What information makes a VAT adjustment traceable

01

What makes a VAT adjustment traceable

A VAT adjustment is traceable when the amount to be corrected is expressed in the national currency of the Member State using the required conversion mechanism, even if the original invoice was in another currency, and when a reliable audit trail remains between the invoice and the underlying supply of goods or services.

Also required are accounting records detailed enough to allow control by the tax administration, and archiving of invoice copies with immediate access for the competent authorities.

02

The framework of the VAT Directive (2006/112/EC)

The Directive requires that the authenticity of origin, integrity of content and legibility of an invoice be ensured from the moment of issue until the end of the storage period, through business controls that create a reliable audit trail.

Electronically archived invoices must remain accessible, downloadable and usable electronically by authorities, and the taxable person may choose the place of storage provided they make invoices available without delay.

03

Roles that make the adjustment verifiable

• Issuance role: ensures authenticity of origin, integrity and legibility of the invoice from the moment of issue.
• Accounting role: keeps accounting records detailed enough for the application and control of VAT.
• Archiving role: keeps copies of issued and received invoices and ensures immediate access for authorities.
• Filing role: prepares the VAT return with all data needed to determine payable tax and deductions within the set deadline.
• Currency conversion role: expresses the VAT amount to be corrected in the national currency using the required conversion mechanism.

04

Hypothetical example

Hypothesis: a company issued an invoice in US dollars and needs to correct the VAT amount. In this hypothetical case, the amount to be corrected must be recalculated and expressed in the national currency of the Member State, keeping the link between the corrected invoice and the original supply of goods.

05

Checks before recording the adjustment

• The corrected VAT amount is expressed in the national currency using the required conversion mechanism.
• The audit trail links the corrected invoice to the original supply of goods or services.
• Accounting records remain detailed enough for control by the tax administration.
• Copies of corrected invoices are archived together with the original ones.
• Electronic access to archived invoices remains available upon request by authorities.

06

Setting up traceability in your own software

It is a useful operational choice to ask your software partner to record, for each VAT adjustment, the link between the original invoice and the corrected invoice, to maintain the required audit trail.

It is equally useful to assign distinct roles — issuance, accounting, archiving, filing — and set up a log tracking who changed the VAT amount and when, so documentation is available to authorities on request.

07

Frequently asked questions on this topic

• The Directive requires the national currency for the VAT amount to be corrected, regardless of the original invoice's currency.
• The obligation to archive and provide immediate access falls on the taxable person, who may choose the place of storage.
• The reliable audit trail is what demonstrates the link between the invoice and the underlying economic transaction.

08

Next step

Check with your accounting team which data currently links corrected invoices to the original ones, and whether archiving guarantees immediate access for authorities: this is the starting point for strengthening VAT adjustment traceability.