Form 347: How to Avoid Errors in Your Annual Declaration of Transactions with Third Parties

Every start of the year, Form 347 takes a prominent place in the tax calendar of freelancers and businesses. It is an informative return: nothing is paid when you file it, but that is precisely why it tends to be underestimated. The Spanish Tax Agency (AEAT) uses it as a data cross-checking tool, and a mistake here usually turns into an inquiry months later. We are using the last quarter of 2026 to review how it works and how to prepare well in advance.

What Form 347 is and who must file it

Form 347 is the annual return of transactions with third parties. It reports your business dealings with customers and suppliers when the annual volume with a single counterparty exceeds the threshold set by regulation (€3,005.06, VAT included, across the whole year). It is filed per counterparty, not per invoice, with a quarterly breakdown of the amounts.

As a general rule, the obligation falls on individuals and legal entities, public or private, that carry out business or professional activities and have made transactions reaching that limit. This includes both purchases and expenses as well as sales and services provided.

There are relevant exclusions. For example, those who have not carried out transactions above the threshold during the year do not file, and transactions that are already reported through other channels are not included, such as those communicated through the immediate supply of information (SII) or certain withholdings already declared on their specific forms. Each case should be reviewed carefully, because the exceptions have nuances and do not all apply equally to freelancers and to companies.

One important note: cash receipts above €6,000 from a single customer are reported in a specific section of the form, regardless of the rest of the transactions.

Why the tax authorities pay so much attention to this form

The key to Form 347 is the cross-check. The AEAT receives the return from whoever issues the invoice and from whoever receives it, and compares them. If you declare having purchased a certain amount from a supplier and that supplier declares having sold you a different amount, the discrepancy is flagged automatically.

The most common differences usually stem from allocation criteria: Form 347 is based on transactions including VAT and on the period in which invoices are recorded, not the period of collection or payment. Mishandled corrective invoices, duplicate entries, incorrect tax IDs, or transactions allocated to the wrong quarter also cause mismatches.

Once an inconsistency is detected, the usual outcome is a notice asking you to clarify the difference. It does not always end in a penalty, but it takes time, supporting documents and, in the worst case, the opening of an audit procedure on years you considered closed. Filing late or with incorrect or incomplete data can also lead to penalties, which is why it is best not to leave it until the last day.

What this means for your business

The practical conclusion is that Form 347 is won during the year, not in February. Here are some concrete steps you can take right now:

Clean up your third-party records now. Check that every customer and supplier has a correct tax ID, a consistent company name and, where applicable, the right province code. Fixing it in October is easy; doing so with the deadline looming is not.

Reconcile your VAT books with your quarterly returns. If your invoice ledger and the Form 303 returns you filed do not match, Form 347 will inherit the difference. It is better to catch it before the tax authorities do.

Watch counterparties close to the threshold. A supplier who falls just below it, or a customer who exceeds it because of a corrective invoice, can change whether they must appear in the return. Keep a running total per third party.

Keep an eye on cash receipts. If you work with customers who pay in cash, check the accumulated amounts and that they comply with the legal limits on cash payments, as well as how they are reflected in the form.

Keep your supporting documents. Invoices, contracts and proof of receipt and payment must be able to back up every figure declared. If a notice arrives, how quickly you respond makes all the difference.

At Zythos Business we work precisely on that preliminary stage: we reconcile VAT books, clean up customer and supplier records and cross-check every transaction against the returns already filed, so that Form 347 becomes a natural result of well-kept accounts rather than a last-minute rush. If you would like to review where you stand heading into year-end, we would be glad to help you prepare with plenty of time to spare.