Helping the Danish Tax and Customs Administration against VAT avoidance

Systematic selected to deliver an IT system that makes it easier to counteract VAT avoidance on business conducted between different EU countries

12 July 2010

In the face of fierce competition from four other major suppliers, Systematic has won an EU tender for a new system for the Danish tax authorities – the Danish Tax and Customs Administration, known as SKAT in Danish.

The listing system maintains records for the goods and services that are bought and sold across national borders within the EU. It is one of the tools that the Danish Tax and Customs Administration uses to combat VAT avoidance. The system is linked into the joint European VAT Information Exchange System (VIES) that collates data from all the different EU countries. According to EU legislation, the appropriate VAT is payable in the country of destination, i.e. the country where a particular item or service ”ends”, with a view to final sale. A combination of VIES and national systems such as the Danish list system makes it possible to monitor and administer these transactions.

'We are very satisfied with the fact that our concerted focus on the public sector has resulted in adding the Danish Tax and Customs Administration to our list of customers, and we welcome them as a new working partner,' said Flemming Bent Thomsen, Vice President Business Development & Sales at Systematic. Systematic is normally better known as a long-term supplier of computer systems for the defence and healthcare sectors. In more recent years, however, we have achieved increasing commercial success with providing systems for use in the public sector and by financial institutions.

'We consider the Danish Tax and Customs Administration an extremely exciting partner to work with. Like the rest of the public sector in Denmark, this body has an increasing focus on its suppliers’ abilities to deliver as specified, and on the skills required to make sure large-scale IT projects are successfully brought to fruition. This focus benefits a company like Systematic, because we are in a position to document our exceptional capabilities,' explains Flemming Bent Thomsen.

Convincing record of reliable delivery

'In this instance, too, our tender was successful because our attractive price was backed by a convincingly realistic delivery schedule and a high degree of security that deadlines would be met. At the same time, our proven experience with developing computer systems that integrate smoothly with larger international systems also played a role in our winning this tender,' says Flemming Bent Thomsen.

As an example of the documented reliability of our delivery scheduling, we met 92% of all designated delivery milestones over the course of the past fiscal year. This success rate is just one concrete result of the company’s ongoing process improvements, using tools such as Lean and Capability Maturity Model Integration (CMMI). Systematic is in fact the only company in Scandinavia that is certified at Level 5 in the international CMMI model.

According to current plans, the new list system is to be ready for implementation in early 2011. It will then replace an existing system that will soon have been in operation for two decades and is therefore now inadequate in terms of both technology and functionality. The new system that Systematic will now develop will make the tasks undertaken by the Danish Tax and Customs Administration more efficient, in part because many of the monitoring procedures can now be automated. The system will also help alleviate the administrative burden for the companies involved.

'With this new system, we will be able to provide companies with a better way to lodge the returns from their international VAT transactions, and make any necessary adjustments in the figures they report. This means we will then be able to focus our efforts on the relatively few companies that attempt to commit fraud in conjunction with VAT returns,' explains Aino Olsen, head of section in the Danish Ministry of Taxation.