Changes Introduced by Royal Decree 596/2016, for the modernization, improvement, and promotion of the use of electronica means in handling the Value-Added Tax

On December 6, 2016, the Official State Gazette (BOE: abbreviation in Spanish) published Royal Decree 596/2016, for the modernization, improvement, and promotion of the use of electronica means in handling the Value-Added Tax (VAT).

The decree amends: (i) the Regulations on the Value-Added Tax, approved by Royal Decree 1624/1992, of December 29; (ii) the General Regulations on tax inspection actions and procedures and the development of common rules in tax procedures, approved by Royal Decree 1065/2007, of July 27; and (iii) the Regulations on invoicing obligations, approved by Royal Decree 1619/2012, of November 30.

The Royal Decree introduces the Immediate Provision of Information (SII: abbreviation in Spanish) system. It also amends other aspects, such as the regime for Travelers VAT refund and the general deadline for sending invoices between companies.

Below we shall analyze the main changes, which will come into effect on 1 July 2017.

1. Immediate Provision of Information System (SII)

1.1 Content of the SII

The SII is a substantial change in the current system for handling the VAT; it involves keeping the VAT registration books through the Tax Agency (AEAT) electronic portal, supplying information on invoices almost immediately. The SII seeks to bring together the time of registering invoices and the time of effective completion of the underlying economic operation.

The taxpayers which apply the SII must handle the following Registry Books through the AEAT's electronic portal, including additional information:

  • Registry Book of Issued Invoices
  • Registry Book of Received Invoices
  • Registry Book of Investment Goods
  • Registry Book of Certain Intra-Community Operations

For this purpose, they must send the AEAT the details of the invoices, from which the different Registry Books will be kept almost in real time.

The system involves sending the same information as currently included in the VAT Registry Books and requires additional data contained in the invoices issued and received. It is important to point out that taxpayers are not required to send a copy of the invoices to the AEAT; rather, it is the data contained in them that must be sent.

Thus, besides the general information from the Registry Books (number, series, issue date, taxable event date, reception number, corporate name, Tax Identification Number (NIF), taxable base, VAT rate, VAT due, cash regime, etcetera.), the following information must be included:

  • Registry Book of Issued Invoices
  1. Type of invoice issued, indicating whether it is a complete invoice or a simplified one.
  2. Identification that it is a correction of the Registry entry.
  3. Description of the operations.
  4. Corrective invoices must be identified as such. They must include reference to the invoice being corrected and any specifications which are altered.
  5. For invoices issued to replace or exchange simplified invoices issued previously, reference will be included to the invoice being replaced or exchanged and any specifications replaced or changed.
  6. The mentions in the invoicing regulations regarding exempted operations, invoices issued by the customer, reverse charge system, and certain special regimes (travel agency, cash regime, used goods, works of art, antiques, and collector's items).
    Also to be included are mentions of reverse charge method for gold regime or intra-group operations within the scope of the VAT Grouping Special Regime.
  7. VAT return period to which the operations registered are referred.
  8. Indication that the operation is not subject to the VAT.
  9. If the invoice has been issued by virtue of an authorization for invoicing under the Regulations on invoicing obligations, reference to the authorization granted must be included.
  • Registry Book of Received Invoices
  1. Number and series number (if any) shown on the invoice. It will replace the reception number used by those not included in the SII.
  2. Indication of a correction in the Registry Book.
  3. Description of the operations.
  4. The mentions in the invoicing regulations regarding invoices issued by the customer, reverse charge system, and certain special regimes (travel agency, cash regime, used goods, works of art, antiques, and collector's items).
  5. Deductible VAT amount for VAT return period in which the registration is made.
  6. VAT return period to which the operations are referred. In case of imports, the accounting date of the operation will be reflected, along with the relevant Single Administrative Document (DUA: abbreviation in Spanish) number.

The fields for registering the information provided will be approved by the Ministry of Finance and Public Administrations through the relevant Ministry Order.

Likewise, certain information with tax relevance (formerly included on Forms 340 and 347) must be provided.

1.2 Taxpayers

The SII will be applicable to taxpayers currently required to make monthly voluntary declarations for the VAT. These are the following:

  • Those registered in the VAT Monthly Refund Registry (REDEME).
  • Major VAT payers (volume of more than € 6,010,121.04 for operations).
  • Companies included in the VAT Grouping Special Regime (REGE).

The system will also be applicable to taxpayers which voluntarily decide to choose it. They must so declare on Form 036, to be filed in November prior to the year in which it will take effect (for 2017, that will be in June).

1.3 Deadline for Sending Registers

  • Invoices Issued
    The deadline for sending the registers will be four calendar days from the issue of the invoice or from the date on which the accounting entry is made, unless they are invoices issued by the receiver or a third party, in which event the deadline will be eight calendar days. In either case, the information must be provided by the 16th day of the month following that in which the VAT for the operation to be registered is returned.
    It must be borne in mind that in calculating the four or eight calendar day deadline, Saturdays, Sundays, and national holidays are excluded.
    However, in the first six months during which the SII is in effect (July to December 2017), taxpayers will have a special deadline of eight days (for all registry books) to send the information.

  • Invoices Received
    The registers must be sent within four calendar days from the date of the accounting entry for the invoice and, in any event, by the 16th day of the month following the liquidation period in which the relevant operations are included.
    For imports, the four calendar days must be counted from the accounting entry of the document which records the amount paid to Customs (the DUA) and, in any event, by the 16th day of the month following the liquidation period in which the relevant operations are included.
  • Intra-Community Operations
    For the intra-Community delivery of goods EU transfers, the deadline will be four calendar days from the beginning of transportation.
    For intra-Community acquisitions, the deadline will be four calendar days from the reception of the goods.

  • Information on Investment Goods
    By the deadline for filing the last VAT return of the year (to January 30 of the year following that in which the goods were acquired).

1.4 Correction of Registry Entries

Any material errors in registry book notes must be corrected. This correction must take place at the end of the VAT return period for filing by means of a note or group of notes.

1.5 Other Implications of Taxpayers Included in the SII

  • Reduction of formal obligations, elimination of filing Forms 340, 347, and 390 and of keeping the traditional VAT Registry Books.
  • The AEAT and the taxpayer will have additional information, since the electronic portal has declared and compared Registry Books containing information provided by third parties using the SII system or by AEAT's data base.
  • Extension of the deadline for periodic voluntary payments (Forms 303, 322, and 353) by 10 days, changing generally from the 20th to the 30th of each month, except February (deadline at the end of the month).
  • Theoretical shorter VAT refund procedures, since the AEAT has the information almost in real time and greater information on the operations.
  • Possibly less request of information procedures, since many are requests for invoices or data contained in invoices to verify that they are the amounts declared on Forms 303 and 390.

1.6 Additional and Temporary Provisions

  • Those required to apply the system must send the invoicing registers for the first semester of 2017 some time between 1 July 2017 and 31 December 2017.
  • For the SII to be applicable from 1 July 2017 voluntarily, the application must be filed in the month of June 2017.
  • The non-filing of Form 340 must be understood as from July 2017.
  • The four calendar day deadline for providing the invoicing registers will be eight calendar days for:
    1. Invoices issued from 1 July 2017 to December 31, 2017.
    2. The invoices received and the DUA, the accounting entry of which is made from 1 July 2017 to December 31, 2017.
    3. The operations registered in the Registry Book for certain intra-Community operations, for which the transportation, or reception of the goods involved takes place from 1 July 2017 to 31 December 2017.

1.7 Other Changes Due to the SII

  • General Regulations on Tax Inspection Actions and Procedures
    Taxpayers included in the SII are exempted from filing Forms 340 and 347. The only exception is the Public Administrations, which must continue listing all persons and companies to which they have paid subsidies, help, or aid, unless they are included in other informative statements and coincide in content.

  • Regulations on Invoicing Obligations
    Persons and companies included in the SII whose invoices are prepared by third parties must present a census declaration (Form 036) informing the authorities of that option, the date from which it will be exercised, and any waiver of the option and the effective date if this system is no longer applied.

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