Verifactu: the nuclear bomb shaking up Chinese-run businesses in Spain

Verifactu triggers a wave of closures of Chinese-run shops in Spain

The rollout of Verifactu, Spain's real-time verifiable invoicing system, is causing an earthquake in the country's Chinese-owned retail sector. Witnesses in areas with a high concentration of these businesses, such as Valencia, report mass closures that began late last year and have accelerated in recent months. According to the shopkeepers' own confessions, the reason is antiestéticar that the Spanish tax agency (Hacienda) can now audit their real sales volume with no margin for error.

What is Verifactu and why does it hit so hard?

Verifactu is a verifiable invoicing system that requires businesses to send every invoice to the tax agency (Agencia Tributaria) in real time, with no possibility of later manipulation. It stems from the Anti-Fraud Law (11/2021) and is regulated by Royal Decree 1007/2023. Unlike traditional e-invoicing, this certified software makes it impossible to omit sales or alter amounts: every transaction is recorded instantly. For businesses whose model was based on hiding revenue – such as many Chinese-run bazaars, restaurants and hairdressers that seem to operate without customers – the tool is a death sentence.

The earlier experience in the Basque Country with TicketBai offers clues: while it has not eradicated the underground economy, it has reduced the room for manoeuvre. However, revenue there did not rise as much as expected, and many businesses with tax residence outside the Basque Country fell outside its scope. With Verifactu, coverage is nationwide and is expected to include almost every sector, including gaming halls, considered hotspots for money laundering.

Three euros per parcel and the return to China

It is not all Verifactu's fault. Some analysts point out that the closure of Chinese-run shops responds to a cocktail of factors. For one, since 1 July the EU has imposed a three-euro fee on each small imported parcel, hitting the business model of shops that resell AliExpress products on razor-thin margins. For another, China's economic growth is drawing many emigrants back home. According to testimonies, "life back home is already getting good", which reduces the incentive to set up a tax racket in Spain. On top of that, Amazon is crushing small online retailers, and the Chinese are no exception.

Is the scam over, or just changing shape?

Some argue that Verifactu will not eliminate fraud but merely push it towards more sophisticated methods. Blockchain-based invoicing, disguised cancellations and proforma invoices that also get recorded are avenues already being explored. Others point out that Chinese-run businesses have "other money-laundering systems", not necessarily tied to retail. The image of an empty warehouse with two customers a day spending five euros on average is a laundering classic, but the mafias can turn to online gambling, cryptocurrencies or opaque property investment.

The underlying question is whether the tax agency will have the real capacity to process the flood of data and pursue offenders. If the TicketBai experience is any guide, those who truly want to dodge taxes will find a way. Meanwhile, the closure of hundreds of Chinese-run businesses – many of them mere fronts – could be just the start of a clean-up that will, paradoxically, leave even more room for the big platforms.

With Verifactu up and running, small home-grown businesses are also bracing for more red tape. But in this game, the first to fall are those who lived with their backs to the tax office. The rest, including Spanish self-employed workers, watch with scepticism: the tool may serve control, but not necessarily tax justice.