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Practical Handbook VAT 2021

Rectifying deductions

The cases for rectifying deductions are:

  1. Incorrect calculation of deductions.

  2. Rectifying of taxable income due to:

    1. Incorrect calculation.
    2. Modification of the taxable base.

If the correction involves an increase in taxable income, it may be performed in the self-assessment for the period in which the taxpayer receives the corrective invoice or in subsequent returns, provided that no more than four years have elapsed since the chargeable event or the circumstances giving rise to the change in the taxable base occurred.

If the correction is not due to a change in the taxable amount, it may not be performed more than one year after the corrective invoice is issued.

If the correction involves a reduction in the taxable amount, it is mandatory and must be performed:

  • If it is due to a well-founded error of law or modification of the tax base: in the self-assessment for the period in which the corrective invoice was received.

  • In the event of bankruptcy or if the taxable transaction is rendered ineffective as a result of the exercise of a bankruptcy reinstatement action or other challenges exercised as part of bankruptcy proceedings, when the initial purchaser or acquirer is also involved in bankruptcy proceedings: in the self-assessment for the period in which the right to deduct input tax was exercised, without any surcharges or late payment interest.

  • If it is for another reason: shall file a corrective self-assessment, applying the appropriate surcharge and late payment interest, pursuant to Article 27 of Law 58/2003, of 17 December, on General Taxation.

The Tax Agency has added a "Modification deadline calculator for TB and other corrections", to its website, where you can consult the deadline for modifying the input VAT deducted when the circumstances foreseen in Article 80 of the VAT Law are met or an error occurs.It also facilitates the period and fiscal year of form 303 where the corresponding adjustment is made:https://sede.agenciatributaria.gob.es/wlpl/AVAC-CALC/CalculadoraMBIServlet

Scheme for rectifying taxable income and deductions
Taxable incomeRectification procedureIncome deducted
Type of changeType of change
Increase

  1. In the self-assessment corresponding to the period in which the rectification is made, when the rectification is caused by any of the following reasons:

    1. Return of containers and packaging.
    2. Discounts and rebates made after the transaction, provided they are duly justified.
    3. When the taxable transactions are wholly or partially ineffective:
      • as part of a final legal or administrative resolution
      • pursuant to the law or trade uses.
    4. When the price changes after the transaction has taken place.
    5. When, following the accrual of tax and provided that the amounts charged have not been paid, a bankruptcy declaration is issued and provided that the requirements established by the tax regulations are met.
    6. In the case of bad debts.
    7. Well-founded error of law.
    8. Amount of the consideration not known at the time that the tax is accrued with the provisional calculation of the taxable amount on the basis of well-founded criteria.

  2. In all other cases and provided that no prior request has been made, the taxpayer must submit a self-assessment in addition to the self-assessment for the period in which the transactions now being rectified were settled, with the appropriate surcharge and late payment interest applied.

 Decrease
Decrease

  1. Correct the situation in the self-assessment corresponding to the period in which the rectification is to be made or in subsequent periods prior to:

    • One year having elapsed for taxable income.
    • Four years having elapsed for input tax if the rectification is justified under Article 80, otherwise one year from the date on which the corrected invoice is issued.

  2. As regards overcharged taxes, the decision may be taken, where appropriate, to launch the procedure for rectifying the self-assessment.

 Increase