For an overview about other VAT-related requirements in Spain read this comprehensive page about VAT compliance in Spain.
Intrastat is an obligation created in 1993 that applies to certain businesses that trade internationally in the European Union. Specifically, it relates to the movement of goods – arrivals and dispatches – across EU Member States.
The requirements of Intrastat remain similar across the EU, though certain Member States have implemented rules differently. As a result, it can be confusing when trading cross-border in the region.
From reports and returns to thresholds and specific codes, knowing what applies to your business and how to comply is important. Consider this your go-to guide to understand Intrastat rules, requirements, reporting and terminology.
Intrastat reporting largely involves statistics but does occasionally require fiscal data. The information needed depends on the threshold of the EU Member State that your business is established within.
The mandatory data in Intrastat reports were originally regulated by Article 9 of Regulation (EC) No 638/2004, which is no longer in force, though it also lists optional elements for reporting consistency across the EU. Typical data requirements included:
In 2022, a project for the modernisation of Intrastat was introduced, Regulation (EC) No 638/2004 was abolished, and a new Regulation 2019/2152 entered into force. In addition to the data mentioned above, it made the following information mandatory in all Member States:
Optionally, Member States can also opt to ask for:
An Intrastat return, also known as an Intrastat declaration, replaced customs declarations in 1993 to serve as the source of trade statistics within the European Union.
These returns provide the European Commission, as well as EU National Customs Authorities, with detailed insights into the goods being traded in the European Union. Due to the information required in the declarations, authorities can identify the kinds of goods that are circulating, as well as the volume of such goods.
If a company does not submit Intrastat returns when qualifying to do so it might be liable to hefty fines.
It’s important to understand how Intrastat works with other compliance obligations in general, such as submitting VAT returns, recapitulative statements (EC Sales Lists) and, notably for e-commerce sellers in the EU, schemes like Union OSS.
Intrastat returns are required when your business dispatches goods to or acquires goods from another EU Member State when the value exceeds the country’s threshold. Each Member State sets the deadline for the submission of declarations to its respective national tax authority.
In Germany, for example, applicable businesses must report every month, with each declaration required within 10 days after the end of the reporting period ending. This can be done online or through the Germany statistics authority portal.
Your business should check the value of goods traded within EU Member States for the past year to see whether they exceed national thresholds.
Qualifying thresholds dictate whether a business must register for Intrastat or not. These thresholds must be calculated each year, with each EU Member State having its own figure that changes annually.
When a threshold is exceeded in a country, businesses should continue to file Intrastat returns until the applicable January-December period is complete.
Read our blog for a comprehensive Intrastat threshold table containing each country’s qualifying figure.
Otherwise known as commodity codes or Combined Nomenclature (CN), Intrastat numbers are part of a system allowing authorities to identify the types of goods traded across the European Union. The requirements for Intrastat numbers are largely the same across EU Member States, with just a few exceptions.
These numbers, or codes, are part of an eight-digit system that is comprised of Harmonized System (HS) codes and EU subdivisions. They contain complete nomenclature for the description of goods and are subject to annual revisions, ensuring they are up to date with technology and trading patterns.
The European Commission published the Intrastat numbers for 2023 in October 2022.
Sovos’ SAP Framework for periodic reports including Intrastat takes care of the extraction of data required to generate periodic reporting for businesses. Sovos’ solution generates compliant Intrastat reports by extracting data from required SAP modules. Using SAP with this add-on provides a framework for periodic returns including Intrastat, EC Sales Lists and SAF-T.
In turn, this increases the ease of compliance and reduces the risk of penalties from incorrect filings – producing cost and time savings for your business.
Speak to our team about how we can help with Intrastat compliance.
Intrastat returns are still required by businesses registered for VAT in the UK, even after Brexit, with respect to supplies of goods from the EU into Northern Ireland and vice-versa.
Businesses in the EU that trade goods with other EU countries – whether they’re dispatched or received – need to file Intrastat returns if the annual trade value exceeds the applicable country’s threshold.
Intrastat is a system which allows the European Union to track traded goods between its Member States. It was devised to replace customs reporting on the movement of goods within the EU, which stopped in 1993.
Intrastat divides goods into categories that are identified by eight-digit codes. These categories are typically referred to as Intrastat codes, commodity codes or Combined Nomenclature (CN).
Want to learn about EU VAT compliance? Our Introduction to EU VAT is a great place to start. We also have specific guides to help you understand important EU tax requirements, including the EU VAT e-commerce package and VAT between European countries.
The speed at which regulations and requirements evolve can make it difficult to stay abreast of VAT Reporting and SAF-T.
Remaining knowledgeable about recent changes enforced by tax authorities is the initial stride towards readiness for repercussions.
In Sovos’ most recent quarterly update webinar on VAT Reporting and SAF-T, Inês Carvalho, Regulatory Counsel, delves into the freshest legislative revisions concerning VAT reporting and SAF-T and the potential implications for your business.
In this webinar, our expert will cover updates on:
Are you in search of a new Insurance Premium Tax (IPT) provider? Need guidance on making a smooth transition? Join our exclusive live Q&A webinar, “Choosing a New IPT Provider,” where we’ll address all your inquiries and help you confidently navigate this important decision.
Changing IPT providers can be a daunting process, but we’re here to simplify the transition for you with our industry expertise and hands-on experience. Our team has successfully assisted numerous clients in finding the right IPT solution that aligns with their needs, and we’re excited to share our knowledge with you.
Sovos’ recent observations of audits by EU Tax Authorities are that Tax Officers are paying more attention to the contents of One Stop Shop (OSS) VAT Returns. They have challenged, and even excluded, companies from this optional scheme.
OSS VAT returns must contain details of supplies made to customers in each Member State of consumption by the taxable person. Supplies that need to be reported are as follows.
Supplies of services to non-taxable persons taking place in the EU. This includes supplies of services taking place in the Member State of identification.
Supplies of services made to non-taxable persons taking place in a Member State in which the supplier is not established. This includes the intra-community distance sales of goods.
Additionally, a taxable person can also declare domestic supplies of goods for which they are a deemed supplier in the Union scheme.
A taxable person might be excluded by the Member State of identification from the scheme for several reasons. Considering the most common reasons, it’s important to note the following:
Let’s look at two case studies to further demonstrate the above.
A taxable person submits a quarterly OSS return and pays the VAT owed by the last day of the month, following the end of each quarter. If they have not sold any goods in the EU during a tax period, they should submit a nil return.
Taxable persons must submit their quarterly OSS VAT returns according to the following schedule.
If the due date falls on a weekend or bank holiday, the deadline is not moved to the next workday.
A company, established and VAT registered in Spain, applied to the optional OSS Scheme under the Union scheme.
This company has an e-commerce store and customers can request delivery to their premises in any EU Member State. Under the terms and conditions on the website, the company clarifies that this channel is only for private individuals.
However, during an audit carried out by the German Tax Authorities, it has been noticed that some supplies are carried out in favour of business customers.
In some cases, the business customers have just shared their company name. In other cases, the companies have included their German VAT number in the purchase order on the internet (e.g. under “Additional comments”) and this information has been included on the invoice issued by the Spanish company.
Under these circumstances, the German Tax Office has provided the Spanish company with a warning as:
A company established and VAT-registered in Turkey applied to the optional OSS Scheme under the Union scheme in Slovakia.
This company has an e-commerce store and customers request delivery from Slovakia, where the main supplier of the Turkish company is located, directly to their premises in any EU Member State.
Due to financial issues, the Turkish company has not paid its VAT liabilities despite submitting the OSS VAT returns on a timely basis.
Slovakian Tax Authorities have decided to exclude the company from the OSS Scheme.
Under these circumstances, the Turkish company:
The information about the supplies, available from EU Tax Authorities, will increase massively with the implementation of the Central Electronic System of Payment information (CESOP).
On 18 February 2020, the EU Council adopted a legislative package requesting payment service providers to transmit information on cross-border payments originating from Member States and on the beneficiary (“the payee”) of these cross-border payments.
Under this package, payment service providers offering services in the EU will have to monitor the payees of cross-border payments. They will have to transmit information on those who receive more than 25 cross-border payments per quarter to the administrations of the Member States.
As mentioned by the Tax Authorities:
Payment Service Providers in the EU will need to report cross-border payments on a quarterly basis as of Q1 2024, with the first report due by 30 April 2024.
We suggest double-checking the quality of the data included in your OSS Returns to the possibility of exclusion from the scheme.
Sovos’ experts are at your disposal to support you through a pre-audit of your data or corresponding with the Tax Authorities. Contact our team for more information.
Our latest webinar delves into the intricacies of VAT and reveals key insights into both Business-to-Consumer (B2C) and Business-to-Business (B2B) transactions.
Sovos’ VAT expert Francisco Gomes will share insights for businesses seeking to expand their reach and streamline operations.
In our free 30-minute webinar, you will learn more about:
Don’t miss this opportunity to enhance your understanding of VAT in cross-border trade and unlock the growth potential. Find out more details in our webinar filled with practical insights and expert advice to propel your business forward, and bring your questions to the Q&A session at the end.
Update: 9 December 2024
On September 15th, 2024, the French Tax Authorities published a Press Release announcing a profound change in the upcoming French Mandate for electronic e-invoicing & e-reporting.
Indeed, the Public Portal (aka PPF) will no longer provide e-Invoicing Services, making it compulsory for every FR-established and VAT-Registered Taxpayer to send and receive e-Invoices via a 3rd Party Dematerialization Platform (aka PDP) of its choice.
After this initial announcement, the FR TA has communicated additional details, whether on the rationale behind that pivotal decision or on the next milestones until the Mandate enters into force:
Update: 2 January 2024
The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. With the finalization of the law, the new implementation dates are as follows:
Receipt of e-invoices: Starting from 1 September 2026, ALL taxpayers, regardless of their size, will be required to be capable of receiving e-invoices. This date may be extended to December 1, 2026, at the latest, but only by decree.
Issuing e-invoices:
International B2B, B2C transaction and payment data transmission:
The e-reporting obligation for international B2B (sales and purchases) and B2C transactions and Payment data follows the same timetable as that for issuing electronic invoices (September 1, 2026 or September 1, 2027 depending on the size of the company).
The implementing decree that will formally ratify this new schedule is expected during the first quarter of 2024.
Looking for more information about how to comply with the French Mandate? Contact our expert team.
Update: 19 October 2023
The long-awaited new implementation timeline regarding the e-invoicing and e-reporting within the draft Finance Law for 2024 has been unveiled on 17 October 2023.
According to the draft amending General Tax Code and Law No. 2022-1157, the new dates are as follows:
Implementation phases: The roll out of the mandate will now occur in two phases, as opposed to the previously planned three phases.
Issuing e-invoices:
Receipt of e-invoices: Starting from 1 September 2026, all taxpayers will be required to be capable of receiving e-invoices.
E-reporting obligations: The enforcement of e-reporting obligations will follow the same revised dates.
It is important to note that the above-mentioned dates, September 2026 and September 2027, may be subject to readjustment with the possibility of rescheduling to the 1st of December as the latest date, in the respective years.
After the adoption of Finance Law for 2024, a Decree complementing the law is expected to be issued in the first quarter of the upcoming year for full enforcement of aforementioned obligations.
Companies need to take advantage of the additional time through active participation in the pilot phase during which all relevant use cases should be tested so that changes to applications, processes and systems can be taken care of and fine-tuned in good time to ensure compliance.
Looking for more information about how to comply with the French Mandate? Contact our expert team.
Update: 15 September 2023
In a recent meeting of the Communauté des Relais, the tax authority released additional details surrounding the previously communicated postponement of the B2B e-invoicing mandate in France.
This delay is a result of the tax authority listening to feedback from French businesses who have struggled to meet the original timeline. It’s further evidence, as previously iterated by the ICC of just how much time and effort is required for most businesses to compare for the complexities of a new mandate.
While the formal dates are still to be defined, the revised main timeline was presented as part of a roll-out in 3 stages:
2024: The authorities will publish the first list of officially registered service providers (PDPs – Plateformes de Dématérialisation Partenaires) by the spring of 2024. During the course of 2024, the development of the public portal (PPF – Portail Public de Facturation) will be completed.
2025: During this year, a large-scale pilot project, involving companies of all sizes will be conducted. The tax authority views this pilot as an opportunity for taxpayers to fine-tune their e-invoicing and e-reporting processes and systems to comply with what has grown to be, a complex and sophisticated CTC framework.
2026: The roll-out of the obligation for the entire economy will largely take place during 2026. However, at what pace remains to be seen once the Finance Law is adopted by Parliament at the end of 2023.
Businesses impacted by the French mandate, headquartered in France and elsewhere, will now be in a better position to successfully comply with the new reform, assuming they make use of the added time provided by the French authorities. In particular, by proactively using the pilot program to build confidence and knowledge on the critical path to readiness. For the largest taxpayers facing these obligations, it would be prudent to regard these changes as a mere 6-month postponement, with the beginning of the pilot program acting as the de facto starting date. To understand the full impact on their business processes and data flows, companies will need to thoroughly test up to 36 use-cases. The many software vendors helping companies to streamline their purchase-to-pay and order-to-cash processes will certainly be eager to test the compliance of their solutions as early as possible in what has become a completely new ecosystem.
Participation in the extended pilot, with professional support from Sovos, provides a risk-free environment to assess and then conduct the essential finetuning.
Sovos is one of the first 20 candidates for service provider (PDP) accreditation in France, and as such will be ready to sustain our customers as they take the numerous steps needed to fully comply with the new CTC framework, drawing on its rich experience of keeping customers compliant with complicated e-invoicing obligations around the world.
Looking for more information about how to comply with the French Mandate? Contact our expert team.
10 August 2023
The French Directorate General of Public Finances (DGFiP) officially postponed the implementation of the country’s electronic invoicing mandate on 28 July. The postponement is in order to provide necessary time for taxpayers to comply with the mandate.
The latest official word states that the revised timeline for the mandate will be provided within the framework of the Finance Law for 2024. We expect this law to be adopted in late 2023.
In addition, on 31 July the DGFiP published updated ‘External specifications file for electronic invoicing’(version 2.3). Despite deferral of the initial go-live, these updates demonstrate the authorities’ commitment to developing the mandate and set the expectation that preparations by taxpayers, vendors, PDP candidates and professional organizations must continue.
The French Mandate is one of the most complex tax digitization initiatives seen in EMEA to date. It’s essential that companies continue their preparations. Compliance with this mandate requires readying applications, processes and systems to a complex set of requirements. According to the ICC, businesses need at least 12-18 months to prepare for the shift to e-invoicing and e-reporting.
Please note that this information is subject to any further updates or changes from the French authorities and no further details are available at present. We will communicate any additional information once it is made available.
Sovos is experienced in helping our customers navigate digitization regulations around the world, including the French Mandate.
Looking for more information about how to comply with the French Mandate? Contact our expert team.
Value Added Tax (VAT) recovery is a matter of great significance for businesses; therefore it is crucial to understand the correct procedures for ensuring successful recovery. Businesses can recover their incurred VAT through either their VAT return or by submitting a refund claim.
The deadline for submitting claims under the 8th Directive is rapidly approaching on 30 September 2023. Failing to meet this deadline could result in the rejection of your claim, emphasising the importance of thorough preparation in handling VAT recovery for your business.
To streamline the process and alleviate complexities associated with VAT compliance, utilising the services of a reputable provider like Sovos is highly recommended. By choosing Sovos, you gain access to language capabilities and valuable resources that facilitate your VAT compliance workload.
Participate in Sovos’ VAT expert-led session to enhance your understanding of the following key aspects:
The Portuguese government has been working on introducing mandatory B2G (Business-to-Government) electronic invoicing in recent years, alongside other obligations for the digitization of VAT compliance in the country.
This aligns with the European Union’s efforts towards harmonising the adoption of e-invoicing in public procurement. To achieve this goal, the EU has implemented Directive 2014/55/EU to outline the responsibilities and criteria for e-invoicing in public procurement processes. The EU requires Member States to enforce an obligation for the Public Administration to receive invoices electronically.
However, several Member States, such as Portugal, have taken a step forward by making the issuance of electronic invoices mandatory for suppliers of the Public Administration. The Portuguese mandate, known as “Electronic Invoicing to the Public Administration” (Fatura Eletrónica à Administração Pública – FEAP), was introduced to streamline invoicing processes and improve efficiency in transactions between businesses and the public sector.
In Portugal, Law Decree 111-B/2017 and subsequent amendments established the beginning of the obligation to issue, receive and process electronic invoices in public procurement. ESPAP (Entidade de Serviços Partilhados da Administração Pública) is the Portuguese entity responsible for the implementation and management of B2G e-invoicing.
This obligation is also present in the Public Contracts Code and requires suppliers of the Public Administration to issue all invoices to public sector entities in electronic format. This excluded contracts declared secret or accompanied by special security measures and contracts concluded following the simplified direct award process (contracts below EUR 5,000).
The implementation of this regime was gradual, starting with the mandatory receipt of electronic invoices by the Public Administration in April 2019. This was followed by a phased introduction of compulsory issuance of e-invoices for suppliers of the Public Administration, starting with large companies in January 2021. The implementation calendar has been postponed several times for small, medium and microenterprises. Currently, only large companies are required to issue invoices electronically.
An e-invoice, according to the EU Directive on e-invoicing in public procurement, is an invoice issued, transmitted and received in a structured electronic format.
Electronic invoicing requires data creation in a structured format and its transmission from the seller’s system to the buyer’s system in an automated manner. As a result, the invoice can be automatically imported into the public entity’s system.
As per Portuguese regulations, the e-invoicing model to be adopted is the semantic data model proposed for the Portuguese standard known as CIUS-PT. There is no obligation to send a PDF document attached to the electronic invoice. An invoice in PDF format is not considered an electronic invoice as they do not comply with European standards.
Suppliers must also archive electronic invoices and ensure they are accessible for the period required by the tax authority, which is typically 10 years.
Considering the general obligation to issue e-invoices in the B2G sector, it is possible to identify four main legal consequences for non-compliance with this legal obligation:
All public administration entities are currently obligated to receive e-invoices in the structured CIUS-PT format. Additionally, all large company suppliers to the public administration must issue e-invoices in the same format.
Once again, the obligation for small, medium and microenterprises was postponed in 2025 and is now poised to enter into force on 1 January 2026.
Until then, micro, small and medium-sized companies can use invoicing mechanisms other than e-invoicing in the structured CIUS-PT schema when contracting with the Public Administration.
Need more information on B2G e-invoicing in Portugal? Speak with our expert team.
VAT regulations can be complex and change often, posing significant challenges for companies operating in the distribution industry.
In this informative on-demand session, Sovos’ Senior Consulting Manager Russell Hughes and Sales Director Alexis Desjardins delve into the implications of VAT for distribution businesses, sharing valuable insights, real-life case studies and strategies to overcome these challenges.
Tune in to find out more about:
Don’t miss the opportunity to learn more about achieving VAT success. Watch our on-demand session on strategies for distribution today.
Sovos is one of a short list of applicants to register as a Partner Dematerialization Platform (PDP). The company, with its 20 years of international business process and data expertise in international tax compliance, will benefit from an SAP extension, one of the few available on the market.
London, 27, June 2023 – International tax compliance software provider Sovos announces its application for registration as a dematerialization platform partner (PDP).
France is introducing a major e-invoicing and e-reporting reform which will be rolled out in a phased approach initially to the largest companies from 1 July 2024 and run beyond 2026. Since the beginning of May this year various software publishers and ERPs have been able to submit their applications to the French government to become an approved PDP.
PDPs are playing a key role in this VAT reform. As trusted third parties, these portals will act as the interface between companies and the French government and will be directly involved in issuing and receiving invoices. The aim is for companies to choose the methods and formats for exchanging their electronic invoices (incoming/outgoing) with the obligation to communicate invoicing, transaction and payment data to the authorities.
International e-invoicing experience
Sovos has 20 years of business process and data expertise and a global reach with modern cloud architecture that currently processes over 6 billion compliant transactions a year.
The company has extensive experience as a delegate of tax authorities around the world, with several certifications already obtained in various countries in Latin America, as well as in Turkey, where electronic invoicing is now well established. In addition, Sovos is set to be one of the only platforms to feature an extension for SAP, which is designed to provide dematerialization operator (DO) capabilities.
“We’ve seen high demand for a demo of our solution and initial demonstrations to many of the companies that rely on Sovos have been extremely positive and have provided valuable feedback. Our solution not only integrates the legal and technical requirements for France, but also leverages all the best practices from our decades of experience, and the compliance suite we’ve built, supporting complex obligations for tens of thousands of companies in other jurisdictions” says Cyril Broutin, Product Manager at Sovos.
Providing agility and anticipating future regulatory changes
E-invoicing regulations are regularly modified and updated and are therefore constantly evolving. In Italy, for example, the e-invoicing mandate has been revised more than 40 times. In France, the tax authorities have already published four versions of the specifications for the next reform, which are likely to be further amended or supplemented. Added to this is the European “VAT in the Digital Age” (ViDA) initiative and the many changes it will bring. Sovos intends to assert itself as a PDP capable of supporting companies over the long term, taking into account the regulatory changes which will occur after the application of the reform, at both national and European level. Indeed, the e-invoicing reform is part of a more global drive to digitalize taxation.
“Sovos believes that companies want to remain agile and not be held back by the changing compliance requirements they face in France and around the world. That’s why we’ve adopted a deliberate strategy of loosely coupling tax compliance obligations with the process automation requirements sought by businesses. Our aim is to enable companies to focus on their core business by removing the friction of complex tax digitization mandates. ” explains Cyril Broutin.
About Sovos
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting, and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe and is owned by Hg and TA Associates. For more information visit sovos.com and follow us on LinkedIn and Twitter.
Implementing certified add-ons in SAP S/4HANA on-premise or a private cloud environment will allow you to expand the capabilities of your system. However, it is necessary to maintain a pristine core by strictly adhering to the most effective procedures.
This blog details the most important steps companies should take to design an add-on with a clean core.
Ensure that all umbrella modules of the add-on have been SAP certified for SAP S/4HANA compatibility. This will prove that the add-on satisfies the requirements for integration and avoid investment risk for non-certified modules that use objects forbidden by SAP.
For each major release from SAP, non-certified modules may no longer work to the expected requirement. At Sovos, we make it a point to guarantee that all of our SAP modules are certified against the latest releases. Examples of these modules include VAT Determination (Sales, Purchasing, Monitoring & Reporting, and VAT ID Validator) and continuous transaction controls (CTC) frameworks.
It is important to provide comprehensive user training on the add-on’s functionalities and document changes or upgrades made throughout the installation.
Using the appropriate software is essential for compliance and efficiency when dealing with indirect taxes. Avoid taking quick routes. Make a choice based on accurate information that helps tax procedures run smoothly.
By adhering to these standards, businesses can successfully implement certified add-ons into SAP S/4HANA while keeping the system core clean. This method, which restricts the use of customisations, prioritises the employment of standard functions and ensures an uninterrupted connection – resulting in the production of an SAP S/4HANA system that is highly effective and optimised.
Are you a SAP user that cares about tax compliance? Download our free eBook today.
The Spanish government has published the much-anticipated draft regulation with the framework for implementing mandatory B2B e-invoicing.
The proposed legislation outlines the operation of the Spanish e-invoicing system. Its main feature is the reliance on the principles of interoperability of e-invoice formats and interconnectivity of e-invoicing platforms. The goal is to promote digitalization (particularly for smaller companies), reduce late invoice payments and save on administrative costs such as the management of invoices.
The draft Royal Decree provides further details to the Law for Creation and Growth of companies published in September 2022, which initially establishes the e-invoicing obligation for companies and professionals.
All companies and professionals required to issue invoices under Spanish law will be obliged to do so electronically. This applies to B2B operations with a few excluded transactions, such as: when issuing a simplified invoice, issuing an invoice voluntarily when there is no such obligation to do so under Spanish rules and in other cases that the government may regulate in the future.
However, the obligation does not apply if one of the parties to the transaction does not have an established business, a fixed establishment or habitual business residence in Spanish territory where invoices are directly issued.
The Spanish e-invoicing system will consist of privately owned electronic invoicing platforms and the public electronic invoicing solution managed by the State Tax Administration Agency. Taxpayers under scope must send and receive e-invoices through one of these two means and will be able to use both in parallel.
Other important characteristics and requirements of this system are:
The proposed Royal Decree defines an e-invoice as a structured document, which means that a PDF will no longer be considered an electronic invoice. Taxpayers will be required to issue e-invoices using one of the accepted formats:
Additionally, in line with the principle of interoperability, private e-invoicing platforms must be able to convert e-invoices into all supported formats while preserving I&A.
The invoice recipient must communicate the e-invoice status to the invoice issuer within the maximum deadline of four calendar days counted from the date of the reported status.
Mandatory statuses comprise the following:
Additionally, the draft regulation establishes optional statuses:
The Royal Decree is currently in draft form but will be effective 12 months after its official publication on the Spanish Official Gazette (BOE). Following the Law for Creation and Growth of companies, the 12-month-timeline will apply to entrepreneurs and professionals whose annual turnover is over €8 million, and for the remaining taxpayers under scope the deadline is 24 months.
In the first year from the regulation’s effective date, companies under the e-invoicing obligation must attach a PDF file to the legal e-invoice to ensure readability to counterparties not yet in scope – unless the recipient agrees to receive it in the original format.
The obligation to report the e-invoice statuses will come into effect 36 months after the publication of the Royal Decree for entrepreneurs with an annual turnover below €6 million and 48 months after the publication of the Royal Decree for professionals below the same threshold.
Further details are expected concerning how taxpayers under the SII (Suministro Imediato de Información) mandate must inform the mandatory e-invoice statuses.
As this is still a draft and certain details remain to be established, taxpayers can expect changes before publication of the final version. Additionally, until 10 July 2023, the draft regulation is open for comments from the general public.
Another important note is that the entry into force of this draft Royal Decree is subject to Spain obtaining derogation from Articles 218 and 232 of the EU VAT Directive before the EU Commission. Although this is a formal step and there is no indication that the Commission would not grant the derogation, until it happens the new Spanish rules cannot enter into force.
Looking for further information on e-invoicing in Spain? Contact our expert team.
For an overview about other VAT-related requirements in Spain read this comprehensive page about VAT compliance in Spain.
In July 2023, the French authorities postponed the implementation timeline. A new timeline will be announced with the adoption of the finance law for 2024.
When your organisation trades cross-border, regular changes to the regulatory landscape are a given. Whether those changes are brand-new requirements in a country where you do business or the evolution of existing legislation, you must be ahead of the developments to remain compliant.
With global tax authorities continually making progress with their digitization strategies, the e-invoicing revolution continues at speed.
In this quarter’s instalment of our VAT Snapshot webinar, Kelly Muniz and Enis Gencer from Sovos’ Regulatory Analysis and Design team, will look in detail at anticipated changes in countries with emerging digital strategies and discuss updates to some of the more established regimes.
They will cover:
Join our 30-minute update on 13 July for the latest news, and for an opportunity to put your questions to our speakers.
Many companies utilise SAP for their tax processes, but limitations in native software functionality add a layer of complexity.
Custom coding is often required for businesses to achieve their desired results, producing the need for ongoing customisation and optimisation – this creates a hefty burden for companies, in addition to their tax compliance obligations. SAP-certified add-ons can lighten the load.
Have you considered purchasing an add-on for the SAP S/4HANA system that you have? Ensure that SAP certification is a top priority, including checking the certification of any umbrella modules that a service provider offers.
The following points highlight the importance of using certified add-ons.
When an add-on is certified by SAP, both the vendor and SAP share some level of accountability and confidence in the add-on. Before deciding on a non-certified alternative, it is essential to conduct adequate research because not all add-ons are subjected to the certification process.
Consider the vendor’s past success in deployments similar to yours, as well as their customer references and reputation. Complete due diligence against prospective vendors to ensure they are financially stable and invest in certification and continuous research and development.
Remember to make a decision based on the prerequisites and potential risks of the SAP S/4HANA environment you work in.
At Sovos, we make it a point to guarantee that all of the modules that make up our SAP product line are certified against the latest releases from SAP. Examples of these modules include VAT Determination (including Sales, Purchasing, Monitor & Reporting and VAT ID Validation products) and Continuous Transaction Controls (CTC) frameworks for SAP.
Download our free eBook on SAP S/4 migrations and tax compliance for more information.
The Ledger of Economic Operations (Libro Registro de Operaciones Económicas), also known as LROE, is a main compliance element of the Batuz tax control system. This system is under implementation in the province of Bizkaia, located in the autonomous Basque community in Spain.
Taxpayers under the Batuz mandate must comply with both TicketBAI and LROE obligations. While TicketBAI applies to invoice issuance, LROE rules require taxpayers to electronically record and report data on income, expenses and other fiscally relevant information to the tax authority in a structured format.
Regardless of size or business volume, individuals engaged in economic activities and organizations must meet LROE requirements if subject to Bizkaia regulations on Personal Income Tax, Corporate Tax or Non-Resident Income Tax for permanent establishments. The rule will come into effect on 1 January 2024 and includes taxpayers currently subject to Bizkaia’s SII (Immediate Supply of Information) mandate.
LROE is the electronic ledger where taxpayers must document several economic activities and report such financial information to the tax authority. Individuals engaged in economic activities report this information via model 140, while companies use model 240.
For compliance with LROE, taxpayers must record and transmit their sales, purchases and other financial data in a structured XML format according to legal technical specifications. Taxpayers can send the data in the ledger either through webservices or manually uploaded via the portal provided by the Bizkaia Tax Authority.
The structure of LROE information for companies and non-resident taxpayers with permanent establishment (model 240) is comprised of the following:
Certain chapters also contain subchapters. The chapter of issued invoices, for example, has a subchapter of issued invoices with guarantor software which requires transmitting data from invoices generated using TicketBAI.
In the case of Bizkaia, as taxpayers do not need to submit the TicketBAI XML (generated with the invoice) directly to the tax authority, they will send this data via the LROE subchapter in a specific TicketBAI field.
The deadline to submit the LROE files to the tax authority varies according to the type of taxpayer under the obligation.
The general deadline is quarterly. Taxpayers must report the data from when the transaction is carried out until 25 April, 25 July, 25 October, or 25 January – depending on the specific quarter.
The deadline for companies under the Bizkaia SII obligation to submit LROE records is four days from the operation’s completion, in line with the general SII deadline. The SII obligation will be considered fulfilled by submission of the LROE.
Failure to comply with the requirement to keep and submit LROE records electronically will result in a monetary fine. The proportionally calculated penalty is 0.5 percent of the transaction amount the taxpayer failed to report, with a quarterly minimum of 600 EUR and a maximum of 12,000 EUR.
By using the TicketBAI invoicing system and reporting the LROE, taxpayers will provide information to the tax authority so that it can fulfil the third element of the Batuz tax control system.
The third element of Batuz entails the preparation of pre-filled VAT draft returns and Corporate and Personal Income declarations, which will be available for taxpayers in Bizkaia from 2024 forward.
Need more information about Batuz LROE or tax in Bizkaia? Contact our team of experts today.
For an overview about other VAT-related requirements in Spain read this comprehensive page about VAT compliance in Spain.
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Significant inflation increases have impacted most of the world’s economies, with the UK still above 10% in 2023. This increase means a reduction in the purchasing power of consumers. Together with increases in the cost of raw materials, this has created uncertainty regarding growth of entire industrial departments and reduced profit margins for companies.
The above is the perfect environment for an increase in the value of ‘safe-haven’ assets, such as houses, gold and works of art and antiques.
When we think about fine paintings, elegant furniture or statues, these can be valuable financially and generally increase in value over time.
However, investing in art may have certain VAT implications and, in the near future, it is one of the areas included as part of:
Following Brexit, France’s art market has increased, with a 7% global market share and $4.7bn in total sales in 2021.
One of the key factors of France’s success is the favourable reduced VAT rate of 5.5% for works of art.
Italy has a reduced VAT rate of 10% for art under certain conditions, and in the UK, the rate is 5%.
Along with general VAT rates rules, several existing derogations allow certain EU Member States to apply lower rates. Specific geographical features, social reasons for the benefit of the final consumer, or general interest justify these lower rates.
This creates a complicated map of VAT rates for operators to navigate.
There are two significant VAT changes due in 2025 that could impact the art sector:
Second-hand goods supplied under the margin schemes, works of art, collectors’ items and antiques will be subject to distance selling rules as of 1 January 2025. These rules make these goods subject to VAT in the Member State of arrival.
If works of art or antiques are not transported or dispatched, or if the transport starts and ends in the same Member State, the supply will be subject to VAT in the place where the customer is established, has their permanent address or usually resides.
This extension of the single VAT registration under the One Stop Shop (OSS) scheme will allow a company to register for VAT uniquely in one EU Member State and report their B2C supplies in quarterly VAT Returns
The EU Directive 2022/542 of 5 April 2022 (that amends previous Directives 2006/112/EC and EU 2020/285), on rates of value added tax, aims to “safeguard the functioning of the internal market and avoid distortions of competition“. The Directive will enter into force on 1 January 2025.
This will require the application of the standard VAT rate to art. This potential change has already raised some concerns in the art market in France.
Italy views this change as an opportunity, with Undersecretary for Culture Vittorio Sgarbi saying that Italy intends to implement the EU directive that reduces VAT on the import of works of art from 10% to 5%.
The changes are ongoing and we will keep you updated on developments to art VAT rates across Europe as they unfold.
Need to discuss reduced VAT rates for art in Europe? Speak to our team of tax experts about how the upcoming changes could affect your business.