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Value added tax: how to tame the bureaucracy monster
You know, we know, people like to avoid the subject of value added tax. Businesses are disconcerted by the different tax rates and economiesuisse regards value added tax as one of the biggest bureaucratic hurdles for Swiss businesses.
In 2018, the State Secretariat for Economic Affairs (SECO) asked 2,000 companies: "Which administration-heavy statutory regulations should be simplified?" The answer was unequivocal – the statutory regulations on value added tax. However, things have become more complicated in recent years, rather than simpler, and special circumstances have quickly accumulated:
- How should value added tax be handled in multinational companies?
- What happens with value added tax on tips?
- How is it possible to retain an overview of the different value added tax codes?
- And what about personal items on invoices?
- How is it possible to meet the requirements without placing too great a burden on the respective national companies?
Identify needs
Luckily, there are many tools on the market that can help you with accounting. Before deciding on a software solution, however, ensure that you know the company-specific requirements. Because if there are too many special circumstances that require manual processing, the tool won't save you much time. These are special circumstances that are also laborious when processed manually. You should also gain an overview of the following points:
- Which countries are affected?
- What is the scope and type of value added tax being reclaimed?
- What do the statutory requirements say?
- Which features have proved to be stumbling blocks in recent years?
- Where are the stumbling blocks in the current value added tax process?
Automate value added tax
Value added tax is one of the strengths of our Edi expenses tool and a decisive feature distinguishing it from other products on the market.
How can Edi help you?
Many of Edi's functions are based on integrated AI (artificial intelligence). We are continually expanding this knowledge and, as Edi is a cloud-based solution, your Edi will always benefit from our training too.
- Edi identifies the correct type of expense on a receipt or invoice and automatically allocates it to the different VAT rates.
- Edi also identifies split value added taxes on the same receipt (e.g. on hotel bills).
- Edi can be integrated with common VAT partners via an API and so contributes to global, carefree handling of value added taxes.
- Edi has predefined national configurations for all common types of expenses and invoices.
- Edi also processes lesser known "acquisition tax" for international services from supplier invoices. See our article XY for more information
- Edi verifies the VAT information it has read and supplements it, if necessary, in order to obtain a settlement-compliant data set.
What does Edi do if the value added tax rate changes?
Special rates of tax were introduced in Germany during the pandemic. If the tax rates in a country change, it may be that information captured shortly thereafter has to be reversed. In this case, not only must the correct statement be ensured, but also the value added tax rate changes at different times and the adjustments to the accounting software, e.g. to the value added tax codes.
Edi is a cloud-based solution. This results in many advantages for our customers: for example, our Service Operations Team can consistently ensure that changes in the law are always up to date for every customer. Edi also recognises when it has to account for a receipt at the former rate, or if it should already use the adjusted rate. Edi ensures that its accounting is always legally compliant.
What does Edi do with a receipt with different types of tax?
Edi splits up such a receipt and allocates the respective amounts to the appropriate VAT rate. It is important that only rates from countries in which your companies are entitled to deduct or reclaim value added tax can be settled. The corresponding countries and rates are stored in Edi in advance.
You also have the option of storing different VAT codes per value added tax rate. Whether it's a night's hotel accommodation with breakfast, or food and office supplies – Edi can unhesitatingly process different types of tax for all types of expense. In addition, it is possible to manually control which value added tax rates are allowed for which expense type, in order to prevent incorrect entries.
Edi – a flexible, individual solution
Together with your finance specialists, our team of consultants will devise the right strategy for your company. Edi's style of working will then be adapted perfectly to your requirements. It is the customization that turns Edi into the useful assistant that it can be.
The system's flexibility matters to us so that we can respond quickly to changes in the future too and ensure correct accounting for our customers. We have been praised by the Swiss Federal tax authorities for our settlement scheme, and we are delighted that Edi is proving its worth to our customers:
«The tool recognises the tax type and allocates the amount to the correct VAT rate. This significantly reduces inputting errors, which saves time when validating and paying expenses.
Another feature we love is automatic recognition of amounts at several different rates of VAT. This means that for expense receipts from abroad we can fully automate value added tax matters.» – Marco Flury, Synpulse
Edi is ready for a challenge – what particular problems does your company face?
Find out here how Edi deals with acquisition tax: «Acquisition tax: solving the great mystery»
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