Reporting and documentation under the Value Added Tax Act

Directive 2006/112/ EC of the Council of Europe of 28.12.2006 on the common VAT taxation system sets out the general rules relating to the issuance of invoices, so as to harmonise the laws of the Member States relating to value added tax, enabling Member States to adopt specific conditions for the issue and specific requirements for their contents. Any taxable person who is a supplier is obliged to issue invoices for the supply of goods or services or upon receipt of an advance payment except in cases where the supply is documented otherwise.

The logic behind VAT is based on the fundamental principle that the tax charged by a person registered under the Value Added Tax Act (VATA) person on taxable supplies is entitled to deduction only when the goods and services are used for the purposes of carrying out the said taxable supplies by the registered person.

To exercise the right to tax credit deduction it is, from a formal point of view, necessary to be in possession of a tax document with certain requisites by the registered person who is the recipient of the supply. In order for the right to deduct tax credit charged by the supplier to exist, the tax needs to be charged on the invoice or debit advice, in which the person has been named the recipient, and these documents need to be drawn up according to the provisions of VATA and RAVATA. A mandatory condition is the tax to be indicated on a separate line.

The documentation of supplies with place of transaction the territory of the country is carried out as per Chapter Eleven of VATA.

The documentation of supplies with place of transaction the territory of another Member State is carried out as per Chapter Eleven of VATA, where the tax on the supply is chargeable by the recipient and the supplier is a person, who simultaneously satisfies the following conditions:

  1. the person has established their independent economic activity on the territory of the country or has a permanent establishment on the territory of the country from which the supply is performed, or if there is no such establishment - a permanent address or usual residence on the territory of the country;
  2. the person is not established in the Member State on whose territory the place of transaction of the supply takes place or their permanent establishment in this Member State does not participate in the supply.

The documents necessary to record the supplies and acquisitions of persons liable for VAT are listed Art. 112 (1) of the Act:

  • invoice;
  • advice to the invoice;
  • protocol.

In the event of theft, loss, damage or destruction of any tax documents, the registered person must notify in writing the competent National Revenue Agency territorial directorate not later than 24 hours after learning of the relevant circumstance.


Invoice (Art. 113 VATA)

The invoice must be issued by both registered and unregistered taxable persons.

An invoice, and respectively advice, shall be mandatorily issued by a taxable person who is a supplier in the following cases:

  • for supplies of goods or services effected by the said person;
  • upon receipt of advance payments on the supply;
  • where no tax obligation arises regarding the supplies, listed in Art. 79 (2) RAVATA;

An invoice or notification to an invoice in the name and for the account of the taxable person-supplier, can also be issued by the recipient of the supply, if there is prior agreement between the two parties, provided that there is a procedure for the acceptance of each invoice or notification to the invoice by the taxable person supplying the goods or services (Art. 113 (11) VATA).

The invoice shall mandatorily be issued not later than 5 days after the date of occurrence of the chargeable event for the supply, and in the cases of advance payment, not later than five days after the date of receipt of the payment (Art. 113 (4) and (5) VATA).

Electronic invoices and electronic notifications to invoices shall be deemed issued on the date on which the supplier or another person acting on his/its behalf provides the invoices and the notifications to the invoices so that these can be received by the client.

The invoice shall be issued at least in duplicate (one copy for the supplier and one copy for the recipient), but if the supplier so wishes, more copies of the invoice may be issued. It should be borne in mind that only the first copy of the invoice is marked with "original" and the same must be submitted to the recipient. The invoice must indicate the tax rate. Where the rate is zero, the grounds for application thereof need to be specified. Unless grounds are stated for not charging the tax, it is assumed that the tax has been included in the agreed price.

An invoice is not issued in the following cases:

  • where the supply is documented in a protocol (Art. 117);
  • for any supplies in which the recipient is a non-taxable natural person;
  • for any supplies of financial services under Art. 46;
  • for any supplies of insurance services under Art. 47;
  • for sales of air tickets;
  • upon supplies effected free of charge;
  • for supplies of goods and services carried out electronically by persons who are not established within the EU;
  • for public sales under TIPC or CPC, sales under the Registered Pledges Act or Art. 60 of the Credit Institutions Act. In these cases VATA provides for a special documentation procedure;
  • for deliveries, performed by individuals not registered under this Act, other than sole proprietors, when for the deliveries made by them: a document is issued under the procedure of a special act, or a receipt about the paid amounts or a document under Art. 9 from the Income Taxes on Natural Persons Act is issued, or the document issuance is not obligatory under the Income Taxes on Natural Persons Act.


Advice (Art. 115 VATA)

Issuing advice to invoices is not a new development. Pursuant to the requirements under VATA, advice is issued upon any change in the basis of taxation or upon rescission of a supply on which an invoice has been issued.

A debit advice must be issued upon an increase in the basis of taxation. A credit advice must be issued upon a decrease in the basis of taxation or upon rescission of supplies.

The rules governing the issuance of an invoice are also relevant to the issuance of advice.

Besides the requisites of Art. 114 of the Act, the advice to the invoice must also mandatorily contain the number and date of the invoice to which the advice is issued, and the grounds for issuing the advice.

The time limit for issuing advice is 5 days from the occurrence of the relevant tax event.

Any invoices and advices thereto, in which tax is charged even though it should not have been charged, are deemed erroneously drafted documents. In those cases where erroneously drafted or corrected documents have been entered in the accounting records of the supplier or recipient, a cancellation protocol is drawn up - one for each party (Art. 116 (4) VATA).

Cancelled documents are kept by the issuer and protocols which have effected the cancellation - by the issuer and recipient.


Protocol (Art. 117 VATA)

The protocol is likewise a tax document. It is mandatorily issued in the cases listed in Art. 117 VATA and Art. 81 RAVATA.

A protocol on taxes charged is issued by both the supplier and the recipient, where the person is obliged to charge tax.

A protocol is also issued where the person is a recipient of a supply under Art. 82 (2), (4) and (5) VATA and where the person is an acquirer under Art. 82 (3) and Art. 84 of the Act.

Protocols in the above cases are compiled in accordance with the requirements under Art. 117 (2) of the Act, unless otherwise provided in RAVATA.

In the case described above, in addition to the requisites of Art. 117 (2) VATA, the protocol must also contain:

  1. VAT identification number of the supplier under which the supply was effected, issued by another Member State;
  2. number and date of the invoice - where such has been issued until the date of issue of the protocol - Art. 81 (3) REVATA.

Where erroneously drafted or corrected documents have been entered in the accounting records of the supplier or recipient, a cancellation protocol is drawn up - one for each party. A protocol is not mandatorily issued where the date of issue of the cancelled document coincides with the date of issue of the new document - Art. 81 (4) REVATA.

The protocol, being a tax document, must be issued not later than 15 days after the date on which the tax became chargeable, or on which circumstances arose for changing the basis of taxation on the supply for which a protocol has been issued.

Upon any change of the taxable amount of a supply or upon rescission of a supply on which a protocol has been issued, the person must issue a new protocol, according to Art. 117 VATA. The new protocol must mandatorily state:

  1. number and date of the initial protocol issued on the supply;
  2. grounds for issuing the new protocol;
  3. the increase/decrease in the basis of taxation;
  4. the increase/decrease in the tax.

The new protocol must be issued not later than 15 days after the date on which the relevant circumstance has occurred.


Sales report (Art. 119 - 120 VATA)

Any taxable person must prepare a sales report on the supplies for which the issuing of an invoice or memorandum is not mandatory (Art. 119 VATA). The sales report must be compiled on the last day of the tax period at the latest, or, optionally, the person may prepare separate sales reports for each day of the tax period and/or for each of the commercial outlets thereof.

Sales report must also be compiled by taxable persons subject to the special tax procedure for carrying out tourist services, supplies of second-hand goods, works of art, collectables and antiquities, investment gold.

Those sales and supplies for which a protocol containing the charged tax has been issued are not to be included in the sales report.

The supplier must declare the sales reports in the ledger of sales, in accordance with Art. 112 RAVATA.

Persons who are not established within the European Union, carrying out supplies and services electronically, must prepare an electronic register. This register needs to be compiled on the last day of the tax period at the latest.


VAT return (Art. 125 VATA)

For every tax period, the registered person shall submit a VAT return, prepared on the basis of the ledger of purchases and ledger of sales.

This requirement does not apply to services performed electronically by persons who are not established within the European Union. A registered person, who has effected intra-European Union supplies, supplies as an intermediary in a triangular operation or supplies of services under Art. 21 (2) with the place of supply within the territory of another Member State for the tax period, must submit a VIES return on the said supplies for the relevant tax period together with the VAT return (Art. 125 (1) and (2) VATA).

Together with the VAT return the registered person must submit the ledger of purchases and ledger of sales for the relevant tax period. VAT returns must furthermore be submitted where there is no payable or refundable tax, as well as in the cases where the registered person has not effected or received any supplies or acquisitions or has effected any importation for the said tax period. The returns and the ledgers of accounts must be submitted on or before the 14th day of the month following the tax period to which the said returns and ledgers refer.

According to the amendments to Art. 125 of the Act, effective 1.01.2012, when any of the ledgers of account under Art. 124 contains more than five entries for the respective period, the tax return under and the ledgers must be mandatorily submitted electronically under the terms and procedure of the Tax Insurance Procedure Code, and signed with a qualified electronic signature. If the company has no such signature, it can authorise another company that does to submit declarations electronically on its behalf.



For the purposes of tax control, when the tax document lacks any details, it is necessary to assess to what extent this absence of data affects the provision of sufficient information on the nature of the transaction.

In the absence of a compulsory requisite in the tax document, an in-depth investigation should be carried out into the specific factual circumstances, compliance with the principles of the primacy of content over form, accurate and fair coverage and documentary support.

In addition, within the meaning of Art. 7 (3) AA, it is assumed that there is documentary support even where the primary accounting document, the invoice, lacks some of the required information, but provided that the said missing information can be certified by other documents.

TIPC provides revenue authorities with the opportunity - Art. 55 (1) - to require a translation by a sworn translator, when presenting documents in a foreign language.

The Value Added Tax Act provides for administrative penalties for non-compliance with certain legal provisions concerning the proper documentation of supplies.

According to Art. 182 VATA, any registered person, who fails to issue a tax document, or to show a tax document issued or received in the ledgers of accounts for the relevant tax period, which leads to an assessment of the tax in a smaller amount, shall be liable to a fine or to a pecuniary penalty.

Also liable to a fine is any person which is not registered under the Act, who issues a tax document statin therein tax.