How can I recover unpaid VAT from my clients?

Requirements

To recover unpaid VAT, you can reduce the tax base of the tax in your declaration if the credit is considered uncollectible.

The credit is considered uncollectible when it meets the following conditions:

1. That one year has passed since the accrual of the output VAT without the collection of all or part of it having been obtained. When the creditor is a SME (businessman or professional whose volume of operations in the immediately preceding calendar year has not exceeded 6,010,121.04 euros), may choose to consider the credit uncollectible when six months have elapsed, or the general period of one year .

   In term transactions , the year or, where applicable, the six-month period, begins to count from the expiration of the unpaid term or terms. Term transactions are considered when the period between the accrual of VAT and the expiration of the last or only payment is greater than one year or in the case of SMEs, six months if the credit is considered uncollectible within a period of 6 months. . With these forward transactions, you only need to be missing the payment of one of the instalments for the credit to be considered irrecoverable, and the gross tax base can be reduced by the portion corresponding with the unpaid instalment(s). 

   In operations to which the special regime of the cash basis is applicable, the condition of the passage of a period of one year or six months to consider the credit uncollectible will be deemed to be fulfilled on December 31 of the year immediately following the year in which the operation was carried out (in installment or deferred price operations, it will be necessary that a period of six months or one year has passed since the expiration of the unpaid term or terms).

2. That this circumstance has been reflected in the books records required for this tax.

3. That the recipient of the operation acts in the capacity of businessman or professional, or, in another case, that the taxable base , VAT excluded, is greater than 50 euros .

4. That the creditor has requested collection by means of judicial claim, notarial request or by any other means that reliably proves the claim for collection from the debtor. For transactions whose recipients are Public Entities, the judicial claim or notary request will be replaced with a certificate issued by the competent body.

The gross tax base will not be modified when it comes to credits that have a real guarantee, are secured by credit institutions or mutual guarantee societies, or are covered by a credit or guarantee insurance agreement, in the portion that is guaranteed, secured or insured, as well as with the case of credits between related persons or entities for VAT purposes, and those regarding transactions whose recipient is not established in Spain.

When there is a bankruptcy declaration for credits corresponding with charges paid from transactions whose accrual takes place before said declaration (bankruptcy claims), the gross tax base will not be amended after this declaration. In this case, the tax base may only be reduced in accordance with the provisions of article 80.Three LIVA .

Regulations: Article 80, sections four and five of Act 37/1992, of 28 December, on Value Added Tax.