From SII to Veri*factu: E-invoicing and e-reporting obligations of non-resident companies operating in Spain

 I. Foreword

A pre-requisite for a non-resident company or entrepreneur (hereinafter, for simplicity’s sake, “company” or “companies”) to be subject to any formal obligation in Spain is that, because of is operative within the Spanish territory, it becomes the appointed taxable person and, so, liable for the liquidation of the corresponding Spanish VAT or, in case of the Canary Islands, IGIC.

This would normally be the case when, according to the applicable location rule, the transaction takes place in the Spanish VAT/IGIC territory and no reverse charge rule applies, whereby the position of taxable person shifts from the supplier to the client.

As a result, no formal obligations would exist for the case that a non-resident company in not a VAT/IGIC taxable person in Spain, although, it is also important to be noticed for the case that such a condition is met, the extent of such formal obligations will be determined by the way in which non-resident companies are treated by the applicable regulations when determining their subjective scope.

II. Spanish e-reporting

          II.1   Immediate Information Supply (SII)

          II.1.1.     Objective scope

The “Immediate Information Supply” or SII refers to the obligation to file at the website of the corresponding tax authorities on, almost, real time basis (4 days from the moment the sale invoices are issued or when the received invoices are accounted for), the data contained in their obligatory VAT/IGIC registers.

The obligations affects some qualifying taxable persons, established or not in the Spanish VAT territory and, when IGIC applies, in the territory of the Canary Islands.

          II.1.2.     Subjective scope

The SII reporting obligation applies to:

• Companies appertaining to a VAT group.

• Companies obliged to file monthly VAT/IGIC returns, namely:

• The so called “big companies, which are those, resident or not, having conducted VAT/IGIC taxable transactions exceeding 6 million Euros the previous year, regardless of their being exempt.

• Those companies having registered at the monthly refund regime register (REDEME).

• Any company having applied the voluntary application of the SII.

          II.1.3.     Territorial scope of the Spanish e-reporting

The SII was introduced in the Spanish VAT territory by Royal Decree 596/2016, of 2 December. However, the three provinces (“Diputaciones”) forming part of the Country Vasque autonomous region and the Navarra autonomous region have specificities affecting the formal obligations of the SII reporting. As a result, under certain conditions, companies operating in said territories must file their SII reports at the corresponding SII portal of the autonomous tax authorities instead of the SII portal of the Spanish Tax Agency (AEAT).

It must be remembered that the Canary Islands autonomous region does not form part of the Spanish VAT territory as, instead, it is the Canary Islands Sales Tax (the, so called, IGIC) which applies and, so, the IGIC SII is governed by the specific regional regulations. As a result, those companies operating in the territory of said autonomous region, when meeting the required conditions to be within the subjective scope of the Canarian SII (which are the same as those defined for the SII in the VAT territory), are obliged to file the contains of the IGIC registers at the SII website of the Canarian tax authorities.

The autonomous cities of Ceuta and Melilla do not form part either of the Spanish VAT territory and have not introduced any specific SII local regulations.

          II.2   Voluntary real time e-reporting of the Veri*factu invoicing software

As is to be commented in section III, the new regulation of the conditions to be met by the invoicing software (the, so called, Veri*factu Ordinance), expectedly to be applicable since 2026, contemplate that the companies within its scope may voluntarily report to the tax authorities, in a real time basis, the contains of the required internal invoicing registers.

III. Statutory requirements for the invoicing software used by companies and entrepreneurs (the “Veri*factu” Ordinance)

To fight against tax fraud, the Spanish General Tax Law contemplates the possibility that the software used by companies for their invoicing processes may be subject to public regulation.

This possibility was implemented by Royal Decree 1007/2023, of 5 December, (published at the Official Gazette of 6 December 2023, that approves the ordinance that regulates the technical requirements of the invoicing software that is used by companies (commonly known as the “Veri*factu” Ordinance).

          III.1. Obligation to use a compliant invoicing software

Companies within the objective scope of the Veri*factu Ordinance will be obliged to use invoicing software that meets its technical specifications by 1^st July 2025.

However, due to the delay of the Ministerial Order that develops the technical standards announced in the Veri*factu Ordinance (Ministerial Order HAC/1177/2024, of 17 October, published in the Official Gazette of 28 October 2024 and in force since the 29^th of October), and pending an intended modification of the Veri*factu Ordinance, the timing of this obligation is likely to be postponed until 2026.

Also, developers and marketers of invoicing software are granted 9 months since the coming into force of said Ministerial Order to adapt the same to the new specifications (at the latest by 1^st July 2025 - unless extended - when the invoicing software has been licensed in a pre-existing pluriannual maintenance contract).

          III.2. Objective scope and excluded transactions

Unless excluded, all the transactions incurred by any company within the scope of the Veri*factu Ordinance must be documented with an invoice generated with an invoicing software which complies with its specifications.

As an exception, this obligation does not extend to:

• Those eligible for the special VAT regime for agriculture, which are documented with a receipt.

• Those eligible for the special VAT regime of equivalence surcharge.

• Those eligible for the special VAT simplification regime, except when the VAT quota determinations is based in the turnover.

• Those authorized by the tax authorities.

• Those carried out though a permanent establishment in a foreign country.

• Some energy supplies.

          III.3. Subjective scope

          III.3.1.    General obligation when operating in Spain (unless non established)

The obligation to use a compliant invoicing software extend to all companies which conduct an economic activity in Spain if any of the following circumstance occur:

• They are subject to the Corporate tax or Personal Income tax.

• In case of non-resident companies, when they operate through a permanent establishment in Spain that is subject to the Non-Resident Income tax.

As a result, those non-resident companies which only have a permanent establishment for VAT purposes, but not for Non-Resident Income tax, will not be obliged to comply with the Veri*factu Ordinance nor to adapt their invoicing software to its technical standards.

          III.3.2.    SII vs Veri*factu

Regardless of being in any of the above-mentioned circumstances, any company obliged to file SII reports - either because the meet the conditions that trigger such obligation or because they have opted for its voluntary application - will not be obliged to comply with the Veri*factu Ordinance.

It is however under discussion if this exclusion does not apply for the case that there is a self-invoicing arrangement and the supplier if under the obligation to use a compliant invoicing software (issue that is to be clarified in the expected modification of the Veri*factu Ordinance).

          III.4. Possible alternatives to comply with the Veri*factu Ordinance

Companies within the subjective scope of the Veri*factu Ordinance will have the following options so to be compliant with the same:

• The public invoicing application: Using the public invoicing software that is to be developed by the State Tax Administration Agency (AEAT).

• A private invoicing software: Using a private invoicing software that complies with the technical requirements of the Veri*factu Ordinance. This software can be:

            - Developed internally by the company (or entrepreneur) for its own use.

            - Developed by a third company to be used by different companies.

• A self-invoice agreement: Subscribing to an agreement for the invoices to be issued on behalf of the company by a third party which is the one to use a compliant invoicing software. This third party can be either a service provider or the client.

III.5. Technical standards for an invoicing software to be compliant with the Veri*factu Ordinance

The Veri*factu Ordinance requires that the invoicing software that is used by obliged companies meets the following standards:

• Features of the entries to the obligatory invoicing registers: The invoicing software must guarantee that the entries at the required invoicing registers meet the following conditions:

           - Integrity.

            - Conservation.

            - Accessibility.

            - Legibility.

            - Traceability.

            - Inalterability. 

• Obligatory invoicing registers: The invoicing software must be capable of automatically generate, simultaneously or immediately before the issuing of the invoice:

 - A register of issued invoices, to reflect the invoices generated by the system, with the following     contains:

- Data of the obliged to issue the invoice (or of the issuer if a third party) and the recipient of the invoice (name, address, tax number number).

- Data of the invoice (number and series, issuing date at date of the taxable event, if different, invoice type, concept, total amount, VAT regime, VAT data.

- Data of the previous invoice (if not the first entry) and its “hash”.

- Time stamping for the moment that the entry is generated.

- Any additional data as may be applicable as to determine the circumstances giving rise to the entry.

- Identification of the invoicing software that generates the entry and its features.

• A register of annulations, to reflect the annulation of invoices having been issued by error, which besides the abovementioned contains must identify the invoice that is annulated.

All the amounts are to be given in Euros (so, in case that the invoice was in another currency its amount t needs to be converted by the system).

The system must add a digital print or “hash” to all the entries, which must also be digitally signed.

• E-reporting capability: The invoicing software must be able to report electronically to the tax authorities all the entries generated to the obligatory registers in a continuous, secure, accurate, automatic, consecutive, instantaneous, and trustworthy way.

• Conservation of registers: The obligatory registers must be maintained during the lapsing period foreseen in the General Tax Law and be accessible and legible. They must also have a procedure for the downloading and secure storage of all the entries, allowing them to be exported in a legible electronic format to an external storage system.

• Log of incidences: The system must keep an accessible automatic real time register of internal events and incidences.

• Dissociation of tax and confidential data: The access by to relevant tax data, accessible by tax authorities, and confidential data not being tax transcendent must be dissociated.

III.6. Responsible declaration

There is not obligation for the invoicing software to be formally homologated. Instead, it is up to the software developer to certify by means of a, so called, “responsible declaration” (“declaración responsable”), to be inserted in a legible form within the invoicing software that is complies with the required standards of the Veri*factu Ordinance.

III.7. Compliance audit by tax authorities

So to verify that the invoicing software is compliant, the tax authorities can:

• Pay a visit to the premises where the software is located or is used and request complete and immediate access to the invoicing registers and log of incidences, as well as to its download, copy or consultation in a legible format.

• Request and obtain a copy of the invoicing registers in an electronic format, to be reported at the electronic site of the tax authorities.

III.8. Specialties of invoicing systems qualifying as “Veri*factu”

Under certain conditions, an invoicing software would be allowed to include the mention “Verifiable system” or “Veri*factu system” (“Sistema verificable” o “Sistema Veri*factu”) and be excluded from some of the requirements regulated in the Ordinance. This would be the case of:

• The public invoicing software that is to be developed by the State Tax Administration Agency (AEAT) to be placed at the disposal of the companies (and entrepreneurs).

• Any compliant private invoicing software which reports electronically in a real time basis all the entries to the registers of issued invoices and annulations at the site of the Spanish Tax Agency, in a continuous, secure, accurate, automatic, consecutive, instantaneous and trustworthy way.

A “Veri*factu system” is excluded from complying with the following technical requisites:

• The tax authorities cannot request a copy of the invoicing registers.

• The entries to the registers need not to be electronically signed.

III.9. Special references to include in the invoices when issued with a compliant invoicing software

The Veri*factu Ordinance modifies the Invoicing Ordinance so to include specific mentions for the case that the invoice is issued with a compliant invoicing software. The mentions to include are:

• When in paper version or in non-structured electronic version (image), the invoice must include a “QR” code representing the partial contains of the invoice, that meets the specifications of the developing Ministerial Order.

In case of structured e-invoices this code is substituted by the URL contained in the QR.

• Regardless of being in paper or in electronic version, when applicable, the invoice must include the mention “Sistema verificable” o “Sistema Veri*factu” (“Verifiable system” or “Veri*factu system”).

IV. Mandatory e-invoicing

IV.1. Background of the electronic invoicing in Spain

Although the Spanish invoicing Ordinance contemplates the possibility that an invoice can be issued in an electronic format, it does not require any specific technical standards for its creation or transmission, limiting to define as “electronic” any invoice that is issued and received by electronic means.

However, since January 2015, the Law 25/2013, of December 27, promoting electronic invoicing and creating the accounting record of invoices in the Public Sector, introduces mandatory e-invoicing for B2G transactions, that is, those taking place between companies and the Spanish administration or its public bodies. To this end:

• Order PRE/2971/2007 of 5 October regulates the standard XML schema of the e-invoice, which is based in the UBL syntax (the, so called, FACTURAE.

• A central access point for the submission of e-invoices to the Administration is created (the. so called, FACe.)

It is to be mentioned that:

• This obligation does not apply to B2B or B2C transactions, regardless of the fact that a new article 2bis is introduced in Law 56/2007 of 28 December of Measures to Promote de Information Society, with provisions aiming to promote the use of electronic invoices for such transactions (as defined in the invoicing Ordinance and so not required to comply with any technical standards as in the case of B2G).

• Making use of their regulatory competences, since 2022 the Autonomous Regions of the Vasque Country and Navarre have introduced mandatory structured e-invoicing (the, so called TicketBai) to companies which, besides meeting certain conditions, operate from their respective territories.

IV.2. Mandatory e-invoicing on B2B transactions following the Law “Crea y Crece”

This situation is changed by Law 18/2022 of 28 September, that regulates the creation and growth of enterprises (the, so called, “Ley Crea y Crece”), and which modifies mentioned article 2bis of Law 18/2022 so to extend the obligation to issue electronic invoices to B2B transactions in the Spanish territory.

The coming into force of the mandatory e-invoicing on B2B transactions is however postponed for a lapsing period of 12 months (24 months for companies with a turnover under 8 million Euros) to commence since publication at the Official Gazette of the required developing Ordinance that is to regulate the technical standards, which at this moment is in a draft version (hereinafter, the ”e-invoicing Ordinance”).

Due to a delay in the completion of the regulatory process, final implementation of mandatory B2B e-invoicing is to be expected by 2027 for companies with a turnover exceeding 8 million Euros (by 2028 in any other case).

          IV.2.1 Definition of mandatory e-invoice

Under the new regulation, the definition of electronic invoice in the Spanish invoicing Ordinance is updated for the case that it refers to B2B transactions where mandatory e-invoicing is required.

If so, besides the requisite that the invoice is issued and received in an electronic format, it will have to comply with the technical standards contained in the future e-invoicing Ordinance.

          IV.2.2.    Subjective scope

Any company that according the Spanish invoicing Ordinance (Royal Decree 1619/2012, of 30 November) must issue an invoice for the transactions incurred within its business activity, will have to do it in an electronic format when addressed to a VAT taxable person.

As a result, there is mandatory e-invoicing for any company, resident or not, as regards all its B2B transactions incurred in its operative for which:

• It is the taxable person for the corresponding Spanish VAT/IGIC.

• There is the obligation to issue an invoice, and the Spanish invoicing Ordinance applies.

• The transaction is not excluded in the e-invoicing Ordinance.

          IV.2.3     B2B transactions excluded from mandatory e-invoicing

As an exception, an e-invoice is not required regardless of it being a B2B transaction in any of the following situations:

• When the recipient is a non-resident company, unless the invoice is addressed to a permanent establishment in Spain for VAT/IGIC purposes.

• When, according to article 4 of the Spanish invoicing Ordinance, there is not the obligation to issue a full invoice, and instead a simplified invoice is enough (no if a qualified simplified invoice with the contains of article 7.2 of said Ordinance is requested by the addressee).

• For those cases where the parties voluntarily agree the issue of an invoice without being an obligation according to article 3 of the Spanish invoicing Ordinance.

          IV.2.4     Technical standards of a mandatory e-invoicing

A mandatory e-invoice must consist in a structured electronic message meeting that meet the standards:

• The semantic data model EN16931 of the European Committee for Standardization (CEN).

• Any of the following syntaxes:

• Message XML SCRDM – CII.

• Messages UBL of invoice and credit note as defined by norm ISO/IEC 19845-2015.

• Message EDIFAC of invoice according to norm ISO 9735.

• Message Facturae, in the version for B2B invoicing applicable in each moment.

          IV.2.5     The Spanish e-invoicing system (the “five corners model”).

Spain adopts the. so called, “five corner e-invoicing model”, where there is not only the private sector represented by the issuer and recipient and their respective e-invoice service provider, but also the administration.

The main features are:

• Spanish e-invoicing system: The e-invoicing Ordinance defines the, so called, Spanish e-invoicing system, as the one formed by:

• Private platforms for the exchange of e-invoices which meet with the requisites detailed in article 11 of said Ordinance.

• The public e-invoicing solution.

• Submission of the mandatory e-invoices: The submission of mandatory B2B e-invoices must be made through any of the channels that integrate the Spanish e-invoicing system, and the invoices:

• Need to be identified with a unique code that includes the tax identification number of the issuer, issuing date, and number and series of the e-invoice. Also:

• Must be electronically signed when submitted from a private platform.

• The syntax Facturae is the standard required when using the public e-invoicing solution.

• Transitory attachment of a PDF: During the 12 months following the mandatory obligation to use e-invoices in their B2B transaction for companies with a turnover exceeding 8 million Euros, a legible PDF of the invoice must also be submitted, by any means, unless the recipient voluntarily and expressly accepts to receive only the original format. A copy of the PDF will not have to be sent to the public e-invoicing solution.
• Interoperability: It is up to the parties taking part in the transaction to freely decide which of the mentioned channels will be used by them for the submission/reception of the e-invoice.

In any case, to guarantee the interoperability of the system, private platforms must be able to transform the message of the e-invoice from any of the accepted syntax to another.

For the case the issuer does not use the public e-invoicing solution for the submission of the e-invoice, the private platform is obliged to simultaneously send a trustworthy copy in the syntax Facturae to the public solution, which operates as a global repository of e-invoices.

• Payment status: The e-invoicing Ordinance introduces the obligation for the recipient of a mandatory e-invoice to inform the issuer of the effective payment (within 4 days when it happens) or rejection of the same. When the public e-invoicing solution is not used, it will also have to be notified.

For companies with a turnover under 8 million Euros this obligation will be postponed until 36 months have lapsed since the publication of the e-invoicing Ordinance at the Official Gazette.

V. Conclusions

The status quo of the Spanish invoicing regulations is under change as a result of the two undergoing initiatives which overlap in time, namely:

• The, so called, "Veri*factu", that refers to the obligation for companies to use homologated invoicing software and will be mandatory, expectedly, by 2026.

• The, so called, "Ley Crea y Crece", that refers to mandatory e-invoicing on B2B transactions and which will be implemented, expectedly, by 2027 (2028 for companies with a turnover under 8 million Euros) when the required developing Ordinance is approved.

Multinational companies operating in Spain may find it difficult navigating through the new regulations as, due to the different timing, requisites and scope for the application of the new rules, their understanding can be confusing.

This confusion can be aggravated by the fact that, besides the new invoicing regulations, Spain did introduce since 2017 e-reporting obligations (the so called SII) which must also be considered.

We attach a table which summarizes how these regulations may affect nonresident companies which, because of their operative in Spain, become taxable persons liable for the liquidation of the Spanish indirect taxes (VAT/IGIC) and, eventually, having to comply with formal obligations resulting from the Spanish e-reporting and invoicing regulations.

December 2024