Are Pre-Filled VAT Returns Really Beneficial for Businesses?

September 11, 2025 EU-Umsatzsteuer-Update

As governments around the world ramp up digital tax initiatives, a new trend is gaining traction: pre-filled VAT returns. Powered by real-time data collection and mandatory e-invoicing systems, tax authorities in several countries now generate draft VAT returns automatically using reported invoice and transaction data.

At first glance, this may seem like the holy grail of tax compliance: automated, accurate, and timesaving. However, for businesses navigating complex VAT regimes or multi-jurisdictional VAT obligations, the benefits are far less clear-cut.

What Are Pre-Filled VAT Returns?

Pre-filled VAT returns are essentially a draft return compiled by tax administrations. These drafts rely on information that the government already collects through various systems:

  • E-invoicing platforms (e.g. Italy’s Sistema di Interscambio, Hungary’s NAV)
  • Real-time reporting systems (e.g. Spain’s SII)
  • Other digital data sources such as SAF-T files or point-of-sale systems and e-cash register feeds

Countries at the forefront of this initiative include Greece, Romania, Spain, Hungary, and Italy—each adopting varying models tailored to their digital reporting landscapes.

The Potential Benefits

If implemented comprehensively, pre-filled returns hold great promise, especially for smaller businesses with streamlined operations.

  1. Time Savings Basic or domestic-only businesses with fully digital workflows can find real efficiencies. If sales and purchase invoices are already reported electronically, the pre-filled return could be ready with little additional work.
  2. Error Reduction Automating the extraction of VAT figures from validated invoice data can reduce human entry mistakes, double claims, or missed reporting.
  3. Audit Readiness Pre-filled returns reflect the data already in possession of the tax authority. This alignment reduces surprises during audits and strengthens data consistency across platforms.
  4. Digitally Driven Tax Transparency These systems support governments’ goals of closing the VAT gap, reducing fraud, and increasing transparency in the tax ecosystem.

The Practical Challenges

Despite the promise, the day-to-day experience of many businesses reveals a more problematic reality.

  1. Incomplete Data Coverage Not all transaction types are included in real-time reporting:
    • Cross-border transactions (like imports/exports)
    • Reverse charges transactions
    • Partially deductible expenses
    • Non-taxable income such as subsidies or grants
  2. Ongoing Manual Intervention Companies still need to:
    • Reconcile ERP figures with government-prepared data
    • Apply complex VAT recovery rules (e.g., sectoral restrictions or pro-rata deduction)
    • Adjust figures based on prior period corrections
  3. Final Responsibility Still with the Business: A serious misconception is that if the government prepares it, it must be right. But:
    • Liability still rests with the taxpayer
    • Errors, even if introduced by tax systems, can trigger penalties
    • Companies often must justify any mismatches between pre-filled data and their internal records—creating more work instead of less
  4. Fragmented Approaches Across Jurisdictions Businesses operating in multiple countries face varying data formats, rules, and system maturity levels. This lack of harmonisation adds to the compliance burden.

So, Are Pre-Filled VAT Returns Helpful?

In principle, yes. For businesses operating in single countries, with fully digitized invoicing and straightforward VAT rules, they offer real simplification. Over time, as data quality improves and tax logic is increasingly embedded into systems upstream, the benefits could expand.

But for now, pre-filled VAT return functions more like a start in the process of completing a VAT return rather than a compliance solution. Especially for complex or international businesses, it’s still essential to have a compliance tool  that can treat the pre-filled return as just another data point to compare

If you would like to understand more how our VAT Compliance tool can support your business in the reconciliation process with a pre-filled VAT Return contact us for a demo or request more information.

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