Published: July 14, 2026
Issuing and delivering an invoice is a formal tax obligation of business owners and professionals. It is mandated by the General Tax Law, specified in the Value-Added Tax regulations[1] (hereinafter,“VAT”), and implemented by the Invoicing Regulations.[2] The recipient, however, does not always receive the invoice. Failure to comply results in penalties for the supplier and immediate financial loss for the recipient.
Without an invoice, the business recipient cannot deduct the VAT it has paid nor justify the expense in the event of an audit by the Tax Agency. If, in addition, the supplier stops responding, the recipient has no direct way of obtaining the document.
In these cases, the law provides for a mechanism that is not left to the discretion of the party failing to fulfill its invoicing obligation. Under certain circumstances, the recipient of the transaction may issue the invoice in the name and on behalf of the business owner or professional required to do so.[3] However, this right cannot be exercised immediately; rather, it requires the prior filing of an economic-administrative claim and compliance with the legally established requirements and deadlines, failure to observe which may result in the loss of the right to exercise it.
It is important to begin with a key clarification. Not every document that refers to a transaction subject to VAT constitutes an invoice for tax purposes. A quote, a receipt, or any other equivalent document—even if they indicate the taxable base and the tax rate—lacks the legal validity of an invoice. Tax regulations specifically list the documents that can be used to justify the right to deduct input VAT, with the original invoice ranking first among them. [4]
I. Advance payments are also subject to VAT: the invoice must be issued at the time of collection
Before addressing the obligation to invoice advance payments, it is important to distinguish between three concepts that are often confused. Accrual is the point in time at which the law considers the transaction to have taken place for tax purposes. It does not necessarily coincide with the completion of the work or services rendered, nor with the collection of payment or the remittance of the tax to the tax authorities. It is the accrual that determines the onset of the main tax obligations, including the pass-through of the tax and the obligation to document the transaction with an invoice.
As a general rule, VAT on services becomes due when the services are performed, that is, when the service has been provided. However, the VAT Act provides an exception for advance payments: when a business or professional receives all or part of the payment before the transaction has taken place, the tax becomes due at the time of receipt, but only on the amounts actually received.
II. Time Limit for Bringing a Lawsuit in the Event of a Breach
When a business owner or professional fails to fulfill their obligation to issue and deliver an invoice, the recipient of the transaction is not left without recourse. The General Tax Law (LGT) establishes a procedure divided into two stages. First, a formal demand must be issued to the supplier, who has one month to comply with the obligation to issue and deliver an invoice. One month after the supplier has been formally demanded to comply, another month begins during which an economic-administrative claim may be filed with the Economic-Administrative Court.[5] The prior formal demand is, therefore, a prerequisite for filing a claim. Once that avenue has been exhausted, an appeal may be filed with the contentious-administrative courts.
III. Issue the invoice on behalf of the defaulting party
If, even after a decision on the complaint has been issued establishing the obligation to issue an invoice, the party in question fails to comply, the interested party may issue the invoice on behalf of the party obligated to do so, in accordance with the following rules:
- The first step is to send a dual notification: a written notice to the Economic-Administrative Court that heard the case, stating that the ruling has not been complied with and that an invoice will be issued, as well as to the defendant, by any means that provides proof of receipt.
- The second provision governs the content of the invoice. It is prepared by the claimant, who is listed as the recipient of the transaction, and the party that failed to fulfill the obligation is listed as the issuer. The mandatory content of all invoices remains required, including a sequential number and series, date, name, and tax identification number (NIF) of both parties, a description of the transaction, taxable base, applicable tax rate, and the tax amount charged separately.[6] An invoice issued under this mechanism but found to be incomplete will not justify the deduction.[7]
- The third step involves distributing copies. The claimant retains the original invoice. A copy of the invoice must be sent to the respondent, and both the invoice and the brief filed with the Court notifying it of the failure to comply with the ruling must be sent to the State Tax Administration Agency (hereinafter“AEAT”).
This mechanism differs from the reverse charge mechanism, in which the recipient is responsible for paying the tax. Under this mechanism set forth in Article 239.6 of the General Tax Law (LGT), this is not the case: the recipient issues a document on behalf of another party, and the supplier remains the taxpayer.
IV. Effects of the Issued Invoice
The issuance of the invoice does not replace the supplier’s payment of the tax; the supplier remains the taxpayer and is responsible for reporting and paying the tax.
With regard to the deduction of input VAT, there are arguments to support the view that an invoice issued in this manner allows for such a deduction. The regulations expressly recognize as a supporting document an invoice issued by the recipient in the name and on behalf of the supplier, provided that the regulatory requirements are met. However, to date, there has been no specific ruling by the General Directorate of Taxes or the courts regarding invoices issued under Article 239.6 of the General Tax Law (LGT); therefore, this interpretation, although sound, still lacks explicit support.
V. Risks Associated with a Defaulting Supplier
Failure to comply with invoicing obligations constitutes a tax violation.[8] Failure to issue an invoice is classified as a serious violation, punishable by a fine proportional to 2% of the total amount of the transactions that gave rise to it; if that amount cannot be determined, the fine is 300 euros for each uninvoiced transaction. Failure to comply with invoicing requirements—when an invoice exists but is defective—is also a serious violation and is punishable by a 1% fine.
VI. Actionable Steps
- Whenever possible, request an invoice at the time of each advance payment, without waiting for the transaction to be completed.
- Keep all documents showing the amount charged: estimates, receipts, bank transfers, and correspondence. They serve as evidence.
- Formally notify the supplier via a method that provides proof of receipt. Date the notice and keep the acknowledgment of receipt.
- Keep track of the deadlines: the supplier has one month to issue the invoice from the date of the request, and if the supplier fails to do so, the recipient has another month to file a claim. Failure to act within these deadlines prevents the use of this procedure.
- If the supplier continues to be in breach following the court’s ruling, exercise the authority provided for in Article 239.6 of the LGT.
If your company has advance payments that have not yet been invoiced, the Gentile Law team can review the documentation, draft a formal demand letter within the required timeframe, and assess the viability of the claim before the deadline expires.
This publication is for informational purposes only and should not be construed as legal advice.
Contact us:
Álvaro Díaz Hotz
Corporate Paralegal at Gentile Law
Ana García Ginés
Tax Associate at Gentile Law
anagarcia@gentile.law
+34 604 512 160
Miguel Espinosa García
Associate at Gentile Law
+34 604 510 566
[1] Art. 29.2.e) of the General Tax Law (LGT) and Art. 164.1.3 of the Value-Added Tax Law (LIVA).
[2] Article 2.1 of Royal Decree 1619/2012, dated November 30, approving the Regulation governing invoicing obligations (hereinafter,the “Invoicing Regulation”).
[3] Article 239.6 of the General Tax Law (hereinafter“LGT”).
[4] Article 97.1.1 of Law 37/1992, of December 28, on Value-Added Tax. This provision accepts as a supporting document the original invoice issued by the party performing the transaction or, in that party’s name and on its behalf, by its customer or by a third party, provided that the regulatory requirements are met.
[5] Art. 235.1 of the General Tax Law.
[6] Art. 6.1 of the Billing Regulations.
[7] Art. 97.2 of the Value-Added Tax Law (LIVA): Documents that do not meet each and every one of the requirements established by law and regulation shall not entitle the holder to a deduction, unless corrected.
[8] Art. 201.1 of the General Tax Law.