Spain SII Requirements Expanded – New Mandates Begin January 1

Businesses in two of Spain’s autonomous communities – Basque Country and Navarra – will soon be subject to Spain’s Immediate Supply of Information on VAT (SII) mandate. On July 1, 2017, Spain launched SII, requiring companies operating in the country to electronically submit ledger and invoice details. With the extension into two of Spain’s autonomous communities, more business transactions will now be subject to SII compliance.

Spain’s Autonomous Regions

When the initial SII legislation went into effect, it did not apply to certain regions of Spain, including The Canary Islands, Ceuta, Melilla, Basque Country and Navarra. The Basque Country (also called the Autonomous Basque Community) is composed of three provinces: Álava, Guipúzcoa and Vizcaya. Navarra is culturally connected and geographically close to the Basque region, and while there are current referendums to officially join the two, Navarra is technically its own autonomous community.

Each of these regions applies the same basic VAT rules as the rest of Spain, but they administer and collect tax independently. While not part of the original mandate, these regional tax authorities are quickly making moves to impose SII. Legislation and technical specifications have already been issued in Basque Country and Navarra, with a planned January 1, 2018, effective date.

Who is required to comply with the VAT SII Mandate?

SII in the Basque Country and Navarra will be applicable to most taxpayers that are currently subject to VAT requirements in these same regions, assuming they meet the following criteria:

1. The business issues sales invoices in excess of EUR 6M annually (or is part of a VAT Group or falls within the special REDEME regime), and
2. Has a fiscal address within Basque Country or Navarra and revenue less than EUR 7M annually, or
3. Operates exclusively in Basque Country or Navarra and has revenue in excess of EUR 7M annually, regardless of fiscal address, or
4. Is currently required to remit tax in proportion to transactional volume carried out in Basque Country/Navarra vs. Spain, and whose revenues exceed EUR 7M annually, except when 75% or more of its operations are carried out in Spain but outside Basque Country and Navarra.

Additionally, as is the case throughout Spain, other taxpayers will be allowed to voluntarily join SII at their discretion.

What is required to comply with VAT SII?

SII requires companies to submit all documents related to VAT liabilities within a maximum of four business days. The requirements in Basque Country and Navarra look substantially similar to existing requirements 

across Spain, including electronically supplied ledgers of issued invoices, received invoices and investment goods, as well as the ledger for certain intra-community transactions. In addition, taxpayers are required to inform the tax authority of repeated cash transactions that exceed EUR 6,000 annually. As in the rest of Spain, insurance companies, travel agencies and freight companies will be required to provide even more information.

Commensurate with the SII requirements taking effect throughout Spain, taxpayers in these regions benefit by no longer being required to file local VAT ledgers for issued and received invoices, nor ledgers for intra-community transactions or capital goods. Further, they will be afforded 10 additional days to meet their periodic VAT filing obligations and are expected to receive any applicable refunds of VAT credits far more quickly.

When are the deadlines for the VAT SII Mandate?

Starting January 1, 2018, companies in Spain’s Basque Country and Navarra must comply with the SII mandate – electronically submitting ledger and invoice detail to the relevant tax authority within four days. The Spanish tax authority has expanded the SII submission window to eight days through December 31, 2017, allowing businesses to ramp up their compliance, but there is no indication that the Basque region or Navarra will take the same approach when their requirements go live on January 1. However, Navarra, has announced that transmittal testing will be permitted starting in September, giving companies the opportunity to develop appropriate SII compliance processes before mandatory submissions begin.