Spain: Planning now to comply with pending mandatory e-invoicing for B2B transactions

• Mandatory use of e-invoicing for business-to-business transactions will soon take effect in Spain.
  
  
• The Spanish Government recently released a draft implementing regulation.
  
  
• Companies with an annual turnover exceeding €8m will be required to comply one year after the implementing regulation is approved; all other entities must comply within two years.
  
  
• This Alert highlights the pending requirements and associated services offered by EY Spain.

The introduction in Spain of a new e-invoicing system for business-to-business (B2B) transactions will significantly change the systems and processes of virtually all companies.

Recently, the Spanish Government released a draft implementing regulation outlining the main features and technical requirements of the new Spanish e-invoicing system for B2B transactions. To help companies begin to proactively plan for adjustments and devise strategies in response to the new B2B e-invoicing obligation, this Alert summarizes the regulation’s features and requirements – which are provisional until the Spanish Government approves the implementing regulation.

Pending requirements

The new e-invoicing obligation for B2B transactions was approved though law 18/2022, dated 28 September 2022, and will enter into force according to the following deadlines, which are linked to the approval of the implementing regulation (Royal Decree):

i. Companies with an annual turnover exceeding €8m: one year after the date of the approval of the implementing regulation

ii. All other companies and professionals: two years after the date of the approval of the implementing regulation

The new obligation has two main objectives. First, it aims to combat late payments in commercial transactions. Second, it seeks to promote the digitalization of Spanish companies, especially smaller ones. Under the new requirement, all invoices must be submitted to a public e-invoicing solution, providing details on their content and status. This will enable the Spanish Tax Authorities to monitor payment deadlines.

The new Spanish e-invoicing system will operate through:

a. Private e-invoice platforms that are required to meet the requirements set out in the implementing regulation

b. A public e-invoicing solution that will be run by the Spanish Tax Authorities (Agencia Estatal de Administración Tributaria)

Companies and professionals must issue, send and receive the B2B e-invoices through the private e-invoicing platforms, the public e-invoicing solution or a combination of both.

If the exchange of the e-invoices takes place directly between private e-invoice platforms, an automatically generated copy of each e-invoice must be submitted to the public e-invoicing solution.

The public e-invoicing solution will become an e-invoice repository that will (i) allow the Spanish Tax Authorities to monitor the e-invoices' content and status, and (ii) entitle the e-invoicing recipients to check the received e-invoices via the public e-invoicing solution.

Who's affected

Companies and professionals affected by the new e-invoicing obligation are primarily those who are Spanish-based or have a permanent establisment in Spain intervening in the B2B transaction.

Some exclusions are provided for certain types of invoices.

The draft implementing regulation details the semantic data model of the core elements of the e-invoice and the list of syntaxes allowed.

Private e-invoice platform operators will be obliged to interconnect with any other private e-invoice platforms and to accept all interconnection requests. Under client permission, operators might use the public electronic invoicing solution to interconnect.

The recipients of the e-invoices must inform issuers of the following invoice statuses:

a. Commercial acceptance or rejection of the invoice and associated date

b. Full effective payment of the invoice and associated date; companies obliged to comply with the Spanish electronic VAT books (SII1 system) must process the effective payment and associated date through an SII book of received invoices within a very tight four-day timeframe

The implementing regulation sets out the technical requirements to be met by the private e-invoice platforms.

Lastly, the Spanish Tax Authorities will develop a free e-form, which will enable small businesses and professionals to generate the e-invoices and send them to recipients and the Spanish Tax Authorities under certain circumstances.

EY Spain's response

The Indirect Tax Group of EY Spain has developed a virtual platform comprising various tools aimed at (i) facilitating ongoing VAT compliance and the filing of returns, (ii) ensuring the accuracy of enterprise resource planning (ERP) data, and (iii) resolving discrepancies between the data included in the accounting records and information submitted to the Spanish Tax Authorities under the SII system obligations.

This virtual environment and its tools may also be used for businesses and professionals who are not subject to SII system but need to prepare and submit its Spanish VAT returns to the Spanish Tax Authorities.

Due the new e-invoicing system, the virtual platform is being updated with additional functionalities that will facilitate the submission of data to the Spanish Tax Authorities, covering all necessary requirements. This integration will ensure compliance with obligations arising from both the SII system and the new electronic invoicing regulations. Importantly, this integration will enable a comprehensive reconciliation of data across ERP, SII, and electronic invoicing databases.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Abogados, S.L.P.

• Rufino de la Rosa
• Eduardo Verdún Fraile
• Silvia Bermudo
• Íñigo Hernández Moneo

Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.