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VAT practical manual 2022.

Tax impact to the recipient

The impact involves the transfer of the economic weight of the tax from the taxable person to the recipient of the taxed transaction.

The pass-on is configured as a right-duty, since 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, for him to make the pass-on, they are established in the regulations a series of requirements:

  • Formal requirements

    The transfer must be made by invoice with the exceptions contained in the regulations, recording the passed-on fee separately from the taxable base.

  • Temporary requirements

    The impact must be made at the time the invoice is issued and delivered and must be made within a period of one year from the date of accrual. In another case, the taxable person loses the right to pass on (that is, the taxable person has paid or must pay the tax, but cannot transfer it to the recipients of the operation).

  • Material requirements

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

    1. When the repercussion is not carried out in accordance with the Law.

    2. When the impact is made before the tax is accrued.

1. Special rule. Impact on public entities

In the deliveries of goods and services subject to and not exempt from the tax whose recipients were public entities, it will always be understood that the taxpayers of the tax, when formulating their economic proposals, even if they are verbal, have included within them the Tax on the Added Value that, however, must be passed on as an independent item, when appropriate, in the documents presented for collection, without the overall contracted amount experiencing an increase as a result of the recording of the passed-on tax. In this sense, the specific specifications provided for in the administrative contract will contain the express provision that for all purposes it will be understood that the offers of the businessmen include not only the price of the contract, but also the amount of the tax.


A City Council awards the performance of a service for an amount of 12,000 euros. The invoice that must be sent to the City Council will be the following:

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. Rectification of passed-on tax payments

  1. Cases in which rectification must be carried out:

    The rectification of the passed-on fees must be carried out in the following cases:

    1. In cases of incorrect setting of said quotas.

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

    The rectification must be carried out when the causes of the incorrect determination are noticed or the circumstances occur that give rise to the modification of the tax base, provided that 4 years have not elapsed from the moment in which the tax was accrued or from the date in which the circumstances that give rise to the modification of the tax base have occurred.

    Rectification can be carried out as long as invoice has been issued, even if no fee has been passed on.

  2. Cases in which rectification is not appropriate:

    Rectification will not proceed in the following cases:

    1. When the rectification is due to the incorrect setting of fees, it implies an increase in the fees passed on and the recipients do not act as businessmen or professionals.

      Exception: In cases of legal rate increases, the rectification can be carried out in the month in which the new rates come into force and in the following month.

    2. When it is the Tax Administration that reveals, through the corresponding settlements, accrued and not passed on tax payments greater than those declared by the taxable person and it is proven that said taxable person participated in a fraud or that he knew or should have known , using reasonable diligence for this purpose, that carried out an operation that was part of a fraud.

  3. Rectification procedure:

    1. Rectification without requirement that implies increase in fees:

      • Due to error founded on law or circumstances that give rise to the modification of the tax base: The difference is included in the declaration-settlement of the period in which the rectification must be made.

      • Rest of causes: A corrective declaration-settlement must be submitted to which the surcharge and default interest applicable according to article 27 of Law 58/2003, of December 17, General Tax, are applied.

    2. Rectification that entails reduction of fees, the taxpayer 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 .

      • Regularize the situation in the self-assessment of the period in which the rectification must be made or in subsequent periods up to a period of one year from when the rectification should have been made. The taxable person must reimburse the recipient the amount of the excess fees passed on.

In the event that the taxable transaction becomes ineffective as a result of the exercise of a bankruptcy reintegration action or other challenge exercised within the contest, the taxable person must proceed to rectify the fees initially charged in the self-assessment of the period in which the accrued fees were declared.

A « Calculator for BI modification deadlines and other rectifications » has been incorporated into the Tax Agency's electronic headquarters, where you can consult the deadline to modify the VAT passed on 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: