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Practical VAT manual 2023.

6. Bad debts

With effect from 1 January 2023, in order to adapt it to Community law, some aspects of the procedure for recovering theVAT of bad debts:

  • 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 amendment shall be two months from the end of the equivalent period in the insolvency legislation of the Member State for the calling up of creditors.

  • Regarding the 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 permitted to replace the judicial claim or previous notarial requirement to the debtor with 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.