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VAT 2023 practical manual.

6. Bad loans

With effect from January 1, 2023, for its adaptation to community law, some aspects of the procedure to recover VAT from bad debts are modified:

  • The modification of the tax base is allowed in the case of bad debts as a result of an insolvency process declared by a court of another Member State to which Regulation (EU) 2015 is applicable /848. The period for the modification will be two months from the end of the equivalent period in the bankruptcy legislation of the Member State for calling creditors.

  • In relation to bad debts:

    • If the recipient of the unpaid transaction is a final consumer, minimum amount of the taxable base of said transaction is reduced from 300 to 50 euros, VAT excluded.

    • It is allowed to replace the judicial claim or notarial requirement prior to the debtor by any other means that reliably proves the claim for collection from said debtor.

    • The period to recover VAT is extended from 3 to 6 months from when the credit is declared uncollectible, adding a transitional regime so that they can apply this new term for taxpayers whose modification terms have not expired on January 1, 2023.