You can now claim Spanish input VAT on employee expenses that were excluded from your...
Despite announcements to postpone the implementation, the Spanish government have published plans to introduce real-time VAT reporting as from 1 July 2017. This system follows the same logic as the Brazilian SPED, although there is no pre-approval from tax authorities required on invoices issued or received.
Spain is the first country in Europe requiring real-time VAT reporting. Several jurisdictions like Poland, Portugal or Czech Republic have introduced the SAF-T requirement on a periodic basis, but none of them has requested real-time information yet.
The so called ´Suministro Inmediato de Información – SII´ consists of the obligation to report electronically all invoices within four days from the moment they are issued or received. This new obligation will require all companies to adapt their invoicing and ERP systems in order to produce the XML file that must be uploaded in the website of the Spanish tax authorities.
The real-time ledger information is mandatory for (i) businesses with a Spanish turnover above €6,000,000; (ii) businesses registered in the monthly refund scheme; and (iii) those registered as a VAT group in Spain.
In principle, non-established and non-resident companies are also required to submit this information if they fall within any of the categories above, but this has not been confirmed in the information published so far. Unfortunately, it will not be possible to de-register from the Monthly Refund Scheme for those companies willing to avoid the new obligation, as this de-registration can only be made during November of the preceding year.
The law does not make reference neither to those taxpayers who opted for the deferral of import VAT and had, as a consequence, to submit VAT returns on a monthly basis. In principle, we understand they are also bound by the new requirements.
Some information is already included in the VAT ledgers return (form 340) however, there are some additional content requirements. The below list summarizes the content of the SII required on top of the usual information included in the invoicing and reporting regulations.
Regarding invoices received, the following information must be reported in real-time:
Regarding invoices issued, the following information must be reported in real-time:
The main problem is that all the above data must be reported within four days from the moment is issued or received. In case of intra-Community acquisitions, the four day period starts when the transport begins or when the goods are received. This will require the tax department to talk to the logistics department in order to introduce this field in the ERP tax data.
Now. Given the complexity of real-time VAT reporting, we expect that all businesses impacted will need to make a significant investment to comply with the new rules. A proper transition will require a timeline for all actions planned in advance, testing the solution used to produce the XML file and having it ready by 1 July 2017… and you only have six months.
All data for the period 1 January 2017 to 1 July 2017 is also required to be reported to the tax authorities in the same format as the real-time ledgers. Businesses have an extended period to provide this information (see below), but it means that you must collect all required data already from 1 January 2017.
All data must be uploaded as an XML file in the website of the Spanish tax authorities. According to our experience, possible solutions include a plug-in to the ERP system or a software adapting your output ERP data to the XML requirements of the authorities´ system. The Spanish authorities will most likely develop a software to convert the file into a format that can be uploaded in their system. In any case, there are several open questions about the technical requirements of the electronic VAT ledgers. We will follow up on the announcements and software developments of the tax authorities and update our VAT news section regularly.
Manual input is also possible in those cases where there are only a few invoices to be reported. In these cases, a form available in the website of the authorities must be completed and submitted manually.
The new obligation of real-time VAT reporting applies as from 1 July 2017. During the second semester of 2017, the four day period is extended to eight days.
In addition, VAT ledgers for the first semester of 2017 must be submitted before 1 January 2018. This means that companies should adapt all their data from previous periods and report it to the tax authorities.
The Spanish authorities have added an ambiguous paragraph next to the four day requirement with the following sentence: “In any case, this data must be reported before the 16 day of the following month”. We need to wait until further details are published to clarify in which cases this second due date applies.
Due to the complexity of the new requirement and the little time allowed to comply with this obligation, the tax authorities may provide additional simplification measures such as delaying the implementation date or extending the time to submit the electronic ledgers. If applicable, these additional simplifications would be published in the coming months.
Businesses submitting real-time electronic ledgers will benefit from an extended deadline to file their VAT return. The new due date will be the 30th day of the following month (28th in February). In addition, they will not have to submit the Annual summary VAT return, VAT ledgers return and Annual Sales and Purchase Listings.
Late reporting of real-time electronic VAT ledgers will trigger a penalty of 0.5% of the missed amounts, with a minimum of €300 and a maximum of €6,000 per quarter.
There are further considerations to be made such as delaying your VAT refunds or jeopardizing your reputation with the Spanish tax authorities.
Brazil introduced real-time tax reporting back in 2006. The system is now fully operational and gradually expanding to new tax areas.
Real-time tax reporting imposes large compliance costs on businesses, particularly for medium and small sized companies. However, in those countries where similar obligations have been introduced, the benefits for the tax authorities often outweigh the disadvantages for the private sector. These are some of the lessons learned from the Brazilian example:
You can find more information about the new Spanish real-time electronic VAT ledgers obligation in the following links (all in Spanish).