Spain Launches Real-Time Transactional E-Invoice Reporting Standards

This blog was last updated on April 9, 2024

60,000 companies required to implement new e-invoice reporting standard.

With recent reports highlighting European Union members’ struggle with uncollected VAT, countries are focusing on initiatives that will reduce fraud and increase tax revenues. Spain, in particular, is taking a page from Latin America’s electronic invoice registration playbook. On December 6, 2016, Spain announced that certain businesses will be required to submit transactional invoice data for both sales and purchases electronically starting on July 1, 2017.

Ranking seventh in the E.U. in terms of VAT gap by total, Spain’s AEAT tax authority will require more than 60,000 companies to implement this new reporting  Spain Launches SII – Real-Time Transactional e-Invoicing  Reporting standard, which now includes real-time registration of transactional data. The requirement, dubbed the Immediate of Information on VAT (SII), will be enforced starting July 1, 2017. The SII will be mandatory for all taxpayers that file monthly VAT returns. It is estimated that a group of more than 60,000 taxpayers with operations in Spain will have to implement this new system, including:

• Large companies with revenues equal to or greater than 6M euros annually
• Companies registered in the monthly VAT refund regime (REDEME)
• Entities forming part of a VAT group

These taxpayers represent 80% of the nation’s invoicing volume, meaning Spain will immediately gain visibility into the vast majority of transactions taking place.

Specifically, the SII will require companies to submit all documents related to VAT liabilities, including invoices issued, invoices received, customs declarations and accounting forms.  The real-time submission of transactional invoice data begins July 2017. Companies must be aware that Spain’s AEAT tax authority will be demanding retroactive transactional data starting from January 1 – June 30th 2017.  It is critical for organizations to make it a priority today to start looking for a solution to ensure compliance and avoid steep fines. . Once the real-time reporting mandate begins, companies will have a maximum of 4 business days from issuing or receiving a VAT-related document to transmit the information to Spain’s tax authority to avoid penalties.  (During the on-boarding period of July 1, 2017, through December 31, 2017, that time period is extended to 8 days.) This is similar to Mexico’s first e-invoicing legislation in 2008, which included a 3-day registration rule – and has since expanded to real-time validations.

Companies with high transactional volumes should treat this as a real-time validation similar to Latin American models, as delay in sending this information to the authorities can result in penalties are 1% of the invoice value. The information required in this new documentation process goes beyond what has been traditionally requested, including more detailed descriptions and classifications.

Spain is no stranger to such electronic processes, introducing mandatory e-invoicing for business-to-government transactions starting in 2015. PYMNTS estimated that this measure would save the government €3.48 per invoice and cut processing times by up to 80%. Similar efficiencies are expected from SII – benefitting both the AEAT and participating companies. One piece of good news in this requirement, for example, is that those mandated and those opting in will no longer be required to submit certain other VAT reports, as companies that are part of the SII will be issued an automated VAT return application that will streamline claims.

Of course, the challenges and risks are high, as well. In addition to the technical and process implementation hurdles SII presents, the fines can quickly add up. Submission delays will result in a fine of 0.5% of the invoice total, and mistakes will cost companies 1% of the invoice amount.

With unrivaled experience in global compliance, Sovos is the only tax compliance company situated to fully support this mandate – and similar initiatives emerging throughout the E.U. – based on its deep experience in the most challenging compliance environments in the world, all within your native ERP environment.