Developments in mandatory electronic invoicing for B2B transactions

In recent years, following the implementation of the Immediate Supply of Information on VAT system (known as SII-IVA), companies’ digitalization process has evolved rapidly.

To move this digital transformation forward and reduce late payment in commercial transactions, Act 18/2022, of September 28, on business creation and growth (known as the “Create and Grow Act”) imposes the obligation on companies and professionals to issue, send and receive e-invoices in all their business relationships with other entrepreneurs and professionals (B2B —or business-to-business— transactions), as we discussed in our previous Post | Impulso a la facturación electrónica.

However, the regulation approved by the Create and Grow Act is succinct, calling for an implementing regulation (as referred to in the act itself) that “determines the architecture that will sustain the Spanish B2B e-invoice exchange system.”

The process for the approval of the regulation has already begun by launching the prior public consultation process. The submission period is 15 calendar days, i.e., from March 7 until March 22, 2023. The Ministry of Economic Affairs and Digital Transformation (together with the Ministry of Finance and Public Administration) aims to use this public consultation to seek the opinion of (i) subjects potentially affected by the obligation to use the e-invoicing system, (ii) companies that create and develop invoicing systems and software, and (iii) in both cases, their most representative organizations. Everyone can voice their opinion by answering 32 specific questions included in the consultation paper, which involves filling in the Excel sheet provided.

To access the public consultation, click here.

Following this prior consultation, the draft Royal Decree will be drawn up and, once it has been published, a new public consultation period will be opened (which, in principle, cannot be less than 15 business days). Depending on these periods —and as long as there are no delays in drawing up the draft bill— the implementing regulation may be approved by summer 2023.

Only once the implementing regulation is approved will we have the exact date of entry into force of this new e-invoicing obligation for B2B transactions, given that it hinges on the date on which the regulation is approved (one or two years following its approval, depending on whether the affected company’s or professional’s turnover exceeds €8 million, respectively). However, the public consultation paper recently made available shows that the ministry is exploring the possibility of establishing longer transition periods and even exceptions to the obligation in certain business sectors, and for certain thresholds and types of invoices.

Another development included in the consultation paper is that the public authorities intend to implement a public system allowing for the basic exchange of invoices, which will operate through the tax authorities’ website. This could prove particularly useful for small businesses and self-employed persons with a lower turnover.

Moreover, and precisely to reduce late payment in commercial transactions, one of the parties to the transaction must provide information on the effective payment date of the e-invoices, thus making payments a mandatory element of the invoice to be disclosed at a later date. However, the consultation suggests that this reporting obligation will not be effective until two years from the date the implementing regulation is approved.

In the context of the digitalization process in companies’ invoicing systems, we draw attention to the Proposal of December 8, 2022, for a Council Directive amending Directive 2006/112/EC as regards certain VAT rules. The amendments will be applied progressively (entering into force from 2024 and from 2028), imposing e-invoicing throughout the EU. This means that, to adapt the VAT Directive in terms of invoicing to the new digital reality, e-invoicing is expected to become the default system for issuing invoices, with paper invoices being consigned to exceptional cases authorized by the Member States.

As well as this new Spanish (and European) law on e-invoicing, 2023 is also likely to bring the approval of the regulation establishing the requirements that invoicing systems and software must fulfill —to ensure they guarantee the integrity, storage, accessibility, legibility, traceability and inalterability of invoicing records— to deal with the use of “dual-use software”. The public consultation paper also mentions that both regulations must necessarily be aligned.