Invoicing is a key part of doing business and most experienced business-people believe they know all there is to know about producing a sales invoice. However, it is surprising to see how many companies' invoices do not meet the minimum requirements. Whether you are just starting in business, or have been invoicing for years, double check that you know the key information and are following all the rules. Here's an overview:
The Essential Elements of an Invoice
Spanish legislation states that an invoice should include all of the following:
- Full details of the supplier
- Full details of the customer
- Sequentially numbered reference which should follow the date order
- Amount chargeable for goods of services
- Breakdown of VAT if applicable
- Deduction for withholding tax (IRPF) if applicable
It is also advisable to state your terms and conditions on your invoice such as method of payment and credit terms.
Supplier and Customer details
The full details for both the customer and the supplier should include the following information. This will vary slightly depending on whether they are an individual or a company.
- First Name and Surname
- ID/Passport or NIE number
- Company name
- CIF number
- Mercantile details (ledger, book and page) of the registration of the company.
Invoicing when VAT is not applicable
If you trade within the European Union, and your clients are VAT registered in their country of origin, you may under certain circumstances not charge Spanish VAT on your supply. Always confirm with your accountant whether your supply of goods or services is subject to Spanish VAT. Should VAT not be applicable on your supply on European transactions, then your invoice must clearly make reference to the VAT article applicable for such treatment under Spanish VAT legislation.
A standard practice in many businesses is the issuing of credit notes as a negative invoice within their normal sequential system. In fact, Spanish legislation has changed to mean that this practice does not meet Spanish requirements.
Credit notes should have the title of 'Factura Rectificativa'. These correcting invoices should follow their own referencing system independently of the normal invoicing system. If you issue a credit note to correct or eliminate an incorrect invoice, then the corrective invoice should be positive and simply be the corrected version of the original wrong invoice. Credit notes should also make reference to the original invoice to which they relate, whether to cancel it or simply correct it.
Invoices acceptable for tax purposes
Only invoices or credit notes that meet the requirements noted above are valid for claiming tax relief and VAT refunds. This can be a cause of confusion for people coming from the more lenient UK system. Please note, the following proofs of purchase are not acceptable for tax purposes:
- Delivery notes (Albaranes)
- Receipts (Tickets)
- Orders (Pedidos)
- Quotations (Presupuestos)
- Draft invoice (Factura Proforma)
Entitlement to receive an invoice
All suppliers are obliged by law to provide you with a proper invoice on request. This includes supermarkets, restaurants, and other entities that usually give receipts. You may ask for an invoice at the time of purchase, or request one later on by presenting your tickets.