MANDATORY ELECTRONIC INVOICING IN SPAIN: EVERYTHING YOU NEED TO KNOW

With digitalization playing a key role in the business world, electronic invoicing has become an essential element in Spain, especially with the upcoming mandatory implementation. This article provides a comprehensive guide on electronic invoicing, covering its concept, its benefits and characteristics, the legal framework, and more.

What is an Electronic Invoice?
An electronic invoice is a digital document that meets the same legal and tax requirements as a traditional paper invoice. The main difference is that it is issued, received, and stored in an electronic format.

This format aims to ensure the authenticity of its origin and the integrity of its content through technologies such as electronic signatures, Electronic Data Interchange (EDI), or other methods previously communicated to the Spanish Tax Agency and validated by it.

Specifically, electronic invoices are regulated by Royal Decree 1619/2012 of November 30, which covers aspects like requirements, deadlines, storage, etc and it’s important to distinguish between two types: structured (containing data that can be automatically generated by the issuer’s billing software and processed by the receiver’s accounting and payment systems) using XML or EDIFACT language among others, and unstructured (consisting of an image, requiring manual entry into the recipient’s systems).

Benefits
Electronic invoicing offers numerous benefits for both companies and the economy in general:

• Cost and Error Reduction: Eliminates costs associated with paper, printing, and postal delivery, as well as human errors.
• Increased Efficiency: Automates administrative processes, speeding up invoice issuance and receipt.
• Security: Digital systems guarantee the document’s validity and legitimacy.
• Transparency: Facilitates easy and transparent access to information.
• Sustainability: Contributes to reducing environmental impact by eliminating paper use.

The «Crea y Crece» Law

Law 18/2022, known as the «Crea y Crece» Law, regulates the mandatory nature of electronic invoicing.

This law aims to promote business creation by adopting measures that speed up this process, improve business growth, simplify commercial relations by removing barriers to economic activities, digitalize organizations, and even reduce late payments by improving control over payment terms to suppliers.

Key points regarding electronic invoicing under this law include:

• Progressive Implementation: Differentiates implementation timelines based on the company size.
  Companies with a turnover exceeding 8 million euros will have one year from the approval of the regulation, while other businesses and professionals will have two years from the approval date.
• Authenticity and Integrity: Electronic invoices must comply with standards ensuring their legal validity.
  To ensure this, each invoice record must include a digital fingerprint (allowing for detection of any changes to the original data) and be electronically signed. The IT system should allow quick verification of this fingerprint or hash and check the electronic signature of any record, as well as ensure the continuity of the record chain when stored in the same system. It must also raise alerts for detected anomalies.
• Interoperability: Platforms for issuing and receiving invoices must be compatible with each other, facilitating exchanges between companies and entities. This refers to the ability of electronic invoicing systems from different providers and platforms to interact without intermediaries in a secure and straightforward way.
• Storage: Invoices must be stored in digital format for the legally required period. They must be accessible for four years (according to tax regulations) even if the contract with the invoicing service provider ends.

Characteristics, Legal Requirements, and Penalties

To comply with this regulation, an electronic invoice must include the following characteristics:

• Structured Format: The most commonly used format is Facturae, compatible with public administration. Examples of invoice generation following this format can be found at this link acortar.link/EiXoPX
• Advanced Electronic Signature: Ensures the legitimacy of the document.
• Readability: Must be understandable for all involved parties.

While on the other hand companies are required to meet several legal obligations:

• Digital Certificate: A valid certificate is necessary.
• Approved Platform: Use an invoicing system or software that complies with legal standards.
• Receiver’s Consent: Issuing an electronic invoice requires prior acceptance from the client, except in cases where it is legally mandatory.
  Failure to comply with this requirement can lead to significant penalties:

• • Financial Penalties: Companies that do not issue or accept electronic invoices may face fines of up to 10,000 euros. Additionally, failing to meet the minimum storage period can result in fines up to 6,000 euros. Security and privacy failures can lead to even higher penalties, potentially up to 60,000 euros.
    The amount will depend on the number of affected individuals or the persistence of the offending behavior.
  • Business Suspension: In severe cases, authorities may temporarily suspend the company’s commercial activities.

What is VERIFACTU?

To support the implementation of these new obligations, combat tax fraud, and drive business digitalization, the Tax Agency will provide a system for issuing verifiable invoices called VERIFACTU. This system will allow the immediate submission of invoices to said agency.

This system will affect all taxpayers engaged in economic activities, whether subject to Personal Income Tax (IRPF) or Corporate Tax, except those in communities of chartered regime or companies under the Immediate Information Supply system and will have to be adapted to the billing systems by 1 January 2026.

Communicating these invoice records to the Tax Agency is voluntary (though it would be the most convenient option). There is also the option to register invoices without sending them, but each must be digitally signed and available to the Tax Agency at any time.

How to Adapt to Electronic Invoicing?

To ensure a smooth transition, companies and other businesses should:

• Invest in Technology: Acquire specialized software for electronic invoicing.
• Train Staff: Educate employees on the new regulations and their practical application.
• Review Internal Processes: Ensure current systems meet legal and technical requirements.
• Communicate with Customers: Inform them of the change and obtain their consent when necessary.

If you have any questions about how to adapt your processes to this new procedure, Settledown can help you. Feel free to contact us by filling out the following form → acortar.link/aIICFR