SALTovation: Making Sense of State and Local Tax

In this episode of the SALTovation podcast, we continue our discussion with Florian Hanslik, a seasoned tax professional specializing in VAT. Listen as we take a brief detour from U.S. taxation to explore European VAT systems. We cover the regulatory framework, audit processes, and the fascinating trajectory of VAT towards digitalization within the EU. Florian provides foresight into the increasing digitalization of VAT compliance and how businesses need to adapt to these evolutionary changes in the tax landscape.

Key Takeaways:

• EU VAT Directive and Adaptation: The VAT Directive sets standard guidelines that EU countries must implement but allows for local adaptations, leading to significant variations in VAT rates and regulations.
• Role of the EU Court of Justice: The Court ensures uniform application of the VAT laws across member states, influencing national legislation and compliance practices.
• Digitalization of VAT Compliance: Moving towards a unified e-invoicing system by 2035 to streamline trade within the EU, despite countries like Poland and Italy having already implemented their systems.
• VAT Audits in Different Jurisdictions: Distinct audit practices in countries like Switzerland, Germany, and Italy, showcasing a range of approaches from trust-based to more bureaucratic methods.
• Future Trends in VAT: Increasing digitalization is anticipated to simplify audit processes and compliance but may also bring challenges related to data privacy and system integration.

Quotables

• "You have to take states by the hand and say, okay, now let's first question, what do you want to do? These are the facts. Let's go to the right side or to the left side. Yes. Let's say yes, let's say no, because it will be difficult for them to decide. So you have to take their hand and guide them through.” -Florian Hanslik [00:49]

• "What I really like here in Switzerland is that the tax authorities talk about their clients when they talk about the companies they have to audit. And it's really a client system. They don't want to act mean. They want to ensure that going forward it will be done correctly.” -Florian Hanslik [18:46]

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