Modelo 347 is the annual declaration of transactions with third parties, an informational return that must be filed with the Tax Agency by companies and self-employed professionals who during the calendar year have carried out transactions with any person or entity that in total have exceeded 3,005.06 euros.
Who Must File?
Individuals and legal entities carrying out business or professional activities are required to file Modelo 347, with certain exceptions: individuals under the objective estimation regime (modules) in CIT only if they operate with owners’ communities or carry out certain transactions; and certain entities such as political parties or trade unions under specific conditions.
Homeowners’ communities (comunidades de propietarios) are also obliged to declare transactions carried out with each service provider — property managers, maintenance companies, utilities — that exceed the annual threshold. This obligation affects thousands of communities that are often unaware they must file the return.
Individuals and entities under the simplified VAT scheme or the special regime for agriculture, livestock and fishing (REAGP) are excluded from the obligation, unless they carry out transactions outside these special regimes that exceed the threshold.
What Transactions Are Included?
All transactions with the same customer or supplier that exceed 3,005.06 euros in the calendar year, including VAT, must be declared. Excluded are transactions subject to withholding, domestic transactions subject to special VAT regimes (agriculture, modules…) and imports and exports of goods.
The information is broken down by quarters, allowing the AEAT to cross-reference data with periodic VAT self-assessments (Modelo 303) and detect inconsistencies. Each transaction is recorded indicating whether the declarant acts as issuer or recipient of the invoice, along with the total amount of transactions and the VAT charged or borne.
Particular attention must be paid to grants, subsidies or assistance paid by public entities: if they exceed the threshold, they must also be declared. Similarly, rentals of real estate subject to and not exempt from VAT are included in the return if they exceed 3,005.06 euros annually.
Filing Deadline
Modelo 347 must be filed during February of the year following the year to which the transactions relate. Filing is mandatory electronically for companies and may be on paper for certain individuals.
The usual period runs from 1 to 28 February. The AEAT does not typically grant extensions, so early preparation of data — ideally from January — is essential for error-free filing. In the case of late filing, the minimum penalty is 200 euros, reduced to 50% if filed before the AEAT issues a requirement.
Common Errors
The most common errors include failing to properly cross-reference amounts with the supplier or customer (discrepancies that generate AEAT requirements), omitting transactions that exceed the threshold when accumulated over the year, or including transactions that should not be declared (such as those subject to withholding).
Another frequent error is confusing the attribution criterion: Modelo 347 uses the accrual basis (not cash basis), aligned with VAT. If an invoice is issued in December but paid in January, the transaction belongs to the year of the invoice. Transactions where the declarant is the reverse charge taxable person also cause confusion: they must be included, but the amount to declare is the total transaction value excluding VAT.
How to Correct an Error: Supplementary or Substitute Declaration
If an error is detected after filing, the AEAT allows filing a supplementary declaration (to add omitted records) or a substitute declaration (to replace the entire return). It is advisable to correct the error before receiving a requirement, as voluntary correction significantly reduces the applicable penalty.
The penalty for omitted or incorrect data is 20 euros per record, with a minimum of 300 euros and a maximum of 3% of the value of undeclared transactions, with an upper limit of 20,000 euros. Voluntarily submitting the correction before a requirement reduces the penalty by half.
Prior Reconciliation with Suppliers and Customers
The most effective practice for avoiding discrepancies is to carry out a bilateral reconciliation before filing: comparing the amounts recorded in one’s own accounts with those in the supplier’s or customer’s records. These differences typically result from different time attribution criteria, disputed invoices, or credit notes recorded in different periods.
Many large companies communicate to their suppliers the amount they intend to declare in the 347 before filing, facilitating reconciliation. For companies with hundreds of counterparties, the process requires technological support to automate data extraction and comparison.
At BMC we manage the filing of Modelo 347 and other informational returns. See our tax compliance services.
