Transactions carried out by taxpayers located in Álava, Guipúzcoa and Vizcaya (commonly known as the Basque Country) plus Navarra should not be reported to the Spanish tax administration (AEAT) as part of the SII, if said taxpayers are considered to be under the tax authority of those regions for VAT purposes.
Who is considered to be under the tax authority of Álava, Guipúzcoa, Vizcaya or Navarra?
- Taxpayers whose fiscal addresses are in those territories and whose volume of transactions has not surpassed 7 million Euros a year.
- Taxpayers that operate exclusively in Álava, Guipúzcoa, Vizcaya or Navarra and whose volume of transactions exceed 7 million Euros regardless of where they have their fiscal domicile.
- Taxpayers that should pay their taxes in proportion to the amount of transactions carried out between the common territory of Spain and Álava, Guipúzcoa, Vizcaya or Navarra and whose revenues exceed 7 million Euros, except when they have carried out 75% or more of their operations in the common territory of Spain.
These parameters mentioned above are the same ones that define where those taxpayers should pay their VAT. Therefore, in general when those taxpayers mentioned above are required to pay VAT in these local regions, the invoice transactions that generate the VAT obligation, should not be reported to the AEAT SII.
The SII of Spain entered into effect July 1, 2017 and under this system, Spanish taxpayers are obligated to submit all relevant invoice information to the AEAT in (almost) real time. However, there are some regions where, as of now, the SII mandate does not apply:
- Ceuta and Melilla: These islands have their own indirect taxes which are administered locally
- Canary Islands: Spanish VAT does not apply here either, as they apply the IGIC
- The Basque Region and Navarra: Spanish VAT applies, but is locally administered.
Starting January 1, 2018, Álava, Guipúzcoa, Vizcaya plus Navarra have announced that they will be implementing their local SII; this means that transactions carried out in those regions by their local taxpayers, will be reported to the corresponding local tax administration only and not to the AEAT.
In summary, invoice information related to transactions carried out in the regions of the Basque Country or Navarra should not be reported to the AEAT as part of the SII. Starting January 1, 2018, qualifying transactions carried out by local taxpayers will be reported to the local tax administration of the corresponding region only.
Source: See Questions 1.21 and 1.22 of the FAQ issued by the AEAT.