Revised draft e-invoicing regulation brings Spanish tax authority’s ‘dream’ closer

Spain continues, step by step, towards the digitalisation of the invoicing function of some of its companies. In articles published on ITR in July 2023 and January 2024, Spanish VAT Services explained, respectively, the first details known about the obligation to issue electronic invoices and the characteristics that the ‘computer invoicing systems’ used by these companies must have.

Both developments, although they come from different regulations and even from different ministries within the government of Spain, are intimately related. The process that is intended to be implemented in Spain covers from the moment at which a company registers a customer until the registration becomes an electronic invoice, ending in the obligation for its recipient to communicate its acceptance or rejection and the payment of the same.

The first draft version of the regulation concerning the obligation of mandatory electronic invoicing was published in Spain in June 2023. A few weeks before this article was written, in January 2024, a second version of the draft was published.

This draft, which includes some of the observations made in recent months by stakeholders, seems to be the version that the government of Spain has sent to Brussels for its assessment. The new version of the regulation maintains the main aspects and basic points of its previous version, although there are some differences that may have a certain importance.

Perhaps the main novelty between the two versions of the draft regulation concerns its subjective scope of application.

The first version mentioned that the obligation of mandatory electronic invoicing did not apply when one of the two parties to the transaction did not have its place of business or a permanent establishment in the Spanish territory.

However, the new version of the regulation has been slightly modified and opens the possibility for non-resident companies to have the obligation to issue electronic invoices in cases in which they are obliged by the Spanish invoicing regulations, provided that the invoicing is addressed to the place of business of a Spanish entity or to a permanent establishment located in Spain.

In this way, a non-Spanish entity that must issue an invoice to a Spanish entity as a result of a transaction to which the reverse charge rule does not apply, being liable for the VAT on the transaction, should comply with the obligation of electronic invoicing. This entity would therefore be obliged to issue an electronic invoice in one of the formats required by the Spanish regulation, it must also hire the services of a platform that allows it to exchange invoices with its recipient, and a copy of the invoice must be sent to the public invoicing solution that the Spanish administration will launch. The latter can be done directly by this company or through its private invoicing platform.

The recipient of the invoice will have only four days to confirm that it accepts or rejects the invoice and a further four days, since the date of payment, to report that it has paid it. As an example, a non-Spanish lessor of real estate in Spain could be in this situation, since these transactions have not been subject to the reverse charge mechanism since 2023.

As far as Spanish entities are concerned, the situation can also be varied; for example, in the case that a Spanish entity issues an invoice for a supply of services that is located for VAT purposes where the recipient is established according to Article 44 of the VAT Directive. Although that invoice must comply with the provisions of the Spanish invoicing regulations, since it is not addressed to the place of activity of a Spanish entity or a permanent establishment located in Spain, everything seems to indicate that it will not have to comply with the obligation of electronic invoicing. It would be allowed to send the invoice, for example, in pdf format and through email, as it most likely would have been doing until now.

Paradoxically, there may be Spanish entities that could skip the obligation to issue electronic invoices, while some non-Spanish entities must comply with the obligation.

It seems that the Spanish administration will provide a free public invoicing solution that allows all the above to be complied with. It is expected that there will be a form that will allow the generation of electronic invoices, which will send the invoice to the tax authority and serve as a computing invoicing system. Initially, it is planned to be used for companies with a low number of annual invoices. The figure of 100 invoices per year is being considered, but this is probably not definitive.

As we can see, Spain is moving slowly but steadily towards the digitalisation of the invoicing function. All this – together with the Immediate Supply of Information System, as described above – will make one of the dreams of any tax administration come true: to have information and even copies of millions of invoices in very short periods of time.