To do list for Spanish real-time VAT reporting (SII)

Most companies impacted are adapting their ERP systems to make sure they meet the 1 July deadline. However, we noticed that many businesses are not planning any changes beyond the XML file sent to the tax authorities. To avoid last minute surprises, here is what we believe you should be doing.

Consulting phase

This is a review of your processes in view of the new Spanish real-time VAT reporting obligation. In this phase, we propose a list of questions aimed at identifying any risk or current practice within Finance departments that must change post-July 2017. Our questionnaire includes over 50 questions with references to the applicable legislation, these are some examples:

• Are you booking all your invoices and tickets individually, including small receipts on taxis, restaurants etc?
• Are all purchase invoices booked in less than a month?
• Is there any delay on the issuance of an invoice in relation to the tax point date?
• Are you making manual adjustments into your input tax (eg. 50% deduction on employee expenses)?
• On intra-Community transactions, do you have the date of departure and arrival of the goods in your invoice listings?

Several invoicing and accounting rules that existed for a long time will have a strict application now that the authorities have better visibility on your processes. In Spain, it is mandatory to book all invoices in your ERP (even receipts, restaurant expenses, etc). As from July, the authorities will reconcile all reported information with the information reported by suppliers and customers. Any gap will trigger an automatic question with the corresponding penalty if not corrected on time. The same applies to sales where the invoice is issued late but the customer reports (and deducts) the purchase on time. In these cases, an automatic penalty will be triggered in the system of the authorities.

Send us an email if you want to receive our complete questionnaire, including applicable legislation in English and all XML data requirements, also in English.

Master data check

Spanish real-time VAT reporting implementation gives the authorities a posibility to check all VAT numbers and names in your report against their official VAT number database. Any difference will give an error message that needs to be corrected. If a health-check in your ERP master data is not done on time, we expect this requirement to produce multiple errors on your first reports, with the corresponding delays, penalties, etc.

The authorities have created a platform to check all your VAT numbers before July. In Marosa, we created a template file that can be uploaded easily into this platform once it is completed with your master data. We can help you uploading the file with our digital certificate and converting the results into a Project management table to follow up on the corrections needed.

Send us an email if you want to receive our template CSV file for master data check.

Transaction data check

In this phase, you will confirm that all your data at transaction level is sufficient to meet the tax authorities’ requirements. The SII obligation goes far beyond the current Modelo 340 when it comes to data reported. Some examples include SAD number for each import of goods; ´referencia catastral´ (individual code for any immoveable property related transaction); type of corrective invoice (there are different kinds of credit notes in Spain); and reason for exemption/zero rating (there are seven different codes that apply).

For this check, our IT team created a template that would be shared with your ERP responsible in order to get one example of each tax code (invoice and credit note). We would then convert it into XML and double check it in the testing platform that is already available in the authorities’ website.

Send us an email if you want to receive our template for transaction data checks.

IT infrastructure for the Spanish real-time VAT reporting

In parallel to all the above, your IT team should start working on the configuration of your ERP system to meet the IT requirements of the authorities. To manage the error messages in your reports you will need support from a software developer.

There are two options:

• Using your ERP add-on: Provided you have commercial ERP such as SAP, Oracle or Microsoft Dynamics, you can wait for their add-on solution to incorporate it in your system. Unfortunately, all these providers are expecting their solution to be available only in May. Given the configuration and testing required, this option will risk being too late for the July deadline.
• Platform by a software developer: Several software companies have already created a platform that receives your ERP data and converts it into an acceptable format that is automatically sent to the authorities. These platforms usually include an interface where you can manage and correct error messages on data sent. This is the preferred option for businesses who want to be prepared in advance. It is also recommended for companies who do not have a commercial ERP. In some cases, businesses are planning to use both options: a platform during the first year and the add-on solution at a later stage.

Marosa is partnering with a major software developer in Spain to offer a platform solution with support from our tax technology team to adapt your ERP into a flat file or other format options of your data in order to compy with the Spanish real-time VAT reporting requisites.

Send us an email if you want to hear about our software offering and tax technology support.

Real-time reconciliation (post-July)

Once SII goes live, the authorities will publish their reconciliations between your data and your suppliers and customers’ data. This information will be available in your online account in the authorities’ website. Any mismatch will be highlighted and will need to be corrected before the VAT return is submitted at the end of the following month.

In Marosa we can help you reviewing these reports and creating a list of actions every month including postings required in your accounts or manual corrections in the VAT return. Contact us if you need help with your VAT compliance obligations.