Invoicing clients is a necessary part of any international transaction. In today’s business market many challenges may arise making cross border transactions difficult. As an HR solutions firm INS Global consulting allows businesses who do not have an existing entity in Spain to invoice their clients in the local currency. This ensures that all rules are complied with and no other administrative challenges will arise.
Doing Business in Spain
With the 5th largest economy in the European Union (EU), and as an integral member to the EU Spain is great place to conduct business for those who want to get a foothold in the European market. Spain’s most well-known cities to carry out business is the capital Madrid and Barcelona, however cities like Malaga and Logroño are becoming more attractive for businesses wishing to enter. Malaga is regarded as the ‘smartest’ city in Spain, while Logroño is regarded as the easiest place to do business in Spain according to the World Bank’s Ease of Doing Business list (subnational economy rankings). The official currency of Spain is the Euro, which has remained strong over the past 10 years and now outperforms the dollar. Read more on doing business in Spain here.
Invoicing in Spain
It is important for companies to remain in compliance with Spanish legislation when issuing an invoice. When issuing an invoice there are some minimum requirements that have to be met in order to ensure that an invoice is valid.
Here is a short outline of the requirements of an invoice in Spain and what should be included.
Requirements of an invoice in Spain
- Invoice number – this is a unique number that is distinct from all other invoices.
- Date – the date of issue
- Supplier’s name and address – full name of the supplier and their registered address
- Receiver’s name and address – full name of the receiver/buyer and their registered address
- Description – a description of the goods sold or services rendered
- Tax rate – the applicable tax rate
- Amount due – the amount due excluding tax and the amount due including tax
- Delivery date – the date on which the goods will be delivered or services rendered
In certain circumstances the law allows for a ‘simple invoice to be issued’ , which contains less detail than a standard invoice. In a simple invoice the person to whom the goods are being delivered or the services rendered does not have to have their name or registered address. These kinds of invoices are only issued when the amount is less than €400. The exception is that if the invoice is being issued to an entrepreneur.
If the requirements have not been met, this qualifies as an infringement and the party issuing the invoice may be liable to pay a fine of up to 1% of the invoice. If the infringement is deemed to be substantial the fine could be increased to 2%. Additionally, in such a case, if the recipient is a business owner they will not be able to deduct the input VAT and the related expense for their personal tax.
E-invoices in Spain
Since 2015 the government has required that all invoices submitted to public administrations are to be in the form of an e-invoice. These e-invoices follow a specific format and include electronic signatures. The e-invoices are submitted on a platform called ‘Punto General de Entrada d Facturas Electronicas’ known as the FACe, which means ‘general entrance for tax invoices.
Following the EU regulations on e-invoicing, which was promulgated in 2014, the FACe was also extended for B2B companies working for public administration. While it is not mandatory in other B2B transactions, other companies are able to issue e-invoices voluntarily. The implementation of e-invoices is in line with common practice being implemented amongst other EU nations and will provide better traceability of transactions.
INS Global and Invoicing
As one of the world’s leading HR solutions providers, INS Global is dedicated to delivering high quality service to our clients. We are leading service providers in array of different services including PEO, which helps businesses begin operations without the need of setting up a costly entity, recruitment, payroll and tax, and many more. Get in touch with us today and let our consultants assist your business in its expansion.