SPAIN JOINS THE TREND TOWARDS MANDATORY ELECTRONIC INVOICING However, some questions still need to be clarified

Just a few weeks ago, a new Spanish law for the creation and growth of companies was officially published. This is not a tax law, but rather a law that aims to strengthen Spanish businesses and industries. The measures contained in this law are aimed at speeding up the creation of companies, improving the regulation for the development of economic activities and facilitating access to financing.

Among the measures approved in this new law is the mandatory use of electronic invoicing. This is an important step in Spain, since until now, electronic invoicing was not compulsory except in certain B2G cases.

The law published a few weeks ago establishes that all entrepreneurs and professionals (not limited to those resident in Spanish territory) must issue, send and receive electronic invoices in their commercial relations with other entrepreneurs and professionals (B2B).

As mentioned above, this is not a law with a tax content, so, although it may seem surprising, not much more is mentioned about this new obligation, so it will be necessary to wait for the publication of the corresponding implementing regulation, which will provide more guidance on this new invoicing process. This regulation is also important because it will be the point from which the deadlines for the obligation to become effective will start to run. 

In this sense, the entry into force of this rule will be one year after the publication of the aforementioned regulation for entrepreneurs and professionals whose annual turnover exceeds eight million euros. For all other entrepreneurs and professionals, the entry into force will be two years after the publication of said regulation.

The regulation will also be of particular importance given that there is still an intense debate as to what should be considered electronic invoicing in Spain. Can a pdf document be considered electronic invoicing? A few years ago, Spain eliminated the obligation for invoices to have a specific format in order to be considered electronic, provided that the issuer could ensure by its own means the integrity of its content and the authenticity of its origin. It will be interesting to know whether this will continue to be the case with this new obligation. 

With regard to invoice issuing software systems, the law states that the technological solutions and platforms offered by electronic invoicing service providers must guarantee their interconnection and interoperability. At the same time, they must provide access so that users can read, copy, download and print electronic invoices free of charge. They must also be able to connect to the Spanish Tax Office’s systems, and their processes must guarantee the integrity, conservation, accessibility, legibility, traceability and unalterability of the invoicing records. We see, therefore, that companies offering invoicing services will need to make a huge effort to adapt to the new obligation.

Although it is not entirely clear, it seems that the obligations relating to invoice issuing software systems will be mandatory only for Spanish entrepreneurs, while the obligation to issue electronic invoices will be mandatory for all types of entrepreneurs or professionals, regardless of where they are established.

In addition, it will be necessary to clarify under what circumstances it will be necessary and mandatory to have software that supports invoicing processes. In other words, it is possible that a given entrepreneur may be obliged to issue electronic invoices in accordance with the new regulations, although, depending on what may be considered an electronic invoice, there will be no need to use an invoicing software, as  long as he can guarantee the integrity of the content and the authenticity of the origin of the invoices by his internal means and procedures. In that case, and as long as he can make the invoices available to his customers, it could be said that there is no need for him to have invoicing software that meets all the complex technical requirements mentioned above. This is an interpretation of the text of the current piece of legislation, but it will have to be clarified for which it will be particularly important to have a clear and precise definition of what an electronic invoice is.

We can see, therefore, that there are still aspects of this new obligation that need to be clarified. Therefore, the implementing regulation will be very welcome. There is certain anxiety in Spain among stakeholders to know the text of the same soon as possible.

Another issue to be considered is how it will fit in with the EU Commission´s proposal on VAT in the Digital Age. For businesses, it is of particular relevance to avoid the fragmentation that these purely local regulations produce in the market. So sooner or later some degree of harmonization or consensus at EU level will be required.