Iker Beraza, Advisory Member of the Spanish Ministry of Economic Affairs and Digital Transformation, joined our webinar to discuss Spain’s new mandatory business-to-business (B2B) electronic invoicing obligations. With Iker, we delved into the details, to get an insider’s point of view and expertise on what the new laws entail and how they will affect Spanish businesses.
Watch the full webinar with English subtitles above, or view the original recording here.
Webinar overview and key takeaways
In the context of the law, what are the considerations each business should take?
One large part of the law refers to the reduction of late payments. This situation hinders SMEs who need to be able to increase their liquidity and working capital requirements.
In order to address this issue, the law proposes electronic invoicing. Electronic invoicing will block the situation in which payment deadlines are abused by generating a monitoring on payment deadlines.
Even though the Late Payment Act details a maximum deadline of 60 days, not all businesses unfortunately keep to rules. An issue which can greatly reduce when using mandatory electronic invoicing
Will the new law take a phased implementation approach?
One year after the published regulation, businesses with a turnover of more than 8 million euros (referring to the latest approved annual accounts) must comply. First wave of obligation: March 2024.
Two years after the published regulation, businesses with a turnover of less than 8 million euros and self-employed businesses must comply. Second wave of obligation: March 2025.
Within the law, how will electronic invoicing and tax reporting coexist?
We are focusing on the relationship between the issuer (supplier) of the invoice and the customer (receiver). We are interested in the payment term and this can only be seen by focusing on the commercial relationship and not the fiscal relationship.
The tax relationship goes its own way. The obligation to use electronic invoicing does not change the need to report to the SII (Sistema Inmediato de Información) or Ticket Bai in the Vasc Country, nor will it change the need to report under the law’s new system.
We have been working with the tax agency for more than one year to achieve certain synergies and to avoid more form-fills than necessary when reporting to the public administration. If the aim is to digitalise in order to simplify, there must also be understanding between the different public entities.
Will the electronic invoice archive have to comply with certain requirements?
It’s about interoperability. The idea of the proposed system is to accept all formats that are well established in our country (for example Facturae, Peppol format). We are going to leave the door open to accept other types of standardised international formats so that platforms can interconnect and be able to “talk” to each other.
Let’s look at the other e-invoicing situations in Europe. Countries such as Italy now achieve almost 100% mandatory electronic invoicing. Would you say Italy is one step ahead?
I would say two steps ahead. In the end, we are thinking of an ambitious way to start our obligations in 2024, whereas in Italy the law has already been in place for a few years.
We have looked at the Italian model. The model is carried out from a fiscal point of view with a centralised system because it is managed by the Italian treasury itself. Italy has a clear objective of fighting fraud and improving collection. This is not the case in Spain.
Spain is approaching the law from the perspective of digitalisation and the fight against late payment and the abuse of payment deadlines.
Will non-compliance within the law be sanctioned?
There are two possible cases of non-compliance: the platforms may refuse to comply, or they may have problems with interconnection. In other countries, systems of operational discipline have been created.
For companies that arrive late to the obligation, they are being given between one and two years. The government will monitor the level of implementation during these transitions in case it is necessary to provide more time.
Are there any requirements for e-invoicing service providers to consider?
ISO 27001 is going to be the main certification with everything that entails: Interoperable and interconnected systems, ability to send and validate different formats and secured transmission protocols.
The law mentions that interoperability must be free of charge, is this the case?
Within the 4 corner model, interoperability (understood as the connection between e-invoicing platforms) has to be free of charge; it is established so that some platforms do not hide behind a price and thus deny interconnection to others because we need the vast majority to be interconnected with each other.
Nothing to do with the relationship between client and e-invoicing provider. From the ministry we see a competitive market in which prices and solutions are adjusted, scalable and affordable for all types of business.
We understand that the scope of application is domestic, national, how will one deal with Italy, France or Poland? Will one have to take into account their B2B regulations?
In principle, none of them by the logic of law, is able to impose its own law on transactions where one of the counter-parties is not domestic. Hopefully one day the European Commission, which has launched a proposed directive (VAT in the Digital Age), will impose it. There should be electronic invoicing in intra-community transactions before 2028.
I want to discuss with you the payment part - who will be obliged to report payments?
The regulation will require you to report the date on which you made the actual payment. Not when it is approved and not when it is ordered. The topic about who is responsible for the payment report will be considered during the public consultation.
How would you explain the advantages of e-invoicing?
There are many advantages. I think it would be a mistake to consider this regulation as simply a compliance or tax obligation.
This is a push that leads you to invest in digitalisation and eventually to save costs, to streamline processes, to reduce process time and to therefore improve the life of your business. In terms of cash flows, e-invoicing potentially gives you a little more breathing space if you are thinking of growing or expanding your business.
It is still an obligation, but it should not be approached from a compliance cost point of view. We believe that it will make sense and we believe that it will greatly improve business life in our country.
How will the law work if a business has two types of suppliers and clients, some subject to the first phase of the obligation and others not?
There needs to be a directory. In other words, a business’ reception points must be known and must be in a directory. In the first two years of the obligation it will be necessary to sign up. Even if there are businesses in the second wave of the law, they could voluntarily adopt e-invoicing earlier and register their status as electronic invoice receivers from day one.
Will the ministry support the digitalisation of SMEs and the self-employed in any way?
Yes, within the plan for the Recovery, Transformation and Resilience of the Spanish Economy, there is the Digital Kit programme. The idea is that in future calls for proposals the Digital Kit will focus more on the implementation of electronic invoicing systems by SMEs and the self-employed.
Start your electronic invoicing journey
As a Spanish business, you may already be considering your transition to electronic invoicing. Electronic invoicing creates many business opportunities that benefit ways of working, as well as allowing businesses to comply with local e-invoicing regulations.
To start your journey, get in touch with a member of our local team to discuss your requirements.