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VAT practical manual 2021.

Modification of the taxable base:

The Law establishes, among others, the following reasons for modification:

  1. When the consideration has been provisionally fixed.

    Example:

    If budgeted community expenses are invoiced together with the lease of the premises, the accrual is made based on the provisional expenses. Once the final amounts are known, the corrected invoice must be issued, charging the differential rate at the rate in force at the time of accrual. The landlord will include this fee in the declaration for the period in which the rectification is carried out.

  2. When returning containers and packaging that can be reused.

    Example:

    The sale of milk in glass bottles that can be reused entails a tax on the total consideration. Subsequently, when the bottles are returned, the tax base must be modified.

  3. When discounts and bonuses are given after the transaction has been completed.

    Example:

    The rappels Granted in one year based on sales volume from the previous year result in a reduction of the tax base.

  4. When taxed operations are cancelled totally or partially or the price is altered.

    Example:

    The return of goods due to quality defects will result in the rectification of the taxable base as the transaction will be void.

  5. When the recipient of the subject operations has not paid the transferred fees in the following cases:

    • Bankruptcy proceedings: When, after the accrual of the operation, an order is issued declaring bankruptcy of the recipient of the operation.

      The modification cannot be made after three months have elapsed from the day following the publication of the bankruptcy declaration order in the “Official State Gazette”.

      For example, if in a bankruptcy proceeding the order declaring bankruptcy was published in the BOE on January 30, the last valid day to make the modification of the tax base is April 30.

    • When the credits corresponding to the fees passed on by the taxed operations are totally or partially uncollectible.

      Bad debt. Necessary requirements:

      1. One year has passed since the tax became due without obtaining collection of all or part of the credit. However, when the holder of the credit right does not have the status of a large company, the aforementioned period may be 6 months or one year.

        In the case of forward or deferred price transactions, one year must have passed since the expiration of the unpaid term or terms in order to proceed with the proportional reduction of the tax base. Likewise, this period may be 6 months or one year for entrepreneurs or professionals who do not have the status of large companies, that is, when their volume of operations has not exceeded 6,010,121.04 euros during the immediately preceding calendar year. In this type of operation, it is sufficient to request payment by means of a judicial claim for one of the installments or by means of a notarial request to proceed to modify the tax base in the proportion corresponding to the unpaid installment or installments.

        In the case of transactions to which the special cash basis regime is applicable, this condition will be deemed to be met on the tax accrual date that occurs by application of the deadline of December 31 of the year immediately following the year in which the transaction was carried out.

        Notwithstanding the provisions of the preceding paragraph, when dealing with term or deferred price transactions, it will be necessary for a period of six months or one year to have elapsed from the expiration of the corresponding term or terms until the accrual date of the transaction.

      2. Reflection of this circumstance in the Registration Books.

      3. Judicial claim for collection, or notarial requirement, even when it involves credits guaranteed by public entities.

        In the case of credits owed by public entities, the judicial claim or notarial requirement is replaced by the certification issued by the competent body of the debtor public entity in accordance with the report of the Comptroller or Treasurer of the latter in which the obligation and its amount are recognized.

The modification must be made within 3 months following the end of the 6-month period or, where applicable, 1 year from the accrual of the tax.

In the case of transactions to which the special cash basis regime is applicable, this three-month period for making the modification will be computed from the deadline of December 31 of the year immediately following the year in which the transaction was carried out.

It is necessary that the recipient of the operations acts as a businessman or professional or, otherwise, that the tax base of those operations, excluding VAT , is greater than 300 euros.

In the cases of bankruptcy declaration and bad debts the following common rules apply:

  1. The modification of the tax base will not be applicable in the following cases:

    1. Credits that enjoy real guarantee, in the guaranteed part.

    2. Credits guaranteed by credit institutions or mutual guarantee companies or covered by a credit insurance or surety contract, in the guaranteed or insured part.

    3. Credits between related persons or entities.

    4. Credits owed or guaranteed by public entities, except in the case of credits that are considered uncollectible, provided that a certificate from the competent body of the Public Entity is provided, recognizing the non-payment. When the certificate from the competent body is requested, in accordance with the report of the Auditor or Treasurer, it will be understood that the period for the reduction of the tax base is interrupted until it is available ( DGT No. V0615-11).

  2. The tax base will not be modified when the recipient of the operations is not established in the territory of application of the tax, nor in the Canary Islands, Ceuta or Melilla.

    However, in the event of bankruptcy declared in bankruptcy proceedings carried out by a court of another Member State to which Regulation ( EU ) 2015/848 applies, it will be permitted the reduction of the tax base when the recipient is established in another Member State. (V3346-20).

  3. The modification of the tax base in accordance with section four of article 80 of the LIVA (for uncollectible credits) will not proceed after the order declaring bankruptcy for credits corresponding to fees passed on for operations whose accrual occurred prior to said order.

  4. In cases of partial payment prior to the aforementioned modification, it will be understood that the Value Added Tax is included in the amounts received and in the same proportion as the part of the consideration paid.

  5. The correction of the deductions of the recipient of the operations will determine the creation of the corresponding credit in favor of the Public Treasury.

    If the recipient of the taxable transactions has not been entitled to a full tax deduction, he or she will also be liable to the Treasury for the amount of the non-deductible tax.

The modification of the tax base is conditional , in these cases of bankruptcy and uncollectible debts , on compliance with the following requirements:

  • The taxpayer must prove that he has sent the corresponding corrective invoice to the recipient.

  • The transactions must have been invoiced and accounted for by the creditor in a timely manner.

  • The modification must be communicated to the Administration. This obligation to communicate changes in tax bases, both for the creditor and the debtor, must be done electronically, using a specific form available at the Electronic Office of the AEAT .

    The creditor's communication must be made within a period of one month from the date of issuance of the corrective invoice, and must state that it does not refer to guaranteed, bonded or insured credits, credits between related persons or entities, or to operations whose recipient is not established in the territory of application of the Tax or in the Canary Islands, Ceuta or Melilla, in the terms provided for in article 80 of the VAT Law and, in the case of bad debts, that the debtor has not been declared in bankruptcy or, where applicable, that the corrective invoice issued is prior to the date of the order declaring bankruptcy.

    Along with this communication, and prior to it, the creditor must send through the electronic registry of the AEAT :

    • The copy of the corrective invoices, which will include the issue dates of the corresponding corrected invoices.

    • In the case of uncollectible debts, documents proving that the creditor has requested collection of the debt by means of a legal claim against the debtor or by means of a notarial request.

    • In the case of credits owed by public entities, the certificate issued by the competent body of the debtor public entity.

    In the communication to the recipient who has the status of entrepreneur or professional, the receipt of the corrective invoices must be reported, indicating the total amount of the corrected fees including, where applicable, the non-deductible fees, within the same period provided for the presentation of the self-assessment corresponding to the period in which the corrective invoices for the operations were received.

Once the tax base has been reduced, it will not be increased again even if full or partial payment is made, except in the following cases:

  • When the taxpayer withdraws the legal claim against the debtor or reaches a collection agreement with the debtor after the notarial request.

  • When the recipient does not act in the capacity of a businessman or professional, and if he has not paid the debt, it will be understood that VAT is included in the amounts received and in the same proportion as the part of consideration received.

  • When the conclusion of the competition is agreed in the following cases:

    • Once the Provincial Court's decision revoking the bankruptcy declaration on appeal is signed.

    • At any stage of the procedure, when payment or deposit of all of the recognized credits or full satisfaction of the creditors by any other means occurs or is verified.

    • At any stage of the procedure, once the common phase of the bankruptcy has ended, when the resolution accepting the withdrawal or waiver of all recognized creditors becomes final.

Finally, it is recalled that the Tax Agency has incorporated into its website a « Calculator for BI modification deadlines and other rectifications » , where it can be consulted the deadline to modify the output VAT when the circumstances provided for in article 80 of the VAT Law or an error occur. It also provides the period and financial year of form 303 in which the corresponding adjustment is made: