Form 347: What It Is, When to File It, and How to Stop the Tax Authority Asking Questions

Every year, many self-employed professionals and small businesses in Spain receive a notice from the tax authority that opens with something like: “a discrepancy has been detected between what you declared and what a third party declared.” The cause is almost always Form 347, the annual informational return on transactions with third parties. It’s not a self-assessment that involves paying or claiming anything, but it’s one of the tax agency’s favorite cross-checking tools — and understanding it well saves you from avoidable trouble.

What Form 347 is and who must file it

Form 347 requires businesses to report, annually and broken down by quarter, all transactions with any single client or supplier whose combined value over the calendar year exceeded €3,005.06 (VAT included). Both self-employed individuals and companies carrying out economic activities are generally required to file it, with some important exceptions: those who already report these transactions through other channels — such as businesses that declare all their VAT via Form 340, or that already report invoices through the Immediate Supply of Information system (SII) — are typically exempt from this obligation. Also excluded from the calculation are, among others, transactions already reported on specific forms (rental income declared via Form 180, for instance) and transactions that don’t qualify as a supply of goods or services for VAT purposes.

One point that causes a lot of confusion: the €3,005.06 threshold is calculated on the total volume of transactions with that person or entity over the year, not invoice by invoice. If a supplier was paid twelve invoices of €300 each over the course of the year, the total exceeds the limit and must be reported — even though no single invoice looks like it would.

How it’s reconciled: matching what you declare against what the other party declares

The reason Form 347 generates so many inquiries is simple: the tax authority doesn’t just read what each business files on its own — it automatically cross-references the data submitted by all filers. If one company reports having purchased €20,000 from a supplier over the year, and that supplier reports having sold only €15,000 to the same client, a discrepancy shows up that the authority spots easily, usually resulting in an “information request” letter or, in the worst case, the start of a formal review.

To avoid these mismatches, it’s worth checking several common problem areas before filing:

Timing criteria. Form 347 is reported by calendar quarter based on the invoice date, except for certain transactions (such as customer advance payments or specific subsidies) that are recorded when paid or collected. If one company books the invoice in the quarter it was issued and the other party records it in the quarter it was received or paid, a gap appears that’s often not a real error — just a difference in timing criteria.

Credit notes and returns. These must be included in the quarter they were issued, reducing the corresponding amount; forgetting them is one of the most common causes of mismatches.

Transactions under special VAT regimes or reverse charge. These have their own boxes and treatment, and if marked incorrectly, they can quietly throw off the declared amount without it being obvious.

Changes to a client’s or supplier’s tax ID or business name during the year. These can prevent the tax authority’s system from properly matching the two returns, even when the amount itself is correct.

The best prevention is simply to reconcile before filing: cross-check the register of issued and received invoices against the accounting ledgers for key clients and suppliers, and confirm that the annual total per third party matches what the other party is likely to report. When there’s reasonable doubt about what a client or supplier is going to declare, a quick email or call before filing saves months of back-and-forth with the tax authority later.

At Zythos Business, we build the Form 347 review into every client’s annual tax closing, systematically cross-checking the invoice register against the accounts before filing any return. That upfront check — tedious to do invoice by invoice for a self-employed professional or small business — is exactly the kind of quiet work that prevents inquiries down the line and lets our clients focus on their business, knowing their reporting obligations are up to date.