SAF-T is not enough
First of all, OECD published the first version of the Standard Audit File for Tax (SAF-T) in 2005. This began a ‘new era’ in tax compliance. Many European states implemented a transactional level of VAT reporting requirements. These were either based directly on the SAF-T model (e.g., Lithuania, Poland) or on their own concepts (e.g., Czech Republic, Romania). Spanish SII meets both trends.
Second, Spain introduced this first among the member states. It was not only very detailed, but also a very frequent VAT obligation – in real-time. Also, in July 2017, the Immediate Supply of Information on VAT (Suministro Inmediato de Información del IVA), commonly known as SII came into force.
Third, like other transactional VAT requirements, SII relies on XML files ensuring structured, standardised and harmonised reporting. Taxpayers deliver important amounts of standardised data. Thanks to the use of appropriate IT tools (including ‘trendy’ ones like AI, data analytics, big data) major automation of a tax audit is possible. For instance, so-called cross-check controls can be now quite easily automated. As a result, detection of potential VAT fraud is more probable and quicker.
Legal framework of Spanish SII
The SII reporting obligation has been implemented based on the Royal Decree no. 596/2016. This in turn introduced particular regulations into several legal acts, in particular into the Spanish VAT Regulation (RD 1624/1992).
The requirement is mainly addressed to the group of taxpayers who are obliged to follow the monthly filing regime, for example:
- ‘large taxpayers’ – any taxpayer whose turnover exceeds EUR 6 010 121,04
- taxpayers registered in the Monthly Refund Register (so-called ‘REDEME’ scheme)
- taxpayers belonging to a VAT group (joint VAT registration)
What is important is the regulation applies also to non-resident entities.
The taxpayers not embraced by the above-mentioned obligation may still choose to follow this requirement.
For the taxpayers willing to follow the SII requirement on an optional basis, the relevant application may be made at any time. Also, this will apply as the first reporting period of the following year. The option must be then be exercised for at least one year. Furthermore, it will last until the taxpayer informs on resignation from the SII reporting option.
Reporting deadlines of Spanish SII
The outgoing invoices shall be reported within 4 calendar days. This does not include Saturdays, Sundays and national holidays. Counting from the date of
- issuance – in cases other than below
- dispatch – in case of intra-EU supply of goods
- receipt – in case of intra-EU acquisition of goods
In case of self-billing invoices or invoices issued by a third party, the period would be extended to 8 calendar days.
The incoming invoices shall be declared within 4 calendar days counting from the date of taking the accounting record. Also, within 4 calendar days counting from the date of receipt in case of intra-EU acquisition of goods.
In practice, companies issuing invoices on a daily basis should consider a daily reporting routine. Although, the law prescribes for some summary reporting, if certain criteria are met.
On the other hand, the taxpayer should consider certain benefits in terms of reporting obligations. This includes in particular:
- Extended monthly VAT return deadline from the 20th to the 30th day of the month, following the reporting period
- Removal of VAT informative obligations: modelo 347 (kind of domestic recapitulative statement), modelo 340 (special form for REDEME taxpayers) & modelo 390 (annual VAT return)
Being non-compliant with SII may result in financial consequences. Potential penalties may apply:
- 0,5% of total invoice value for a delay in submission of invoice data, from EUR 300 to EUR 6,000 quarterly
- 1,0% value of mistake (e.g., omission), from EUR 150 to EUR 6,000 quarterly.
Autonomous territories and Spanish SII
Spain possess territories, which to some extent are autonomous from a Spanish taxation perspective. For example, the Canary Islands are not part of the EU VAT union. Although, they do belong to Spain politically. Actually, there is different indirect tax on the Canary Islands – called IGIC. However, as of January 2019, SII reporting applies also to the Canary Islands (Decree 111/2018).
It’s worth mentioning that Spanish SII, as of January 2018, is in force also in the Navarre region – one of the provinces which collects national and regional taxes independently.
Spanish SII reporting scope
SII requires to report 4 main ledgers (books). This contain very detailed data about taxpayers’ transactions:
This book contains data about outgoing invoices including, for example, domestic sales, export of goods, standard intra-community supply of goods transactions, and appropriate credit notes.
Each invoice has to be described by a number of fields covering very detailed pieces of information like
- Invoice number
- Issue date
- Seller’s data including VAT ID (NIF)
- Purchaser’s data, at least VAT ID (NIF)
- Description of the transaction
- Taxable base and VAT rate
- Invoice type (e.g., ‘F1’) – standard invoice, ‘F2’ – ticket.
Additionally, each document has to be mapped to the appropriate operation code (transaction key). For example: ‘01’ – standard operation, ‘02’ – exportation.
This book contains data about incoming invoices including domestic purchases and standard intra-community acquisition of goods.
Incoming invoices, similar to outgoing ones, have to be also described by many fields. Some of them are typical for input VAT. For example, it is required to indicate a deductible amount of VAT coming from an incoming invoice.
Purchase transactions settled by reverse-charge mechanism and consequently resulting in output VAT calculation, shall be shown in a received invoices book. There is no need to indicate such records in issued invoices.
Certain intra-community transactions
This ledger contains data about specific intra-community operations. For example, so-called deemed intra-community acquisitions have to be indicated in this book. Such situation occurs, if a taxpayer transfers its own goods from one EU member state to another (in SII case – to Spain). Standard intra-community acquisitions are to be reported in a received invoices book.
This book is applicable only for taxpayers who are subject to pro-rata rules. In other words, to the ones who do not have a full right for deduction because of performing exempt transactions.
Spanish tax authorities – Agencia Tributaria (AEAT) underlines that SII is not about sending invoices themselves (even electronic invoices). However, it is about invoice records (in line with ledger structures described in the above point).
The invoice records (until blocks of 10 000 invoices) are being sent to AEAT using a so-called web service. Then, AEAT verifies (validates) the received records. After that, using the same special web service it sends the response to the taxpayer with the result:
- Fully accepted – all records have been registered by AEAT
- Fully rejected – all records have been rejected by AEAT (e.g., not in line with the technical structure of the ledgers)
- Partially accepted – some records have been accepted, some not. Rejected records have to be submitted again.
What is next?
Finally, Spanish tax authorities have already announced that SII reporting will soon be extended to entities liable to pay excise duty (so-called Special Taxes – IIEE). The requirement shall come into force as of 1 January 2020.
The producers, processors and warehouse keepers of excise products will generally be obliged to use electronic accounting software interfaced with AEAT. A special portal called SILICIE has been launched for this purpose. However, an alternative option of delivery of the requested data shall be enabled as well.
The obligation shall apply to various types of establishments characteristic for excise product supply chain purposes. These include in particular: factories, tax warehouses, and tax deposits. The scope of the requirement shall include registering the processing, movement and inventory events related to excise products, as well as to raw materials necessary to produce them.
Also, it is planned that certain exceptions could apply for manufacturers not exceeding certain production thresholds. For example: wine producers – 100k litres per year. Still, they would be obliged to comply with the obligation to keep electronic records or at least paper books in a pre-approved format.
The AEAT has already published the proposed content of the accounting register in the official document (Annex I) on the Customs and Excise portal of the AEAT. The document lists all the mandatory and optional information to be provided by the entities.
As a rule, the requirement of accounting for excise tax items shall be met through the usage of the AEAT portal. This enables the data to be registered directly. Alternatively, the obliged taxpayers may opt for using their own electronic accounting software to meet the requirement. In such case, the taxpayer shall officially apply for such an option in advance – till the end of November preceding the calendar year, in which the option shall be affected.
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