The requirement for businesses and individuals to provide electronic invoices to their clients to secure Spanish anti-fraud regulations has moved a step closer. The Spanish Ministry of Finance has officially published the long-awaited Royal Decree that establishes invoicing and billing software requirements.
Overview
Since February 2022, when a draft of the intended Royal Decree was published, Spain has pursued various routes for digitising tax controls, including introducing software requirements on potential billing systems.
This draft decree laid out a timetable and since then several proposed deadlines have moved further into the future. We had recently advised of the following deadlines:
- Only ordinary SIF (Sistemas Informáticos de Facturación) or Verifactu – approved billing systems may be used to prepare and submit invoices for the taxpayers under the scheme’s scope. (July 2025)
- Billing software developers and sellers must offer their product fully adapted within a maximum of nine months from the approval of the Ministerial Order that specifies all technical details, which is still to be approved.
However, this has been updated to account for recent developments such as proposals that companies with an annual turnover exceeding 8 million euros, must accompany their electronic invoices with a pdf copy.
Primarily, a raft of technical additions to the processes involved has resulted in a review to determine those to include in the final text of the Royal Decree. This process may be completed by the summer of 2025, perhaps longer.
Once the Royal Decree has been approved and published, the Ministerial Order will need to be approved a few weeks later. This will serve as the starting signal from which companies will have 12 months to prepare. That said, this revised deadline of 12 months is likely to be for those companies with a turnover of more than 8 million euros per year. And 24 months for all other companies.
There was also a previous draft deadline for the Spanish tax authority to ensure within nine months that the service for receiving billing records for the Verifactu systems would become available. As yet, there is no understanding as to whether this particular requirement has been achieved or is available.
Additionally, there are some issues between the public e-invoicing solution and regional administrations, which will necessitate appropriate agreements between the regional tax authorities and the AEAT.
In essence, it goes beyond creating electronic invoices toward a system that verifies the issuance of electronic invoices for anti-fraud and tax controls. Such systems will be required to generate a billing record in XML format for each sale of goods or provision of services, and for that billing record to be sent to the tax authority simultaneously or immediately before the invoice is issued.
Currently, the draft decree on technical requirements has allowed for two system types: Ordinary SIF and Verifactu. Verifactu is a verifiable invoice issuance system, and its adoption is also currently voluntary, allowing taxpayers to choose to continuously send all billing records generated by their systems to the tax authority. One condition of using Verifactu is that all invoices generated by this method must include a statement to that effect.
System Scope
Various taxpayers and entities will be required to implement these changes, which are compatible with the electronic invoicing mandate currently underway in Spain. As such, taxpayers must ready themselves to comply. The new rules will apply to:
- Taxpayers subject to corporate tax (IS), except for exempt or partially exempt entities.
- Taxpayers subject to income tax for physical persons (IRPF) who obtain income from economic activities.
- Taxpayers subject to income tax for non-residents (IRNR) with a permanent establishment in Spain.
- Entities under the income allocation system carrying out economic activities.
Companies that do not fall into the categories above do not need to comply.
Billing System Requirements
Invoices generated by these new systems must include either an alphanumeric code or a QR code generated by the system and in compliance of all technical specifications.
And must meet the following requirements:
- Generate a billing record in XML format for each sale of goods or provision of services, and for that billing record to be sent to the tax authority simultaneously or immediately before the invoice is issued.
- The computer system must be able to send all generated billing records to the Tax Office (AEAT).
- Must possess traceability (event logs that collect system operations and incidents).
- Ensure that records cannot be altered by any means.
- Must add a digital fingerprint.
Any taxpayer using these systems and submitting their billing records to the AEAT automatically by electronic means will receive formal acceptance messages with the records incorporated into the taxpayer’s sales and income ledgers.
Tax Administration Audits
The AEAT may appear in person where the computer system is located and may require full and immediate access to the data records, obtaining, where appropriate, the username, password and any other security key that is necessary for full access.
The AEAT may request a copy of the billing records, which companies may provide in electronic format.
In Conclusion
Spain is intent on delivering improvements to its digitization infrastructure. And although the goals and aspirations of the above system may seem like something over the horizon, it should be pointed out that these technologies already exist in the world.
Therefore, these changes are matter of when and not if, and as such, all taxpayers who issue or receive invoices will need to be not only aware of these changes, but should also be ready to implement them, once enacted.
