5 Data Considerations When Choosing the Right Compliance Solution for Your Business

In today’s fast-paced, regulation-driven landscape, your VAT Compliance solution isn’t just a nice to have – it’s the centre piece to you VAT risk management and tax control framework. Poor data practices can lead to missed filing deadlines, errors, audits and ultimately interest, penalties and fines from the tax authorities.

Before we dive into the five data considerations, it helps to understand the four broad approaches to VAT compliance:

1. An in-house solution, built and maintained by your IT and tax teams using custom extracts, macros or scripts. While this offering full control but often saddled with maintenance debt and limited flexibility.
2. Outsourcing, where a specialist provider handles your filings end-to-end in exchange for per-declaration fees and service-level commitments. Outsourcing allows you to benefit from significant external expertise and best in classes process from knowledgeable VAT experts in all jurisdictions. Often these firm combine VAT Compliance with VAT Consulting, where they can help you ensure compliance with even the most complicated VAT flows. This outsourcing allows you to access deep expertise on call when you need it.
3. Traditional SaaS Compliance tools, which rely on custom system APIs or batch data uploads into an external platform – delivering packaged functionality but exposing you to integration complexity, API-call bills and third-party data risk.
4. Meridian’s ARCO Compliance Solution is a next-generation SAP-embedded solution, built on SAP Business Technology Platform (BTP). BTP is SAP’s cloud platform. By leveraging standard Core Data Services (CDS) views, BTP’s Integration Suite and Extension Suite, this Compliance tool lives entirely within your SAP environment. That means real-time data extraction, automated validations, seamless multi-instance consolidation, built-in audit trails and frictionless upgrades.

Before you commit to one of these options, ask yourself these five crucial data questions.

1. Data Extraction: How Does the Data Extracted from Your System?

Choosing the extraction mechanism determines reliability, cost and maintenance overhead.

• In-House – Here IT teams with guidance from internal VAT compliance experts work to create bespoke scripts, excel macros or home-grown connectors to extract and configure data from SAP. While you control every line of code, you’re also on the hook to maintain it – often with the original developers long gone. While this is often seen as the cheapest alternative hidden costs such as IT time & resources, training and key person risk can make it the riskiest and most expensive when non-compliance, late fees etc are factored in.
• Outsourcing – Firms will take whatever extract you deliver and integrate this into their own standard VAT Compliance process. This process still relies on you being able to extract the required data. These firms can often provide you with guidance on how to extract the data they need to complete your VAT declarations.
• Traditional SaaS compliance tools – Typically relies on custom built APIs or batch data uploads to transfer data from your SAP system to their standardised system reporting. Integration projects can drag on, and API-call bills can surprise you down the line and changes to your system or process can require changes and updates to these API’s.
• Meridian’s ARCO Compliance Solution – Uses standard CDS views and SAP Integration Suite flows in BTP. As this functionality is entirely SAP standard functionality this allows for the tool to be Clean Core compliant. Throughout the process data stays your SAP system, live data flows in Realtime into the Compliance solution without manual intervention.

Key takeaway: Aim for extraction that’s low-touch, enterprise-grade and vendor-maintained so your VAT Compliance Team can focus on what they do best – VAT.

2. Data Timing & Availability: Reactivity vs. Proactivity

The time between the books closing at month end and VAT declaration submission deadline is short and only getting shorter as Tax Authorities move towards live data filing requirements.  If you’re only seeing data after books close, you’re always “catching up.”

• In-House & Outsourcing – Post-Close Snapshots Traditional month-end data locks you into a reactive mindset: short timelines, rushed fixes and zero room for quality checks.
• Traditional SaaS & Meridan’s Arco Compliance – Live Data Streams A real-time feed means anomalies surface as they occur. You can correct mis-posted invoices before period close, drastically cutting the time between issue detection and resolution.

Key takeaway: Real-time data changes the paradigm for VAT teams. It transforms the way they work by putting them at the centre of process rather than at the end by giving them access to the data as it is created. This allows for ample time to check & correct errors before they become an issue – transforming VAT teams from reactive firefighters into proactive problem solvers.

3. Data Validation & Checks: Manual vs. Automated

Your compliance solution must catch errors before data goes to the tax authorities. The sheer volume of data that flows downstream to the VAT Team means that it can be impossible to check each invoice therefore

• In-House – Manual/Ad-Hoc Checks These vary Person-by-person, region-by-region approaches lead to inconsistent coverage and over-reliance on key individuals. The huge volumes of data involved make this approach very high risk, particularly if this is combined with the post-close snapshots approach to data extraction, as described above in section 2, as the short timeframe further reduces the checks that can take place.
•  Outsource – Semi-Automated (Tool-Assisted) Some SaaS tools offer validation modules, but they often still require post-export fixes. Keeping track of these fixes and alterations can be difficult. It can be challenging to reconcile your SAP system to the final VAT submission.
• Traditional SaaS & Meridan’s Arco Compliance – Fully Embedded Automation Built-in validation rules flag discrepancies in the source system. You can resolve issues upstream in SAP, ensuring clean, compliant data flows in every period. These tools allow for VAT teams to pursue a “right first time approach” by identifying errors early and getting upstream teams to make corrections early.

Key takeaway: This is an essential question for VAT teams to answer as part of their Tax Control Framework. Tax authorities are beginning to embrace IT solutions that allow them to cross compare VAT returns from your suppliers & customers to ensure the accuracy of your VAT returns. Failure to get the data right first time to them increases the risk of audits, fines and penalties. Fully embedded automated checks give you the confidence that your data is correct and ready for the tax authorities on time, every time.

4. Data Storage, Security & Privacy: Where is your data and how secure is it?

VAT Compliance data is sensitive—don’t expose yourself to unnecessary risk.

• In-House – Data never leaves your network, but so do all the patching, monitoring and intrusion detection responsibilities. Stored in multiple excel files, across various folders & drives. It can be very difficult to reconcile data from SAP to submission retrospectively.
• Traditional SaaS solutions & Outsource providers – Data is stored outside of your system. Email attachments or API feeds to a third-party vault create extra attack surfaces. Breaches in the compliance chain can expose transactional or customer-level details. Your VAT data is stored external to your system, there is often a cost associated with accessing & extracting your own data!
• Meridan’s Arco Compliance – Your data remains inside your SAP environment on your BTP instance. No additional network hops, no new perimeter to secure. This approach also allows for seamless integration with SAP’s AI tool joule without the need for further API integration & calls.

Key takeaway: Minimize data egress. If your tool can work entirely within your existing enterprise platform, you reduce risk and simplify governance. Put simply SAP is investing more in data security than all the compliance solutions are investing combined. Why put your data anywhere else?

5. Data Amalgamation: Consolidating Multiple SAP Instances

Global enterprises often live on more than one SAP instance – how do you merge, reconcile and report?

• Inhouse: Relies on custom scripts & endless spreadsheets Fragile, hard to version, and a nightmare during phased migrations (e.g., ECC → S/4HANA).
• Outsourcer Processes Typically robust—outsourcers have playbooks for multi-system data loads—but you still feed them extracts and may face delays.
• Traditional SaaS solutions Multiple API connections, custom mapping for each instance; every new system adds a new integration project as well as on-going maintenance.
• Meridan’s Arco Compliance A single SAP-centric platform pulls from every source instance via standard connectors—no manual merging, no user-driven consolidations. This allows for seamless integration & consolidation. Its easy to manage VAT groups where the entities sit in different SAP instances.

Key takeaway: Look for solutions purpose-built to federate data from all your SAP systems with minimal handholding and input.

Conclusion

Data is the lifeblood of compliance. Extraction, timing, validation, security, storage and consolidation aren’t optional—they’re foundational. By prioritizing real-time, embedded, automated and secure data handling, you’ll reduce risk, streamline processes and keep your VAT and tax teams focused on strategic value rather than month-end firefighting.