Small business SAF-T implementation: Taxpayers should not rely on a postponement, but should start preparations already19 July 2024
The last major deadline in the calendar for the implementation of the standard tax control file (SAF-T), which targets small taxpayers, is fast approaching. For this reason, small businesses should already start preparations, not wait until the last moment for a postponement that probably won’t come, according to Cristina Săulescu from Cabot Transfer Pricing.
Starting with January the 1st, 2025, small companies included are required to submit the SAF-T file, as established by the ANAF Order 1.783/2021. Basically, we are talking about the last major stage of the SAF-T reporting implementation calendar (statement 406), since large and medium-sized taxpayers already file the 2022 and 2023 forms, respectively.
To better understand who is targeted and who is not, but also why small taxpayers should not leave the implementation to the last minute, we spoke with Cristina Săulescu, Partner at Cabot Transfer Pricing.
1. Do all small taxpayers have to comply from January 1, 2025, with regard to filing the 406 return, or are there exceptions?
Cristina Săulescu: “There are also exceptions to the SAF-T submission. Thus, the following do not have to submit it: authorized natural persons, sole proprietorships, family enterprises, natural persons carrying out activities for profit, family associations, professional limited liability law firms and individual law firms, professional notary societies and individual offices notaries, individual medical practices, professional societies of insolvency practitioners, sole proprietorships with limited liability, public institutions (regardless of their source of funding or the category of taxpayers to which they belong) and administrative authorities. Apart from the listed categories, all economic operators will have the obligation to submit SAF-T starting from January 2025.”
2. Is there any chance for a possible postponement of the 1 January 2025 deadline?
Cristina Săulescu: “Given the pace of digitization imposed by the Romanian tax authorities, I don’t think that the issue of postponing the deadline for submitting SAF-T declarations by small taxpayers can be raised. All the more so since the implementation of e-TVA is desired, which depends to a large extent on the information transmitted electronically to ANAF, part of this information not being available unless the SAF-T is submitted on time.”
3. Even if the obligation applies from January, what should small taxpayers expect from ANAF during the grace period?
Cristina Săulescu: “If the implementation of e-VAT, respectively the pre-completed VAT return, will follow the path already prepared, according to the program announced by the authorities, during the SAF-T grace period, small taxpayers must expect multiple errors and inconsistencies in what concerns e-TVA, if they decide to take advantage of the grace period for SAF-T.”
4. Is the current six-month grace period long enough for small businesses or should it be extended?
Cristina Săulescu: “The grace period provided at the moment may seem too small for small taxpayers. However, considering the other systems that are already functional (e-Invoice and e-Transport), it should not represent a major problem, especially since this category of taxpayers generally uses accounting programs that are already “customized » so that it can generate the necessary reports in a timely manner. Of course, there will be additional pressure in terms of timely accounting of all operations, not only those that have an impact in VAT.”
5. Will those waiting until the end of 2024 hoping for a reprieve have enough time to implement the SAF-T file by the end of the grace period?
Cristina Săulescu: “Indeed, from the discussions held in the business environment, I understand that there are still people, small taxpayers, who did not take seriously the obligation of these reports and who are still waiting for the deadline for this category of taxpayers to be extended, postponed. In such situations, there is also the risk that they may not be prepared to implement the necessary programs or modules so that they can comply with the reporting requirement. Let’s not forget that the grace period for quarterly depositors only applies to the first deposit. Accordingly, until July 31, 2025, small taxpayers will have to submit two SAF-T returns, if they submit quarterly, or six returns, for those who have a monthly submission deadline. Which is a lot, if they don’t submit regularly on a monthly basis.”
6. What do you recommend small businesses do now, regardless of whether the January deadline remains or is pushed back?
Cristina Săulescu: “My recommendation for small taxpayers is to make sure ahead of time that the accounting program they use is ready for these reports, and, if not, to look for viable alternatives. Moreover, it must be ensured that the accounting department or the external providers who provide them with such services are prepared for the implementation of the SAF-T reporting system. And here I am also referring to the method of registration in accounting, correctly and in a timely manner.”
7. Is implementing SAF-T in a small firm easier than it is in a medium or large firm?
Cristina Săulescu: “Normally, a small company should be able to implement SAF-T more easily. As mentioned, in most cases, small taxpayers use accounting programs that are already prepared to meet the SAF-T reporting requirements. However, the category of small taxpayers includes not only really small companies, but also entities that use accounting programs implemented at the group level, which will have to be “customized” to be able to meet the legal reporting requirements. In addition, there are many entities that still use accounting services external to the company, and in this case the collaboration between the operational side and accounting must be closer than until now, with greater responsibility on both sides. Therefore, contrary to expectations, I think that the implementation of SAF-T at the level of small taxpayers will be more difficult than at the level of other categories of taxpayers.”
8. Can small firms implement SAF-T on their own or is external consulting required?
Cristina Săulescu: “All those who do not use accounting programs of providers who have already prepared for the reporting needs will need external consulting. Even they may need outside advice, because the program, after all, does nothing more than extract some information that you input. Thus, it becomes crucial that data entry in accounting strictly follows accounting and tax rules, regardless of whether or not they are directly related to taxes and duties to be declared and paid. With the submission of the SAF-T, it will be impossible to carry out “adjustments” in the accounting, without it being immediately notified by the competent bodies.”
9. What mistakes should small taxpayers pay attention to in the process of implementing SAF-T?
Cristina Săulescu: “ANAF has published a set of recommended tests for checking SAF-T declarations. In general, one should check the correctness of taking the information from the accounting system in the declaration, but also the correlation of the data from D406 (SAF-T declaration) with those taken in other declarations generated automatically by the accounting system — or even manually — and sent to ANAF. Separately from these checks — or even before them –, the correct use of the accounting accounts must be ensured, especially since several innovations have appeared in this regard, to ensure compliance with the accounting and fiscal principles when recording in the accounting.”
10. What general advice do you have for small businesses that need to start SAF-T reporting in 2025?
Cristina Săulescu: “Personally, I would have more advice and I would start with: don’t wait for the SAF-T submission deadline to be postponed. Prepare ahead of time. Prevention is better than cure. Even if you are not yet required to submit this form, start implementing the required modules. Try to generate the file ahead of time and check the correlation with the other submitted returns as well as the actual accounting data. And last but not least, if you find the process cumbersome, seek the advice of a specialist who can guide you in correcting errors or improving the D406 generation process.”
Article published in Avocatnet.ro