How to comply with the Immediate Supply of Information (SII)

18/12/2017

The Immediate Supply of VAT Information (SII) entered into force on July 1, 2017 at the state level and will be introduced on January 1, 2018 in País Vasco and Comunidad Foral de Navarra. It involves a real-time connection with the Treasury and an instant monitoring of all the economic or commercial activity of companies and professionals with an annual volume of operations of over 6 million euros. Therefore, this new model entails an optimization of the tax control of the operations carried out between companies.

According to data from the Tax Agency, the number of companies that are going to be regulated in real time is close to 62,000, that is, 80 percent of the total collection. For those companies that do not know the details of the procedure, this article clarifies some keys to comply with the SII.

What is the Immediate Supply of VAT Information?

The State Agency for Tax Administration (AEAT) defines the Immediate Supply of Information as "a change of the current VAT management system that has been in operation for 30 years, as it is passed to a new system for keeping the records of the Value Added Tax. Added through the Electronic Office of the AEAT, through the quasi-immediate provision of billing records ". In this way, they stipulate, "it allows to approach the moment of the registration or accounting of the invoices to the effective realization of the economic operation that underlies them".

Advantages of SII: fewer errors and fight against tax fraud

As pointed out by Carlos Giner, Project Director of I+D Solutions, a company specialized in comprehensive business management, with the new regime many more data are provided than with the previous procedure (models 340, 347 and 390) and also the management is done in an automated way.

Once implemented, the SII system will include some advantages. "Although now we are at the most complex point of the process, in which companies must make economic and resource efforts to adapt to the SII, when everything will be automated there will be few errors and the process will be very fast, both for the Treasury and for companies, and it will not be too much work to generate VAT self-assessment", Giner considers about it. It will also allow combating tax fraud. "If at the same moment of issuing an invoice you have to attach it to the Treasury, there is very little margin to defraud", indicates.

What companies must apply the SII?

The Tax Agency states that the taxpayers who must apply the Immediate Supply of Information and self-assess the VAT on a monthly basis are:

• Those registered in the REDEME (Monthly VAT Refund Register)
• Large Companies (annual turnover of more than 6 million euros)
• VAT corporate groups

The SII is also attributable to companies that decide to adopt it on a voluntary basis. Once hosted, operators must remain under this regime for one year, which will be extended until no waiver is requested.

Will SMEs and the self-employed have to assume the SII?

Giner explains that, although the ideal would be that this procedure would be extended to SMEs and self-employed workers, that will not happen at least in a period of approximately ten years. "It is almost unfeasible because the capacity of companies and the self-employed to adapt to the SII system are minimal", he explains. As an example, he highlights the VAT Model 340, which was not implemented in entities of this type. "In any case, if this procedure were finally applied to SMEs and the self-employed, there should be a concert between the State and representatives of these groups to see to what extent it applies", the chief of I+D Solutions explains.

Basic lines of operation of SII

Taxpayers under this procedure must manage the following Books through the Electronic Office of the Tax Agency:
• Registration Book of Expedited Invoices
• Registration book of Received Invoices
• Registration Book of Investment Goods
• Registration Book of Certain Intra-Community Operations

To do this, they will send their billing records to the AEAT, with which information they will be configured in parallel -and immediately - the different registration books. The process is carried out online, through web services based on the exchange of XML messages. The disposition of the shipments consists of a common structure, which includes a header with the information of the owner of each registration book, as well as the fiscal year and period in which the operations are registered. Next, a block with certain content of the invoices is added. For each type of registration book, the registration, cancellation and collective modification operations can be carried out.

The documents that are sent to the Treasury are not the invoices in themselves, but the billing and fiscal information records specified in the Orden Ministerial del Real Decreto 596/2016 de 2 de diciembre. This information includes:
• Register: Registration book of invoices received and issued, investment goods, cash operations and certain intra-community transactions.
• Type of operation: To be identified by means of codes (simplified invoice, rectifying invoice, simplified invoice, Inversion of the taxpayer, cash VAT and other special regimes, etc.).
• Simplified invoice / invoice data (according to articles 6 and 7 of Real Decreto 4/2013 on January 22): NIF, identification, date of issue and issue, types, bases and quotas.
• Other information: Deductible fee, cadastral reference number (in certain leases of commercial premises), billing agreements, etc.

What exempts this system?

Those subjects submitted to the new Immediate Supply of VAT Information are exempted of the following models:
•    Model 347: Annual return on transactions with third parties
•    Model 340: Quarterly registration of VAT settlement support
•    Model 390: Annual summary of transactions carried out to settle VAT

The regulation maintains the responsibility of presenting model 303 (self-assessment of VAT), or models 322 and 353 in the case of entities covered by the special regime of the group of entities.

Deadline to present billing records

The deadline for sending the billing records to the Agency varies depending on the type of document:
• Issued invoices : Four calendar days from the issuance of the invoice. They must be issued before the 16th day of the month after the accrual of the tax corresponding to the information to be registered
• Received invoices : Four calendar days following the date of the accounting record of the invoice. As with the invoices issued, they must be sent before the 16th day of the month following the settlement period
• Relationship of intra-community operations: Four calendar days, from the moment of the start of the expedition or from the moment of receipt of the referred goods
• Information on investment assets: Within the deadline for submission of the last annual liquidation period (until January 30)


How is invoce registration performed in SII?

In the new system of immediate information you can send the data of the invoices in two ways:
• Via telematics through web services based on the exchange of XML messages, which allows information to be delivered practically in real time. In essence, these XML messages are invoice containers, with their associated data, identified with an unique key.
• For those taxpayers who perform few transactions or to attach the records of specific invoices in isolation, there is a web form through which these procedures can be done. Once the XML messages have been registered, the AEAT will automatically carry out a validation process, both in terms of XML format and business rules.

Una vez realizada esta validación, las facturas podrán ser aceptadas, rechazadas o aceptadas con errores. Los criterios para cada una de ellas, según Hacienda, son:
●    Aceptada: Todas las facturas y documentos incluidos en el registro han pasado tanto las validaciones sintácticas como las de negocio y quedan inscritas en la AEAT.
●    Aceptada con errores: En la presentación existen algunos archivos que no han pasado algún tipo de validación. Será necesario enviar nuevamente dicha presentación corregida.
●    Rechazada: Esta clasificación se puede dar por dos motivos; primero, porque su taxonomía no cumple las validaciones estructurales o existen errores sintácticos en la cabecera, en cuyo caso se devolverá un mensaje de tipo SoapFault, en el que se especifica el error concreto. El segundo de los motivos ocurre cuando todos los registros incluidos en la petición no cumplen las validaciones sintácticas o de negocio (de la cabecera) y, por tanto, todas ellas han sido rechazadas.

Once this validation is done, the invoices can be accepted, rejected or accepted with errors. The criteria for each of them, according to the Treasury, are:
● Accepted: All the invoices and documents included in the registry have passed both the syntactic and business validations and are registered in the AEAT.
● Accepted with errors: In the presentation there are some files that have not passed any type of validation. It will be necessary to send the corrected presentation again.
● Rejected: This classification can be given for two reasons; first, because its taxonomy does not comply with the structural validations or there are syntactic errors in the header, in which case a SoapFault type message will be returned specifing the specific mistake. The second reason occurs when all the records included in the request do not comply with the syntactic or business validations (of the header) and, therefore, all of them have been rejected.

What are the mistakes that can be made in a presentation? 

The Tax Agency has defined two types of faults that may appear in the registers, which will be examined during the validation process:
●    "Inadmissible" errors: structural and syntactic mistakes of the shipment, as well as failures in the identification of the owner of the registration book. The records that can not be processed due to contradictions or untreatable information will be rejected.
●    "Permissible" errors: These inaccuracies are those derived from business validations of invoices or registrations. The Agency will record these failures, which must be corrected in order to carry out the treatment and validation of them. To carry out the correction, it will be necessary to request a modification of those documents accepted with mistakes.

el Estado pone a disposición de las empresas y profesionales el  una herramienta de atención automática, con el objetivo de responder de forma inmediata a las dudas sobre el nuevo sistema, así como  con detalles sobre estándares y requisitos, consideraciones de diseño y otras especificaciones.

For more information on these procedures, the State makes available to companies and professionals the Asistente Virtual SII, an automatic attention tool, with the aim of responding immediately to doubts about the new system, as well as Technical Information with details about standards and requirements, design considerations and other specifications.

Impact of the Immediate Supply of VAT Information

Digital transformation is reaching all levels of society, including the Public Administration. The SII arises from the need to streamline VAT management and to fight against tax fraud. Companies must adapt to this model and become familiar with the new telematic management service. Its fulfillment supposes a renewal for the companies, that must incorporate a software to connect to the Tax Agency. As stated in the newspaper Expansión, "all operators must re-evaluate their operations, systems and internal billing procedures, in order to comply adequately with the standard".

This article has been written with the collaboration of the company I+D Solutions, housed in the University of València Science Park. They are specialists in the development of integrated business management solutions and through a wide range of applications pursue the optimization of business processes: financial management, analysis, human resources, projects, customer relationship management, manufacturing, retail and e-commerce.

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