Spanish Invoices: Requirements

Introduction

The Spanish Tax Agency can reject invoices if they have formal defects, even if they are minor. This can lead to fines or, in the case of received invoices, expenses might be declared as non-deductible.

This will result in a higher taxable base and possible fines for tax evasion, surcharges and interest payments in case of inspection. It is therefore important to make sure that both emitted and received invoices are formally flawless.

Regarding the deductability of received invoices, there are 3 basic requirements to consider:

• Justified: A corresponding official invoice must be provided.
• Recorded: They must be included in registers, bookkeeping and tax declarations.
• Related: They must be specific and necessary for the business activity.

This last one is often the most tricky one and can be challenged by the tax inspector. If you have chosen a service level including a personal Account Manager, we will check all invoices for deductability and raise a flag if there are any doubts. You can also consult them at any time in order to avoid mistakes.

 

Ordinary Invoices

The ordinary invoice is an official document that serves to record a commercial operation, whether it is the purchase or sale of a product or a service. It must contain all the data relating to the transaction carried out so that it can be filed in an orderly manner. It is the way of keeping track of all transactions including all essential information for correct accounting and tax declarations. Invoices must contain at least the following basic information:

• The word Invoice or Factura on the document (Packing Bills or Pro Forma invoices are not valid).
• Date of issue and transaction date, if different and an unique, sequential and correlated invoice number.
• Registered name, VAT number and complete address of both the supplier and customer.
• Description, quantities, unit prices and discounts for all goods or services provided.
• The taxable base of the transaction and applied tax types, rates and amounts, broken out individually.
• The total payable amount of the invoice after taxes have been applied and applied exchange rates.

Simplified Invoices or “Facturas Simplificadas”

This is a type of invoice that is used to deduct a company’s expenses and only includes the issuer’s tax data. In other words, it is not necessary for the tax data of the recipient of the simplified invoice to appear on the invoice. It is also often referred to as a ticket or receipt although this is not the correct name, and is often used by restaurants, taxis, hairdressers etc. A simplified invoice must include the following elements:

• Date of issue and an unique, sequential and correlated number.
• Registered name and tax identification number of the issuer.
• Description of the product delivered or the service provided.
• The taxable base of the transaction and applied tax types.
• Total amount to be paid.

The most important difference between an ordinary invoice and a simplified invoice is that a simplified invoice does not allow the recipient to deduct the associated VAT. Also it is increasingly required for ordinary and simplified invoices alike to be paid by bank transfer, credit card or other electronic means. Simplified invoices paid in cash are often rejected by the tax agency.

Rectifying Invoices or “Facturas Rectificativas”

In Spanish bookkeeping it is forbidden to delete a sales invoice once emitted, and the numbering of invoices should always be sequential, correlated and without interruption. The only way to cancel or rectify an issued invoice is to emit a new invoice related to the original invoice that is called a rectifying invoice. This invoice modifies or completes the original invoice.

Some of the reasons for issuing a rectifying invoice may be:

• Error in some of the formal elements of the invoice.
• Mistakes in the calculated prices or quantities.
• Absence of required information in the document.
• Incorrectly calculated tax rates or quotas.
• Cancel an unpaid invoice and recuperate VAT.

When issuing a rectifying invoice, positive or negative, there are special considerations to keep in mind. The following information should minimally be included:

• Identification of the original invoice to be modified (number and date).
• The reason for issuing the invoice and the details of the rectification to be made.
• It must be clearly stated that it is a rectifying invoice.
• It will must bear a different serial number than the normal invoices.

Intra-Community Invoices

Intra Community invoices are invoices between companies within the European Union and associated countries, and are subject to special VAT regulations.

• If you sell goods to companies in other countries in the EU – what’s known as an ‘Intra-Community Sales’ – you do not have to charge VAT on the invoice if your company and the company you are selling to are both registered as Intra Community Operators. Special rules may apply to some industries so make sure to check with us in case of doubt.
• The above is only valid for selling to companies or registered freelancers in the EU, If you sell goods or services to a private individual, you must always include your country’s VAT on invoices – as if it were a business transaction in your own country.
• When buying products or services from companies or registered freelancers from other countries in the EU – what’s known as ‘Intra-Community Acquisitions’ – you must register VAT in your bookkeeping even though the invoice received will say 0% VAT. This is called a ‘reverse charge’ mechanism and can normally be compensated in the same operation making it VAT neutral.

We can arrange your registration as an Intra Community Operator for you if you do not already have one. Just let your Account Manager know and we will take care.

Applying the Reverse Charge

There will be no VAT on the invoice when you buy a product or a service from another VAT-registered company in the EU. This means that you are responsible for calculating and including VAT in your bookkeeping as a reverse charge and to declare the operations to the tax agency. If your EU provider is invoicing you with VAT, you should ask them to invoice you without VAT instead and provide them with your EU VAT number and company details. Similarly, if you are the one selling a product or a service to another VAT-registered company in the EU, you do not include VAT on the invoice. The buyer will calculate and declare the VAT in his home country.

As mentioned, the above is only valid for operations between tax registered companies or freelancers (not private individuals without business activity) that are registered as Intra Community Operators. Follow these guidelines when dealing with transactions in the EU:

• If your customer can provide you with a valid EU VAT Registration number, you can apply the zero rate of VAT to the sales. The VAT will be due in the destination country from the customer on acquisition of the goods
• All companies, freelancers and other professionals wishing to work with Intra-Community transactions, must register for an EU VAT number in the member state where they reside. In order to be able to apply the EU VAT mechanism, the corresponding customer / provider must also reside in a member state and possess the EU VAT number.
• After receiving your customer’s VAT number, you should check that the VAT number is given in the right format for that country and that it matches the customer’s name and address. You can check any EU VAT number for a customer or a provider through the online VIES validation system to see if the number has been authorized for intra EU transactions.
• You must mention both the seller’s and buyer’s EU VAT registration numbers on the invoice. You must also obtain and keep valid evidence that the goods have left the country of origin within certain time limits to be able to apply the zero rate.
• Finally, you must include a legal text in your EU invoices mentioning the VAT excemption and the applicable legislation. For example “Factura exenta de IVA por aplicación de la Directiva 2006/112/CE y el art. 25 de la Ley 37/1992” or “Invoice exempt of VAT according to EU Directive 2006/112/CE and article 25 of law 37/1992”.

Our software includes an invoicing module that assists you in preparing, issuing and sending correct invoices in PDF or electronic invoice format. If you have chosen a service level including a personal Account Manager, all invoices will be checked to make sure they are legally valid and correctly issued.

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