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Practical Handbook VAT 2022

Tax impact to the recipient

Passing-on involves the transfer of the economic burden of the tax from the taxable person to the recipient of the taxable transaction.

Chargeback is configured as a right and duty, in that the Law establishes that the taxable person must pass on the amount of the tax to the recipient of the taxed transaction, but at the same time, in order for the latter to pass on the tax, a series of requirements are established in the regulations:

  • Formal requirements

    The charge must be passed on by means of an invoice, subject to the exceptions contained in the regulations, and the amount charged must be shown separately from the taxable amount.

  • Temporary requirements

    The charge must be made at the time the invoice is issued and delivered and must be made within one year of the date of the chargeable event.Otherwise, the taxable person loses the right to pass on the tax (i.e. the taxable person has paid or is required to pay the tax, but cannot pass it on to the recipients of the transaction).

  • Material requirements

    There is no obligation to bear the impact in two cases:

    1. When the impact is not made in accordance with the law.

    2. When the charge is passed on before the tax becomes chargeable.

1.Special rule.Impact on public bodies

In the case of supplies of goods and services subject to and not exempt from tax whose recipients are public bodies, it shall always be understood that the taxable persons, when formulating their economic proposals, even verbally, have included value added tax in the same, which shall nevertheless be charged as a separate item, where appropriate, in the documents presented for collection, without the overall amount contracted being increased as a result of the inclusion of the tax charged.In this sense, the particular conditions foreseen in the administrative contracting shall contain the express prevention that for all purposes it shall be understood that the offers of the entrepreneurs include not only the price of the contract, but also the amount of the tax.


A City Council awards a contract for the provision of a service for 12,000 euros.The invoice to be issued to the City Council will be as follows:

Taxable base:(12.000 ÷ 121) x 100 = 9.917,36 euros

VAT at 21%:2,082.64 euros

Total (9.917,36 + 2.082,64) = 12.000,00 Euros

2.Correction of output tax assessments

  1. Cases in which rectification is to be carried out:

    The rectification of the amounts charged must be carried out in the following cases:

    1. In cases of incorrect setting of such quotas.

    2. When the circumstances giving rise to the modification of the tax base occur.

    The rectification must be made when the causes of the incorrect determination become apparent or the circumstances giving rise to the modification of the tax base arise, provided that 4 years have not elapsed from the time when the tax accrued or from the date on which the circumstances giving rise to the modification of the tax base arose.

    A correction can be made if an invoice has been issued , even if no tax has been charged.

  2. Cases in which rectification is not appropriate:

    Rectification shall not take place in the following cases:

    1. When the rectification is due to the incorrect setting of quotas, involves an increase in the quotas charged and the addressees are not acting as entrepreneurs or professionals.

      Exception: in cases of statutory rate increases, the correction may be made in the month in which the new rates enter into force and in the following month.

    2. Where it is the Tax Administration which reveals, through the corresponding assessments, tax payments due and not passed on which are greater than those declared by the taxable person and it is established that the taxable person was participating in a fraud or that he knew or ought to have known, using reasonable care, that he was carrying out a transaction which formed part of a fraud.

  3. Rectification procedure:

    1. Rectification without requirement involving increase of quotas:

      • By founded error of law or circumstances that give rise to the modification of the taxable base: the difference is included in the tax return for the period in which the correction is to be made.

      • Other cases: a corrective declaration-settlement must be submitted, to which the appropriate surcharge and interest for late payment are applied in accordance with Article 27 of Law 58/2003, of 17 December, on General Taxation.

    2. Rectification involving reduction of quotas, the taxable person may choose to:

      • Initiate, when appropriate, the procedure for rectification of self-assessments provided for in article 120.3 of the General Tax Law and in articles 126 to 129 of RGAT.

      • Regularise the situation in the self-assessment of the period in which the rectification is to be made or in subsequent periods up to one year after the rectification should have been made.The taxable person must reimburse to the recipient the amount of the overcharged taxes.

In cases where the taxable transaction has no effect as a result of the exercise of a action for reinstatement in bankruptcy or other actions to challenge exercised within the bankruptcy, the taxpayer must rectify the taxes initially charged in the self-assessment for the period in which the accrued taxes were declared.

The Tax Agency's E-Office has incorporated a "Calculator of deadlines for modification of BI and other rectifications", where you can consult the deadline for modifying the VAT when the circumstances foreseen in article 80 of the VAT Law or an error occurs.It also provides the period and financial year of form 303 in which the corresponding adjustment is made: