Form 347: What It Is, Who Must File It and Why the Tax Agency Cross-Checks Your Data

Form 347 is the annual return of transactions with third parties. You don’t pay anything with it: its purpose is for the Spanish Tax Agency to compare what you say you have bought from or sold to another business with what that business declares about you. If the two versions don’t match, requests for clarification follow. That’s why it’s worth understanding how it works before you file, rather than treating it as a minor formality.

What Form 347 is and who must file it

It is an informative return listing the customers and suppliers with whom you have exceeded €3,005.06 in transactions during the calendar year. It must be filed by business owners, professionals and companies, whether self-employed or SMEs, that have carried out transactions with third parties above that amount.

There are cases in which filing is not required, and it is easy to get them wrong. For example, those who are not required to file VAT returns, or those whose transactions are already reported through other channels, such as certain property transactions that have their own regime. If your situation is unusual, check the current regulations or consult your advisor.

The filing deadline falls in the first quarter of the following year and refers to the previous year’s transactions. Check it every year in the Tax Agency’s taxpayer calendar, because the exact dates are published officially.

The €3,005.06 threshold: how it is really calculated

This is the most common source of confusion. The threshold is not measured on the taxable base, but on the total amount of the transactions, VAT included (and with equivalence surcharge or withholdings as applicable). It is also calculated per third party and per calendar year, adding up all invoices rather than looking at each invoice separately.

An example with round numbers. Imagine you buy materials from a supplier during the year:

• Accumulated taxable base: €2,600.
• VAT at 21%: €546.
• Total: €3,146.

Although the base does not reach €3,005.06, the total does exceed it, so that supplier goes into your Form 347. And if the same supplier buys from you as well as selling to you, purchases and sales are reported separately, each with its own threshold.

Another practical detail: the amount is broken down by quarter. The form doesn’t just ask for the annual total, but for how much corresponds to each calendar quarter, so your accounting must be able to give you that information without effort.

Why the tax authority cross-checks data and which mismatches are typical

Your supplier reports in its Form 347 what it has sold you; you report what you have bought from it. The Tax Agency cross-checks both figures automatically. If your customer says it has bought €10,000 from you and you declare €8,000, or if it includes you and you haven’t included it, the difference is flagged. The most common causes are always the same:

• Different VAT criteria. One party reports with VAT and the other without. Form 347 is prepared with VAT included; mixing taxable bases and totals is the source of many differences.
• Invoices recorded in a different period. A December invoice that you book in January creates a gap between the two filers. What matters is the date of the transaction and its accrual criterion, not when you received it.
• Credit notes and corrective invoices handled incorrectly. If an invoice is partially cancelled, the net balance changes and can leave a third party below or above the threshold.
• Duplicate third parties caused by a mistyped tax ID. The same supplier registered twice splits the amount and can hide the fact that it exceeds the limit.
• Transactions that must or must not be included. Leases, utilities and transactions subject to withholding have their own rules; not everything in the VAT book is reported in the same way.

How to reconcile it before filing

The best defence is to do the cross-check yourself before the tax authority does. A simple method: pull the customer and supplier ledgers for the year, add up the total including VAT by tax ID, and compare it with the issued and received invoice registers. Check the tax IDs, merge any duplicates and make sure credit notes are subtracting where they should. For the significant third parties, ask your customer or supplier for an account statement and confirm that you both see the same figure.

If you receive a request over a discrepancy, don’t ignore it: replying with the statement and the invoices is usually enough to resolve it, and in any case preventing the problem is far cheaper than justifying it afterwards.

At Zythos Business we keep the books of self-employed professionals and SMEs so that Form 347 is practically done for you: third parties are cleaned up throughout the year, invoices are allocated to the correct period, and the cross-check against the VAT book is verified before filing. That way you reach the deadline with the figures already reconciled and no surprises.