SII. Beware of the consistency of data. It is not only penalties


Once the unofficial truce lasting until past December 2017 is over, the time has come for companies failing to comply with their SII obligations having to face the consequences of such a behaviour.

However, more than the specific penalties which may result from the failure to properly deal with the SII reporting obligations, companies must be aware that these are not the only negative consequences.

Furthermore, such unexpected consequences which may result for uncompliant companies or for companies which, regardless of their having complied with their SII reporting obligations, have declared inconsistent data, are producing.

It must be remembered that, as results from the new paragraph 6 added to article 62 of the VAT ordinance following the introduction the so called “Immediate Information Supply” or SII, this is just a special system of keeping the VAT registers required by the VAT regulations (namely, electronically through the website of the Tax Agency), that is obligatory to those companies under its scope.

As a result, in the event of a tax review, SII uncompliant companies could be considered to qualify for the application of the second paragraph in number three of article 99 of the Spanish VAT Law, according to which:

“Three. The right to deduct may only be exercised in the return for the tax period in which the taxable person has been charged the deductible tax, or in the subsequent returns, provided that the four-year period has not elapsed from the time such right originated.

For the case that there is a notification request from the Tax Authorities or inspection proceedings, input VAT quotas will only be deductible at the return corresponding to the period when they are properly accounted for in the Register Books required by the VAT regulations or any other subsequent return...”

In fact, this is the approach that is been adopted by the Tax Authorities in case that, for a declared monthly period, the data that is declared at the corresponding VAT return does not match with the data declared at the SII reports. If happens that the input VAT quotas at the return are higher than those appearing at the SII of the same month, the system initiates a tax review and issues a complementary tax assessment to the company for the difference.

Furthermore, any discrepancy of data, regardless of the same do not resulting in a higher tax payable, is also likely to trigger such a review which, if such were the case, will delay the payment of any VAT receivable resulting from the VAT refund affected by the discrepancy.

Such negative consequences more than justify the convenience for companies affected by the SII obligations, to introduce reconciliation routines which prevent inconsistencies between those data they declare at their monthly VAT returns and those resulting from their SII reports.

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Tuesday, 20 August 2019


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