What SII Will Require from Companies Doing Business in the Canary Islands

Gustavo Jimenez
October 12, 2018

A version of Immediate Information Sharing (SII) will take effect in the Canary Islands on Jan. 1, 2019. As usual in the Canaries, an autonomous region of Spain, tax regulations will be similar to those in the mainland but not exactly the same.

The Canary Islands is an autonomous region of Spain with a tax system separate from the mainland. For VAT purposes, it is not considered part of the EU. They have their own version of VAT known as IGIC. Similarly, while Spain operates under the AEAT tax authority, the Canary Islands have an authority of their own, the Agencia Tributaria Canaria (ATC).

Who falls under the new Canary Islands SII mandate?

In an effort to cut down on IGIC fraud, the Canaries are implementing their own version of SII. As of Jan. 1, 2019, businesses must begin IGIC ledger bookkeeping with the ATC if they:

  • Invoice more than 6 million Euros per year
  • Are members of an IGIC group (the equivalent of a VAT group)
  • Are under the special regime of monthly VAT refunds (REDEME)

The ATC will also allow businesses to participate voluntarily if they file IGIC returns on a quarterly basis. However, those that voluntarily decide to join the system will be required to stay in it for at least a full calendar year. In order to participate in 2019, businesses should submit applications during November and December of 2018.

What information do businesses need to track?

The SII-IGIC is not so much a report as it is a system of flowing information from a company’s ERP system into the ATC database. Businesses now need to keep information in ledgers and keep and maintain those ledgers electronically in via the ATC website. Required information includes:

  • Issued invoices: all invoices issued by the paying company, reported within 4 days
  • Received invoices: all received invoices, reported within 4 days from the day they are registered
  • Capital assets: all IGIC-relevant changes in the fixed assets accounts that a company, under the pro rata regime, has had during the fiscal year

In addition, travel agents have to track purchases corresponding to provisions of air transport of passengers and their luggage.

What does the ATC hope to accomplish?

As is the case with most VAT-related enforcement mandates, the ATC is seeking with its new mandate to reduce fraud. Prior to the mandate, the ATC collected monthly or quarterly. Under the mandate, it will collect data transaction data in near-real time every 4 days at the most, greatly reducing the potential for false or incorrect filings.

The SII mandate actually simplified some elements of IGIC reporting, as it eliminates the need for three forms:

  1. Form 415: Annual informative return summarizing the transactions a company has carried out with third parties during the year.
  2. Form 416: Annual declaration of exempt operations by application of article 25 of Law 19/1994
  3. Form 425: Annual summary of transactions

The mandate will also enable the ATC to process audits more quickly and to conduct faster data triangulation among the shipper, receiver and tax authoring, which will also help prevent IGIC fraud.

Compliance with SII in the Canaries

Companies doing business in the Canary Islands will need a third-party partner to track transactions in compliance with the new SII mandate. Legacy accounting systems might not offer updates to keep businesses in line with new regulations.

Sovos, a leading processor of e-invoices for business transactions in Latin America, Europe and Asia, including Spain, has the solutions to keep businesses compliant and change dynamically as regulations in regions such as the Canaries shift.

We’ve successfully implemented Spain SII AEAT for the largest multinationals with very complex ERP environments and logics, and we are ready to help you with SII ATC in the Canaries.

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Author

Gustavo Jimenez

Gustavo is Sovos’ Product Marketing Manager for eInvoicing solutions.
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