Tell us about Sovos’ activity in the last year and your role in its growth?
In short, we’ve been busy. Alongside growth through acquisitions, we’ve been heavily focussed on key initiatives that ensure our current and future customers can be fully supported through an evolving regulatory landscape. In EMEA, these encompass a whole range of indirect tax requirements, from traditional periodic VAT Reporting through to real-time continuous transaction control (CTC) solutions, the latter of which is becoming increasingly prevalent both in region and globally.
Within Compliance Services we’ve worked with hundreds of our e-commerce customers to navigate the EU E-Commerce VAT Package that came into force in July 2021. For many, this led to a significant simplification in VAT reporting requirements in terms of the volume of VAT Returns required, although the complexity of understanding how to comply – and potentially communicate – with 27 Member States remains.
We’ve based our e-commerce offering around two key strengths: comprehensive technology solutions and expert regulatory understanding. This has allowed our customers to benefit from an easy to navigate offering plus access to the support they need to trade with confidence and mitigate the risk of fines and penalties.
My role involves collaboration with multiple functions to develop and implement business transformation and growth initiatives. I’ve been heavily involved in the co-ordination of Sovos’ approach to the e-commerce package and ensuring our comprehensive offering to both existing and the many new customers we’ve acquired in this space.
What are the key learnings in the past year and what’s changed?
Change and adaptability are part and parcel of what it means to be part of Sovos. Strategic acquisitions, increased tax digitisation and tax authority initiatives to close VAT gaps means there’s a continual requirement to work in collaboration with a diverse set of stakeholders to ensure we keep ahead of change and properly communicate both internally and to our valued customers and the wider market. Effective communication and planning are key to making this work.
In EMEA, we’ve strengthened our position in supporting the e-commerce sector; gained new colleagues and customers in Portugal through acquisition; and continued to expand and enhance our product portfolio through innovation as well as due to regulatory demand and customer requirements.
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What challenges has Sovos helped businesses with following the recent EU tax legislation updates?
Tax is becoming increasingly digitised as authorities work to close the VAT gap associated with e-commerce and simplifying VAT compliance requirements for businesses selling both B2C and B2B. Most recently in 2021, the EU rolled out its new e-commerce VAT package. Its aim is to reduce fraud and streamline e-commerce transactions and reporting for businesses.
Though the package simplifies the VAT process in the long term, the initial set up can present challenges for SMEs and tax authorities, and it has caused some confusion amongst shippers. For example, the adoption of the Import One Stop Shop (IOSS) has presented problems in some European Member States as computer systems weren’t prepared, slowing down the import process and stalling trade.
On top of this, for SMEs without dedicated in-house tax teams or the mechanisms in place to account for VAT, changes can have a huge impact on being able to comply with the new rules, with non-compliance resulting in fines and penalties and a poor customer experience. Whilst reporting for e-commerce has been simplified, now tax authorities can require a granular view of business data which may be requested and used in audits to check VAT has been applied appropriately.
This is where Sovos comes in to guide teams through the process. Sovos assists businesses from SME to enterprise by providing technology to reduce admin and access to a team of regulatory and VAT experts who monitor legislative changes and its business impact. This way businesses can face change head on knowing they are compliant with time to spare; particularly important for SMEs with teams already stretched across multiple responsibilities.
What can we hope to see from Sovos in the future?
As more governments go digital and seek transaction data in real time, it’s impossible for businesses to keep up without technology-enabled services and solutions. CTC mandates are increasingly expected to be rolled out from as early as next year in more European countries such as France, Poland, Belgium and the expansion of Hungary’s scheme. Sovos will continue to focus on delivering software solutions that ensure our customers remain compliant with today’s CTCs and with whatever regulatory changes are on the horizon.
With seven acquisitions this year, a signed agreement for an eighth, and growing presence in many regions around the world, Sovos will continue to prioritise local expertise helping more businesses stay on top of legislative changes with in-house experts and services to guide organisations through the compliance maze.