The Spanish Ministry of Finance has published a draft resolution that will – once adopted – establish the requirements for software and systems that support the billing processes of businesses and professionals. This law will have a significant impact on the current invoice issuance processes. It will require implementing new invoice content requirements, including a QR code, and the generation of billing records by January 2024.
The regulation is also intended to adapt the Spanish business sector, especially SMEs, micro-enterprises, and the self-employed, to the demands of digitization. For this, it is considered necessary to standardise and modernise the computer programs that support the accounting, billing, and management of businesses and entrepreneurs.
Scope of the regulation
The regulation establishes the requirements that any system must meet to guarantee the integrity, conservation, accessibility, legibility, traceability and inalterability of the billing records without interpolations, omissions or alterations.
The new rules established in the regulation will apply to:
Taxpayers subject to corporate tax (IS), except for exempt or partially exempt entities.
Taxpayers subject to income tax for physical persons (IRPF) who obtain income from economic activities.
Taxpayers subject to income tax for non-residents (IRNR) with a permanent establishment in Spain.
Entities under the income allocation system carrying out economic activities.
Companies that do not fall within the above categories do not need to comply, but those who do must ensure their computer systems are adapted to this regulation as of 1 January 2024.
New invoice content requirements: ID and QR codes
Invoices generated by the computer systems or electronic systems and programs that support the billing processes of businesses and professionals must include an alphanumeric identification code and a QR code, generated per the technical and functional specifications established by the Ministry of Finance.
Billing system requirements
The computer systems that support billing processes must have the capability to:
Generate a billing record for each delivery of goods or provision of services, simultaneously or immediately before the issuance of the invoice.
The computer system must be able to send all the billing records generated to the State Tax Administration Agency (AEAT) in a continuous, secure, correct, complete, automatic, consecutive, instantaneous, and reliable manner.
The system must be provided with traceability, verifying the sequence of data creation. It will create an event log that collects all the system operations and incidents during its use.
The records created may not be altered by the user or any internal or external means.
The systems must add a fingerprint or ‘hash’ to the billing records, according to the specifications and the electronic signature.
To achieve these ends, all computer systems must certify that they ensure the commitment to comply with all the requirements established in this regulation through a “responsible statement”. The Ministry of Finance will establish the minimum content of this statement later in a new resolution.
Billing record content and its optional transmission
The billing records must comply with several content requirements laid down by the regulation.
The taxpayers using computer systems to comply with their invoicing obligations may voluntarily send all its billing records generated by the computer systems to the AEAT automatically by electronic means. The response of a formal acceptance message from the AEAT will automatically mean that these records have been incorporated into the taxpayer’s sales and income ledgers.
Tax administration audits
The AEAT may appear in person where the computer system is located or used and may require full and immediate access to the data record, obtaining, where appropriate, the username, password and any other security key that is necessary for full access.
The AEAT may request a copy of the billing records, which companies may provide in electronic format through physical support or by electronic means.
Application to the B2B e-invoicing mandate
The regulation doesn’t include any specific rule for the B2B e-invoice mandate draft decree currently being discussed in Congress and waiting for approval. However, if the mandate is approved, all the B2B e-invoices issued under this draft decree will have to comply with all the new rules established in this regulation.
While this new regulation does not seem to take Spain further down the continuous transaction control (CTC) route, the proposal has clear similarities with Portugal’s invoice requirements.
The draft resolution establishing these is currently open for public consultation until 11 March 2022. Once this resolution is approved, the Ministry of Finance will publish the technical and functional specifications needed to comply with the new requirements and the structure, content, detail, format, design and characteristics of the information that companies must include in the billing records.
The Ministry of Finance will also publish the specifications of the signature policy and the requirements that the fingerprint or ‘hash’ must meet. Once these details are published, it will be clearer whether Spain is going down the Portuguese route or carving out its own path.
Need help staying up to date with the latest VAT and compliance updates in Spain that may impact your business? Get in touch with Sovos’ team of experts today.
TRENDS AND UPDATES ON VAT COMPLIANCE
Trends 13th Edition 2022
TRENDS AND UPDATES ON VAT COMPLIANCE
Trends 13th Edition 2022
Welcome to the 13th edition of Sovos’ annual Trends report where we put a spotlight on current and near-term legal requirements across regions and VAT compliance domains.
This report provides a comprehensive look at the regulatory landscape as governments across the globe are enacting complex new policies to enforce VAT mandates. It examines the demanding and unprecedented insight now required into your economic data so that regulatory authorities enforce standards and close revenue gaps.
This year’s report examines the evolution of law and practice around the four emerging megatrends that Sovos experts identified in the 12th edition. These trends, many of which revolve around tax compliance and controls being ‘always on’, have the potential to drive change in the way organizations approach regulatory reporting and manage compliance.
Authored by a team of international tax compliance experts, we provide extensive recommendations on how companies can prepare for and thrive through these changes.
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The four mega-trends that we examine are:
Continuous Transaction Controls (CTCs) – Countries with existing CTC regimes are seeing improvements in revenue collection and economic transparency. Now, other countries in Europe, Asia and Africa are moving away from post-audit regulation to adoption of these CTC-inspired approaches. The report highlights how countries like France and Hungary have accelerated their transition to CTCs, and how many jurisdictions are combining invoice controls with CTC transport documents, thereby expanding their real-time reach from financial to physical supply chains.
A shift toward destination taxability for certain cross-border transactions – Cross-border services have historically often escaped VAT collection in the country of the consumer. Due to a large increase of cross-border trade in low-value goods and digital services over the past decade, administrations are taking significant measures to tax such supplies in the country of consumption or destination.
Aggregator liability – With the increase of tax reporting or e-invoicing obligations across different taxpayer categories, tax administrations are increasingly looking for ways to concentrate tax reporting liability in platforms that naturally aggregate large numbers of transactions already. Ecommerce marketplaces and business transaction management cloud vendors will increasingly be on the hook for sending data from companies on their networks to the government, potentially even inheriting liability for paying their taxes. The report notes how the July 2021 introduction of sweeping changes in e-commerce VAT legislation via OSS and IOSS are confirming this trend.
E-accounting and e-assessment – Combining CTCs with obligations to synchronize entire accounting ledgers makes onsite audit necessary only in cases showing major anomalies across these rich data sources. Over time, the objective is for VAT returns and other tax reports to be prefilled by the tax administration based on taxpayers’ own, strongly authenticated source system data. A brief deep-dive into the origins and potential future of SAF‑T shows how this trend is evolving to become a solid companion to CTCs globally.
CTCs have emerged as the primary concern for multinational companies looking to ensure compliance despite growing diversity in VAT enforcement approaches. Tax authorities are steadfast in their commitment to closing the VAT gap and will use all tools at their disposal to collect revenue owed. This holds especially true in the aftermath of COVID-19, when governments are expected to face unprecedented budget shortfalls.
The potential costs and risks associated with the trends highlighted in the report cannot be effectively mitigated with a reactive or opportunistic approach. The digital transformation of tax administration can – if approached as just an evolution of the legacy ‘post audit’ VAT world – significantly contract the digital transformation of businesses. This report suggests an analysis framework that companies can use to ensure ongoing VAT compliance whilst maximizing the opportunities of modern information and communication technologies for their own benefit.
In addition, Trends includes a major review of the country and regional requirement profiles. These profiles provide a snapshot of current and near-term planned legal requirements across the different VAT compliance domains.
Spain has a near real-time reporting system for domestic transactions
Spain is one of the first EU nations to adopt the Continuous Transaction Controls (CTCs) method, with the introduction of mandatory near real-time invoice data reporting in 2017. With this requirement, Spain’s tax authority, the AEAT, aimed to streamline refunds, provide taxpayers accurate data for returns, conduct audits more effectively and fight VAT fraud.
Taxable persons who are in scope must report invoice data to the tax authority through a platform known as Suministro Inmediato de Información (SII) within four business days following the date of issue.
In 2020 the tax administration announced a new version of the SII, introducing a ledger to record operations related to the sale of goods in consignment. This came into effect on 1 January 2021.
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Mandate Quick Facts
The Spanish mandate applies to companies with an annual turnover above €6 million, companies that are part of VAT groups; and, companies using the REDEME system.
The following records must be sent to the tax authority:
Registered book of issued invoices
Registered book of received invoices
Registered book of investment goods
Registered book of certain intra-community operations
The transmission of the information must be via web services available to exchange XML messages.
Some formal obligations are reduced as taxpayers will no longer be required to file the information returns form 347 (third-party information), form 340 (transactions in register books) and form 390 (VAT annual summary).
In 2020 the Spanish tax administration introduced a service to pre-populate the periodic VAT return (Modelo 303) using the information that taxpayers supplied via the SII.
Mandate Rollout Dates
2 January 2017: The immediate supply of information began on a voluntary basis for taxpayers in Spain.
1 July 2017: The mandatory phase of the immediate supply of information for taxpayers under the scope of the mandate.
1 January 2018: The period to supply the information was reduced from 8 days to 4 days. The mandate was also extended to other Spanish territories (Basque Provinces and Canary Islands).
1 January 2020: Introduction of a ledger to record operations related to the sale of goods in consignment.
Omissions or inaccuracies in the information reporting obligation have a penalty of up to 1% of the total amount missed with a maximum of €6,000.
Late reporting of real-time electronic VAT ledgers will trigger a penalty of 0.5% of the total amount reported, with a minimum of €300 and a maximum of €6,000 per quarter.
Errors or omissions in the Book of certain intra-Community transactions and Book of investment goods has a fixed penalty of €150.
Sovos Helps Companies Stay Compliant with Spain’s SII
Sovos serves as a true one-stop-shop for managing all VAT compliance obligations in Spain and across the globe.
Sovos supports the Suministro Inmediato de Información (SII) platform, ensuring our customers remain compliant with the legal and technical framework developed by the Spanish tax authority (AEAT).
Sovos experts continually monitor, interpret, and codify these changes into our software, reducing the compliance burden on your tax and IT teams.
Topics covered included the Conscorcio reporting system, tips for effective and accurate compliance, the penalty regimes currently in place and the latest regulatory updates.
Although our expert team answered plenty of questions they didn’t have time for everyone. Here’s a helpful summary.
Is all health insurance exempt from IPT in Spain?
We understand that health and sickness insurance are exempt from IPT in Spain. For completeness, this doesn’t include Accident cover, which should be taxable at 8%. Article 5 of the IPT law provides for the exemption.
You mentioned that international insurance risks belong to the exemptions. Is this also true for international freight forwarder liability insurance? And for international marine cargo insurance?
Article 5 of the IPT law provides an Exemption for: “insurance operations related to ships or aircraft that are destined for international transport, except for those that carry out navigation or private recreational aviation”. Two pieces of case law (1073-00 (09/05/2000) and V1233-03 (13/06/2008)) provide further details on the exemption.
Under Act 22 of Law 37/1992 (VAT Law): “international transport is considered to be that which takes place within the country and ends at a point located in a port, airport or border area for immediate dispatch outside the Spanish mainland and the Balearic Islands”. We therefore understand insurance, such as freight forwarder liability and marine cargo, gain the IPT exemption to the extent they relate to international transport.
I’m preparing CCS on a monthly basis manually in Excel. Is there a Microsoft tool that can create the final report?
We’re not aware of any Microsoft tools that can prepare the CCS file for monthly reporting. This file can be complex. For our customers we use our proprietary software to generate the relevant file from an Excel input template.
What is CLEA?
CLEA is the surcharge to fund the winding-up activity of insurance undertakings. It was included in the Modelo 50 CCS and is due for all insurance contracts signed on risks in Spain, other than life insurance and export credit insurance on behalf of or with the support of the State.
The type of surcharge destined to finance winding-up activity of insurance companies is made up by 0.15% of the aforementioned premiums.
Do insurers have to be registered in all the provinces in Spain?
We understand all insurers should register in the provinces where they have risks located. This is a compliant requirement because insurers need to declare premium taxes to the correct tax authorities according to the location of risk.
I understand you can submit monthly policies to Consorcio even if the postcode is wrong. How should we proceed in the future?
The postcode in addition to the correct address where the risk is based are very important. Spanish law states that businesses must declare the premium tax according to the location of the risk. Sometimes, non-domestic insurers provide the location of risk based in Spain using the address of the insured. For example, a German insurer who issues a policy insuring a house in Spain, should provide the address and postcode of the house in Spain.
If we don’t have this data for the monthly submission we will need, in the future, to declare the Fire Brigade charge report. The CCS system will reject a report with an incorrect postcode as a result.
When reporting Consorcio liabilities, should the lead insurer declare on behalf of its co-insurers?
Insurers can elect to declare only their share of the co-insurance agreement should that be the agreement amongst the insurers that are party to the contract.
Where Consorcio cannot recover an outstanding sum from a co-insurer, however, it’s likely that it will hold the lead insurer accountable for that amount. Alternatively, the lead insurer can pay the surcharges on behalf of all follow insurers. So there is to some extent an element of discretion by the relevant insurers.
Is there a list or explanation of each movement and declaration type to report to Consorcio?
We’re able to provide this to our customers upon request.