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A company sought guidance on the procedure to follow after reducing its taxable base due to non-payment, subsequently reaching a settlement with the client and withdrawing the legal proceedings. The DGT ruled that, in the event of a withdrawal, a corrective invoice must be issued to account for the VAT amount.
Companies must ensure that any settlement reached during legal proceedings that reverses a previous bad debt write-off is correctly documented through corrective invoicing to adjust the VAT liability.
The tax team reviews your specific situation.
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