B2B Invoicing is becoming mandatory in Spain. Congress has approved the law for the Creation and Growth of Companies in Spain. Hence, the country has begun implementing a nationwide e-invoicing adoption.
This means that, as they have done since 2015 in all B2G transactions, B2Bs in Spain will use the e-invoicing system in all transactions.
The new regulation aims to ensure that all VAT-paying companies and individuals in Spain can generate and receive electronic invoices. The mandate will take effect from July 2024 for large taxpayers with a yearly turnover above €8 million, and electronic-Invoices implementation will extend through 2026.
The e-invoicing system will promote the digitalization of business transaction processes like in other European countries. It will also prevent late payments in business transactions to support business growth in Spain.
This article will discuss in detail the new law for the Creation and Growth of Companies, the obligations for companies, the benefits, and how you can prepare for the change.
What is the law for the Creation and Growth of Companies?
The law for the Creation and Growth of Companies is a new law approved by the Congress of Spain. It requires companies and professionals to issue, send, and receive electronic invoices in business dealings with other companies and professionals.
In addition, the recipient and the sender of e-invoices are required to provide information on the status of invoices.
From 2024 to 2026, this new B2B e-invoicing legal regulation must be implemented by companies and self-employed individuals in Spain.
This initiative is a part of the Recovery, Transformation, and Resilience Plan, aimed at promoting the creation of companies and aiding their growth and development. This measure is also intended to align Spain with other EU countries.
Implementing the new law will help reduce the obstacles faced in creating companies, reducing the time required for its creation (which can be processed telematically), and reducing its registration cost from 3,000 euros to 1 euro.
Similarly, any modification, such as a capital increase or reduction affecting the company, will be processed faster (within 10 working days).
It will also prevent late payments in business dealings, support business growth in Spain, promote alternative financing through mechanisms such as crowdfunding and adapt to the digital trend.
When will B2B e-invoicing become mandatory in Spain?
After being approved by the parliament and made public on the BOE, the e-invoicing mandate is scheduled to start by July 2024 for large taxpayers with turnover exceeding €8 million (State Official Bulletin). The implementation process is estimated to last until 2026.
For other taxpayers, including small and micro-enterprises, whose invoices total turnover is less than 8 million euros, e-invoice adoption will be required to start in 2026.
Currently, the Tax Authority in Spain (AEAT) collects transaction information through the Suministro Inmediato de Información (SII) from some taxpayers up to four working days after issuing or receiving an invoice.
On the other hand, the enforcement of mandatory e-invoicing would necessitate more frequent transaction data submissions from a larger number of taxpayers. While this new e-invoicing regulation is in process, there is a high chance that the model will be based on the preclearance model. A public consultation has been launched.
Furthermore, a QR code will be added to all e-invoices, making it simple for authorities to track them. The Royal Decree provides a legal obligation to ensure that software developers and retailers accounting and similar systems comply with the new e-invoicing requirements and send the required data to the tax authorities.
Note that adoption dates are subject to change following the law's official publication in the BOE.
What categories of taxpayers will be affected?
All Spanish VAT-paying businesses and individuals must abide by the new regulations regarding issuing and receiving electronic invoices.
The obligation will come into effect in July 2024 for large taxpayers with annual revenue above 8 million euros. And it will include utilizing certified invoicing systems and voluntary submission of invoices to the Agencia Tributaria – Sistemas y Programas informáticos o electrónicos ('SIF').
Spanish VAT-paying businesses and individuals will be able to use some limited approved invoicing systems from the tax authorities. Or else, any commercial product that is not in compliance must make pledges to comply with the new rules, including submitting invoices to the Agencia Tributaria. Once compliant, their systems will be considered 'verifiable invoicing systems' or VERI*FACTU systems."
The implementation of this new invoicing process will extend through 2026 and include all other taxpayers, even small and midsize enterprises.
Obligations for companies and the self-employed
Before the publication of the technical regulations governing the new electronic invoicing system, companies and independent contractors must:
- Issue and send electronic invoices to other companies and independent contractors.
- Facilitate recipients' access to, viewing of, downloading of, and printing of electronic invoices.
- Store and maintain access to electronic invoices for six years, even if the recipients have stopped being customers of the issuing companies.
Benefits of using B2B electronic invoicing in Spain
Due to its many benefits, Spain joins other European countries, including Italy, France, Poland, and Albania, in adopting the extensive usage of e-invoicing in the B2B sector.
Here are some of its main benefits for businesses' day-to-day operations:
Digitization and optimization of business relationships
With e-invoicing, the management of business dealings becomes more digitized and streamlined. The risk of error in document classification, labeling, and storage is reduced because data entry is more automated, and re-entry is minimal.
This means there will be fewer payment issues and a reduction in the number of disputes.
When disputes do not or rarely happen, it improves your business relationship with your customers and helps you retain more customers.
Are you looking for an electronic invoicing system to help you with the coming mandatory B2B invoicing while guaranteeing complete compliance with Spanish regulations? Schedule a demo with one of our e-invoicing experts.
Time and cost reduction
The adoption of electronic invoicing systems helps save time as invoices are readily accessible on your customer's system. Your customers don't have to sort through invoices, which cuts processing cycle time by 65%, fastens payments, and improves your cash flow.
E-invoicing saves you time manually processing invoices and other paper documents. Your productivity improves as you can better spend time on other value-adding tasks.
Reduced delinquency in commercial transactions
An e-Invoicing system reduces delinquency in commercial transactions due to the increased transparency of financial dealings.
E-invoicing also creates barriers against fraudulent billing, duplicate billing, oversight, and human error. This reduces the possibility of complications that your auditor might find odd, saving time and resources needed to conduct the due diligence required to prevent such mistakes and fraud.
Traceability and control of payments between companies and freelancers
With e-invoicing business dealings between companies and freelancers can be monitored which allows them to know when their invoices were received, acknowledged, or processed.
This helps their financial planning and gives them peace of mind knowing what stage their invoices are in.
This transparency and visibility offer thorough audit traceability.
How can you prepare for the change?
Knowing that change is on the way, B2B companies and independent contractors need to get ready to adopt an electronic invoicing system keeping in mind that Facturae is the only format for sending invoices in Spain now.
Also, note that it is mandatory for companies that execute business transactions with public administrations (B2G transactions) to add an electronic signature for invoices issued. In contrast, for B2B transactions, it is not mandatory. However, to facilitate the monitoring process, a QR code must be added to B2B e-invoices.
Furthermore, note that e-invoices would have to be archived for 6 years.
Storecove is a certified e-invoicing solution provider. In the case that your business needs help with the e-invoicing implementation process, you can schedule a video consult with one of our e-invoicing experts to learn how you can become compliant with the upcoming regulations in Spain.
As you can see, the implementation of the law for the Creation and Growth of Companies is now a reality in Spain.
This new law impacts all types of taxpayers, improves the ease of starting a business, and streamlines business transaction processes, saving cost and time for all parties involved in business dealings.
By July 2024, all companies with revenue over 8 million euros must adopt the e-invoicing system, and others with less than 8 million euros in yearly turnover two years from the published BOE.
While getting your company set for this change, you can partner with Storecove to ensure that you use the proper sending and receiving infrastructure for e-invoicing. Most companies need to do this due to regulatory compliance.
Storecove will manage the integration and ensure that all your e-invoices comply with the latest regulations.
Feel free to book a consult with one of our e-invoicing experts.
More information about B2B Invoicing Spain?