Spain: Current status of mandatory e-invoicing on B2B operations

I. Background

As a rule, notwithstanding the special provisions that may be applicable for certain territories - Basque Country, Navarre, the Canary Islands, Ceuta and Melilla -companies operating in Spain must comply with the Spanish VAT invoicing regulations when being the appointed taxable subject for this tax (or, if not applicable, its equivalent local sales tax).

Except for the Basque Country and Navarre (where there is a special e-invoicing regulations applicable to companies domiciled or with a permanent establishment in any of these territories, known as ticket BAI,) and for B2G transactions – those where the client is a public administration - companies have not a general obligation to issue electronic invoices to document their supplies of goods or services when operating in Spain.

It must be remembered that the obligation to inform electronically to the tax authorities, in almost real time, the data contained in the VAT registers (the so called SII or Immediate Information Supply) does not affect e-invoicing, although, on the other way around, it may be affected by the introduction of new regulations on this field.

This situation is to change following the extension of mandatory e-invoicing to the operations B2B, those taking place between companies and entrepreneurs, introduced by article 2bis of Law 56/2007, of December 28, on Measures to Promote the Information Society, following its new wording given by article 17 of Law 18/2022, of September 28, on the creation and growth of companies.

The coming into force of this extension of e-invoicing to B2B operations is postponed until the provisions of the Law are developed at reglementary level and a vacancy period of 12 months from the date of publication at the Official Gazette of the corresponding Royal Decree is lapsed (24 moths for companies and entrepreneurs with a turnover under 8 million Euros).

II. Pending e-invoicing regulations

At this moment two reglementary rules which may be considered to implement the required development of the new e-invoicing obligation for B2B operations are under way, namely:

A) The 21 February 2022,  a draft of the Royal Decree was made public for consultation, which develops the provisions of article 29.2.j) of General Tax Law 58/2003, of December 17, after the new wording given by Law 11/2021, of July 9, on prevention measures and the fight against tax fraud (DRD2022).

This draft implements the provision in said article of the General Tax Law establishing that technical specifications can be introduced via reglement that must be complied with by computer or electronic systems and programs that support the accounting, billing or management processes of those companies or entrepreneurs carrying out economic activities.

After stating in its preamble that " there are significant differences between the electronic invoice regulations , which affect the documentation, conservation and transmission of these documents and the matter regulated in this Royal Decree, which refers to the requirements that must be adopted by the systems and computer programs and focuses exclusively on guaranteeing the computer or electronic systems that support the billing processes of businessmen and professionals and the standardization of their formats” , he concludes by stating that:

“ The content of this Royal Decree is compatible with the implementation of electronic invoicing, additionally generating synergies between both regulations ”.

Despite this statement, the truth is that DRD2022 does not in fact respect the alleged limitation of its scope since, in addition to regulating technical aspects of billing software, it deals with issues that have more to do with the area of electronic invoicing , such as the requirement of certain billing records to the taxpayers, its incidence in the SII obligations, the possibility of voluntary sending of information from the invoice recipients to the Tax Agency, or the introduction of certain modifications in the billing regulations that have to do with the electronic invoice.

B) In June 15, 2023, a new draft of Royal Decree has been made public, which aim is to develop the extension of mandatory electronic invoicing to B2B operations (DRD2023).

It is surprising that, despite the statement contained in the preamble of DRD2022, we do not find any reference in DRD2023 to the existence of the former, which in theory would be a complement for the new regulatory standards it introduces on electronic invoicing.

Furthermore, to increase confusion, DRD2023 does not limit  itself to establishing the technical and information requirements to be included in the electronic invoice, but also deals with matters that could be understood to be within the scope of DRD2022, such as:

• The establishment of minimum interoperability requirements. between the providers of technological solutions for electronic invoices and,

• The security, control and standardization requirements for the devices and computer systems that generate the documents.

It is likewise to be mentioned that, as also happen in the DRD2022, the new draft introduces modifications in the invoicing Ordinance and the Immediate Supply Information (SII) regulations, and introduces new reporting obligations:

• The obligation for the recipient of the e-invoice to inform about its situation as regards the payment.

• The obligation of private billing solutions to send a true copy of each invoice issued to the public tax system.

III. Summary

As a way of summary, the situation concerning the implementation in Spain of e-invoicing for B2B transactions can be describes as follows:

• At present there are two drafts of future Royal Decrees which provisions, directly or indirectly, affect the field of e-invoicing in Spain.

• Meanwhile one of them is in the public consultation phase, its predecessor has already cleared this step that is previous to its final publication at the Official Gazette.

• Although they are declared complementary, they actually overlap in the treatment of certain aspects with contradictory or, at least, inconsistent results.

• This createsa situation of uncertainty that urgently needs to be resolved so IT solution providers and internal IT departments of companies are allowed the necessary time margin to adapt to the new B2B e-invoicing obligations and reporting changes resulting therefrom.

28/6/2023