E-invoicing in Spain. Present and future scenario for non-resident companies

I.      Background

I.1.   E-invoicing obligation

Before the publication of Law 18/2022 of 28 September regulating the creation and growth of enterprises that modified article 2bis of Law 56/2007 of 28 December of Measures to Promote de Information Society, there was not a general obligation to issue electronic invoices, except for transactions between companies and the Spanish administrations or their public bodies (the, so called, B2G operations).

This obligation does not extend to other transactions, either B2B or B2C, regardless of the. possibility that, under certain circumstances, companies considered to provide services of special economic significance according to article 2 of said Law 56/2007, could issue electronic invoices for the case that:

a) In B2B operations, there is an agreement with the client whereby it accept the issuing of e-invoices instead of paper ones.

b) In B2C operations, the client expressly asks for an e-invoice.

I.2.   Position of non-resident companies

As there is not a special reference in the commented article to non-resident companies operating in Spain, its provisions would be fully applicable to them. However, based in the Spanish VAT and invoicing regulations:

a) A pre-requisite for a non-resident company to be subject to any invoicing requirement in Spain is that it is obliged to apply the Spanish regulations for invoicing.

b) This would normally be the case when, regardless of its being established or not in the Spanish VAT territory, the non-resident company is the appointed taxable person for the Spanish VAT accrued in the transaction.

This implies both that the transaction is located in the Spanish VAT territory and that no internal reverse charge rule applies, whereby the position of taxable subject shifts from the supplier to the client.

I.3.   Technical standards for e-invoicing in the common VAT territory

At this previous stage, other than for B2G transactions, where the e-invoice requires a specific structured format regulated by a ministerial order (Facturae)  and an electronic signature, the electronic invoice is defined by the Spanish invoicing ordinance as “any invoice complying with the Invoicing ordinance requirements that is issued and received in an electric format”.

Unless there is a specific developing regulation that, as happens with B2G transactions, specific technical requirements must be complied with, this allows files containing the invoice data, not necessarily in a structured way (such as a PDF or a word), to be considered an e-invoice as far as they are sent and received between the parties electronically.

I.4.   Technical standards for e-invoicing in the Basque country and Navarra

As an exception, affecting those companies operating in Spain from an autonomous region with special VAT competences (namely, the Basque country and Navarra), special e-invoicing technical requirements have been introduced affecting both B2B and B2C transactions (the, so called, ticketbai) which are already in force in these territories.

II.   Extension of e-invoicing obligation to B2B transactions

II.1.    Legal obligation to issue, deliver and receive e-invoices for B2B transactions

In its article 12, Law 18/2022 modifies said article 2bis of Law 56/2007, so to extend the obligation to issue and deliver electronic invoices to all B2B transactions.

According to the new wording of this article and as result from the VAT and invoicing Spanish regulations, it is to be understood that the obligation to issue e-invoices would apply to any company, regardless of its being resident or not, as far as within the scope of the Spanish invoicing regulations, which, as mentioned, would normally be the case if the company is the appointed taxable person for the Spanish VAT accrued in the transactions its carries out in the Spanish VAT territory.

Although it is not clear that it may have any practical implications, mention must be made to the fact that, besides extending the obligation to the issuing and delivery of e-invoices on B2B transactions, the new wording of said article 2bis, also includes a reference to the obligation to receive such an e-invoice. Although obvious, as it may be considered implicit for the client when there is the obligation for the supplier to issue and deliver an e-invoice, this explicit reference to the reception did not exist in the former wording of the article. We will later reverse on this issue.

II.2    Postponement of e-invoicing obligation for B2B transactions

It is important to mention that the coming into force of the obligation to issue e-invoices on B2B transactions is delayed until 12 months are elapsed from the date when the required reglementary development of e-invoicing is published in the Official Gazette (24 months for companies with a turnover under 8 million Euros). Until then the Spanish status quo for e-invoicing, as has been already described, remains unchanged.

As commented in a former entry of this blog, where the existence of two ongoing drafts affecting this area is commented, the reglementary development which will start the clock for the application of e-invoicing obligations on B2B transactions in Spain appears to be the draft of the Ordinance regulating the Spanish e-invoicing on B2B transactions, submitted to public consultation the past 15 of June 2023 by the Ministry of Economic Affairs and Digital Transformation.

 II.3.   The future of e-invoicing obligations for B2B transactions incurred by non-resident      companies operating in Spain

When regulating its subjective scope, number 2 of article 3 of the e-invoicing draft ordinance, excludes from the obligation introduced in its number 1 to issue and deliver electronic invoices on B2B transactions those cases “when any of both parties of the transaction has not its business site or a permanent establishment to which the invoicing is addressed in the Spanish territory or, failing that, its domicile or habitual residence”.

Notwithstanding the apparent clarity of the exclusion from the scope of the introduced e-invoicing obligation on B2B transactions, requiring that any of both parties of the transaction being a non-established, a more closer view shows that the wording in the article actually focuses on the condition of non-established met by the party that receives the e-invoice.

Furthermore, so to update the Spanish invoicing ordinance to the provisions of the e-invoicing draft ordinance, its First Final Disposal introduces a new article 8bis in such an ordinance, which number 2, when detailing the exceptions to the obligation to issue electronic invoices on B2B transactions, specifically excludes in its letter a) those cases where “the destinee of the transaction has not its business site, a permanent establishment or, failing that, its domicile or habitual residence, as far as the destinee for the transaction is such a business site, permanent establishment, domicile or habitual residence”.

Although, in practice, it may appear not to make a big difference, any B2B transaction addressed to a company or entrepreneur that has not its business site, a permanent establishment or, failing that, its domicile or habitual residence in the Spanish VAT territory, would be excluded from  the obligation to issue, transmit and deliver an e-invoice as required by the commented new article 8bis of the Spanish invoicing ordinance.

So, according to this interpretation of the e-invoicing draft ordinance, the condition of non-established of the issuer of the invoice would not have any incidence when deciding on the obligation to issue e-invoices on B2B transactions, since the exception would only depend on the condition of non-established of the client receiving the invoice.

In any case, subject to a more detailed analysis, it does not seems that this lecture of  number 2 of article 3 of the e-invoicing draft ordinance it is not likely to lead to much differences in practice if compared with the literal approach commented which excludes from the obligation to issue e-invoices on B2B transactions where any of the parties is a non-resident that is not established in the Spanish VAT territory.

III.   Conclusions

On the basis of the draft of the Ordinance regulating the Spanish e-invoicing on B2B transactions and the existing Spanish VAT regulations, invoicing ordinance and electronic invoicing, the following conclusions can be advanced as concerns the obligation to issue or receive e-invoices complying with the Spanish applicable regulations by non-resident companies operating in Spain:

a)   The obligation to apply the Spanish standards regulating e-invoicing would affect to any company, regardless of its being resident or not and established or not, when the same is within the scope of the Spanish invoicing regulations.

This would normally be the case if the company is the appointed taxable person for the Spanish VAT accrued in the transactions it carries out in the Spanish VAT territory. This requires both that the transaction is located in the Spanish VAT territory and that no internal reverse charge rule applies, whereby the position of taxable subject shifts from the supplier to the client.

b)   At this moment, there are no e-invoicing obligations in Spain which may affect non-resident companies except for the following cases:

• B2G transactions unless the reverse charge rule applies. Obligatory standards apply for this case (Facturae).

• B2B transactions when there is an agreement between supplier and client to invoice electronically unless the reverse charge rule applies. There are no obligatory technical standards to apply except if within the scope of ticketbai regulations (companies operating though its business site or a permanent establishment in the Basque country or Navarra).

• B2C transactions when the client asks for an e-invoice for the case of companies considered to provide services of special economic significance according to article 2 of Law 56/2007. There are no obligatory technical standards to apply except if within the scope of ticketbai regulations (companies operating though its business site or a permanent establishment in the Basque country or Navarra). It must be noticed that for non-resident companies having applied for a special OSS regime for their distance sales of goods, the Spanish invoicing regulations will only apply is Spain is the registration country.

c)   When the expected new Ordinance regulating the Spanish e-invoicing on B2B transactions comes into force (so, 12 months after its publication in the Official Gazette or 24 months for companies with a turnover under 8 million Euros), the situation would be as follows:

• The issuing of e-invoices meeting the technical requirements of the e-invoicing ordinance is obligatory on B2B transactions. Instead, when within the scope of ticketbai regulations (companies operating though its business site or a permanent establishment in the Basque country or Navarra), the special technical requirements therein contained must be complied with. In principle, this obligation will not apply to non-resident companies which do not operate through a permanent establishment in Spain.

• The situation as regards B2G and B2C transactions would remain unchanged.

d)   Where there is an obligation for the supplier to issue an e-invoice, it is implicit the obligation of the client to receive the same and comply with the terms regulated in the e-invoicing ordinance, regardless of the same being a non-resident company or that the same is established or not (although for this later case it can be assumed that there is no the obligation to issue an e-invoice for the supplier).

e)   The possibility that the parties agree voluntarily the issuing e-invoices in their B2C transactions, when there is not such an obligation, would still be possible. For such a scenario the issuing of an e-invoicing would not be obligatory. 

f)   It is unclear what happens for the case that the client asks for an e-invoice on B2C transactions and the Spanish regulation applies.

Let us conclude stressing the need for companies to closely analyze their business flows so to determine the implications in their system of the impending changes on the Spanish e-invoicing regulations and the required updates, if any, so they can be implemented in due time, so avoiding the disruptions and penalties which may result from a lack of compliance.

27 July 2023