details of all dispatches (sales) of goods to other EU28 countries, plus the receipts (purchases). Following details for each goods transaction are required:
- commodity code
- quantity & value
- delivery terms
- the country of departure & arrival (using country codes)
- any shipping cost
For the Intrastat system, the customs authorities provide the national authorities with statistics on dispatches and receipt of goods. The member states then transmit their data to Eurostat on a monthly basis (generally within 40 days). The national authorities collect the following data:
- an identification number assigned to the party responsible for providing information
- reference period
- the flow (receipt, dispatch)
- value of the goods
- quantity of the goods
- member state partner, and
- nature of the transaction.
When should one submit it?
There is annual reporting threshold for each EU28 country, which can also be different for dispatches from a country (sales) vs. receipts (purchases) within the same country. These thresholds are much higher than the VAT registration thresholds. Its filings are generally undertaken at the same time as the VAT return and are sent to the appropriate statistical office of the concerned country.
This Part-1 blog shall be followed by Part-2 in the following week, wherein we will discuss how Krypt can help businesses easily file intrastat reports to meet the requisite compliance.
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