How can I recover unpaid VAT from my clients?
To recover the VAT unpaid by your clients you must meet a series of requirements and follow a certain procedure
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:
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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 for considering the credit uncollectible when six months have elapsed, or the general term of one year .
In term operations , the year or, where applicable, the six-month term, begins to count from the expiration of the unpaid term or installments. 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 criterion is applicable, the condition of the expiration of the period of one year or six months to consider the bad debt will be deemed to have been met on December 31. December of the year immediately following the year in which the operation was carried out (in installment operations or with a deferred price, it will be necessary for a period of six months or one year to have elapsed since the expiration of the unpaid period or installments).
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That this circumstance has been reflected in the books records required for this tax.
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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 .
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That the creditor has requested collection by judicial claim, notarial request or by any other means that reliably accredits the claim for collection to 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.Tres LIVA .
Regulations: Article 80, sections four and five of Act 37/1992, of 28 December, on Value Added Tax.