In order to facilitate the filing of the declaration of transactions carried out with third parties whose annual amount with the same person or entity exceeds 3,005.06 Euros (VAT included), Form 347, which must be filed until 1 March, we comment on some of its main aspects:
Obliged to declare
Individuals or legal entities, whether public or private, that carry out business or professional activities must file the tax return during the month of February. Inherited estates, communities of property and other entities that, without legal personality, constitute an economic unit or a separate taxable estate, are also obliged to file the tax return.
It should be remembered that, as was the case in 2017, those entities that are obliged to keep their books and records through the AEAT’s E-Office, i.e. entities included in the Immediate Information System (SII), are not required to file the return. In addition to taxpayers who must report on the transactions included in the VAT record books.
In addition, individuals and entities in attribution of income for personal income tax purposes continue to be excluded from the obligation to file income tax returns, for activities taxed under the objective assessment method and, simultaneously, under Value Added Tax under the special simplified or agriculture, livestock and fishing regimes or the equivalence surcharge, except for transactions that are excluded from the application of the aforementioned regimes, for which they issue an invoice and for those acquisitions of goods and services that must be recorded in the Register of Invoices Received.
In any case, also obliged to submit the return are communities of property, horizontal property communities, as well as private social entities or establishments for general purchases of goods or services that they make outside business or professional activities, even if they do not carry out activities of this nature. However, these entities are exempted from including transactions for the supply of electricity, fuel and water, as well as those deriving from insurance. In the case of homeowners’ associations, this exemption requires that the services are for community use.
In general, all transactions for which there is an obligation to issue an invoice should be included, although transactions that have been included in other declarations should not be included.
Transactions exempt from VAT
- Interest on financial transactions. In the case of loans, only the amount of interest will be included (provided that it has not been the subject of another return such as Form 181 to be filed by financial institutions) but not the amortised capital.
- Insurance premiums. The premiums paid must be included. Note that the box “insurance operation” that appears on the form should not be ticked, as this is only to be completed by the insurance companies.
- Financial leasing. The total amount of instalments paid must be declared. In cases where the commitment to exercise the purchase option is formalised, in the year in which this is done, the total outstanding capital plus interest paid should be included; in subsequent years, only the interest should be declared.
- Lease of business premises. These should not be included in the return provided that they are subject to withholding, since the lessee has already included this data in the Annual Summary of withholdings for rentals (Form 180). In the event that they are not subject to withholding, lessors should include in the tax return, separately from the rest of the transactions, the amount of the leases, stating the cadastral reference and the data necessary to determine their location. However, it should be noted that if the total amount of the transactions carried out with the lessee does not exceed €3,005.60, it should not be included in the tax return. For their part, lessees will only include leases not subject to withholding.
- Rental of dwellings. They should not be included in the tax return unless an invoice has been issued, which is the case when the lessee has so requested in order to exercise his right to apply tax deductions.
- Advances from suppliers or to customers. They must be included in the return. In the year in which the transaction takes place, the amount must be deducted from the total.
- Refunds, rebates, discounts and settlement of transactions. The amount to be declared will be the net amount of the operations of the year minus the items indicated. These circumstances must be reflected in the calendar quarter in which they have occurred.
- Exports and imports. These are not included in the return. Remember that this regime also applies to supplies of goods involving shipments between the Spanish mainland and the Canary Islands, Ceuta and Melilla.
- Transactions carried out in the Canary Islands, Ceuta and Melilla. The amount of the services and supplies of goods that are understood to have been carried out in these places must be declared. The amount to be declared is the total amount, including IGIC or IPSI.
- Intra-Community acquisitions and supplies of goods or services. These should not be included in the return, as there is a specific return (Form 349) for this type of operation.
- Provision of services to/by non-residents. They must be included in the return unless they already appear in other returns (such as Form 296 or Form 349). The tax number to be included will be that supplied by the recipient, even if it is not a Spanish tax number.
- Transfer of real estate. The amounts received in consideration for transfers of real estate subject to and not exempt from VAT carried out or pending formalisation must be entered. These amounts shall be shown separately and on a quarterly basis from other transactions carried out between the same parties.
- Cash transactions. Amounts in excess of 6,000 euros received in cash from each of the persons or entities listed in the return shall be recorded. When such amounts cannot be included in the return for the calendar year in which the transactions are carried out because the payment is received in a subsequent financial year, indicating in the box provided for this purpose the financial year in which the transactions giving rise to the payment were carried out.
- Special Regime of the Cash Criteria (RECC). Taxpayers who carry out transactions to which the RECC applies, as well as those who are recipients of the transactions covered by it, are not obliged to provide the quarterly breakdown for these transactions. They must identify these transactions separately and declare them on an annual basis according to the general accrual rule and also according to the CCER rule (receipts and payments).
Transactions with Public Administrations
- Subsidies. Both the subsidies, aid or grants awarded, whatever their amount, and those received when their amount exceeds €3,005.06 shall be declared. For these purposes, subsidies, aid or grants are understood to have been paid on the day the payment order is issued and, if there is no payment order, when the payment is made.
- Compensation for expropriation. The amount of the compensation must be included in the period in which the corresponding payment order is issued, unless there was no obligation to issue an invoice or equivalent document.
- Social Security, IAE, IBI, etc. contributions. These are not subject to declaration.
- Period in which the transactions must be declared. The transactions are included in the period in which the invoices must be recorded in the register book, so that both invoices issued and received will be declared in Form 347 for the quarterly period in which they are recorded.
- Quarterly breakdown. The information must be broken down by quarter; the information return, although it refers to an annual period, must include the transactions totalled by quarter. This quarterly breakdown excludes transactions covered by the RECC and homeowners’ associations.
- Rectification of Declarations. Erroneous or inaccurate data that may have been included in Form 347 must be rectified by filing a replacement or complementary return to the one initially filed. However, it is also possible to modify entries and cancellation by substitution through the AEAT website in the section on procedures and queries and modifications of returns, accessing with the same certificate with which the return was filed.
- Separate tax return. In addition to transactions covered by the RECC, transactions in which the taxpayer is the recipient under the reverse charge rule and transactions exempt because they refer to goods linked to a warehousing system other than customs warehousing must also be declared separately.