Executive summary

On 29 September 2022, the Law for the Creation and Growth of Companies (Law 18/2022, dated 28 September 2022) was published in the State Official Gazette and includes, among other measures, the mandatory use of electronic invoicing for transactions between companies and sole contractors.

The main aim of this Law is to prevent late payment in business transactions and promote growth. Indeed, the objective is using electronic invoicing for knowing the time of issuance of the invoices and when are they paid.

Detailed discussion

The Law for the Creation and Growth of Companies (the Law) implements the mandatory use of electronic invoicing in transactions between companies and sole contractors. Likewise, recipients may request copies of the invoice for a four-year period from their issuance, at no additional cost.

Although the obligation of electronic invoicing is only envisaged for business-to-business relations, the Law extends this requirement to certain relationships with individuals, for those companies that provide services of special economic significance, such as electronic and financial services or supplies of water, gas or electricity. This obligation applies when the individuals have agreed to receive electronic invoices or have expressly requested them. Travel agencies, transport services and retail activities are exempt from this obligation.

Accordingly, and by way of pending regulatory development, the Government is empowered to extend this obligation to relationships between companies and individuals in certain circumstances.

Entry into force

The entry into force of the Law is delayed until its regulations are published. Thereafter, the Law will enter into force one year after the date of publication for companies with annual turnover over €8 million, and two years from publication for the remaining companies.

Implications

The extension of compulsory electronic invoicing to all relationships between companies and professionals, and even in certain relationships with individuals, will have a clear impact on the digitalization and modernization of Spanish companies and, in turn, will require adequate coordination with the current invoicing tax compliance obligations.

Companies that do not offer users the possibility of receiving electronic invoices or do not allow access to their invoices to individuals who have ceased being customers, will be sanctioned with a warning or a penalty of up to €10,000.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young Abogados, Madrid

Rufino de la Rosa | rufino.de.la.rosa@ey.com

Eduardo Verdun Fraile | eduardo.verdun.fraile@ey.com

Iñigo Hernandez Moneo | inigo.hernandez.moneo@ey.com

Ernst & Young LLP (United States), Spanish Tax Desk, New York

Jose A. (Jano) Bustos | joseantonio.bustos@ey.com

Andres Carracedo Insua | andres.carracedo.insua1@ey.com