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V3427-16 ·20 July 2016 ·consulta-vinculante Medium impact
Tax

Zero-rated credit notes may be issued to reduce taxable base due to bad debts

A local council enquired whether a supplier could issue credit notes for the full taxable base and VAT amount when invoices become uncollectible but the supplier continues to pursue payment. The Directorate-General for Taxes (DGT) ruled that it is possible to reduce the taxable base provided the requirements for bad debts are met, and that the credit note may reflect either the amount being rectified or the resulting balance.

In 6 key points

How it affects those involved

This ruling clarifies the procedure for adjusting VAT when debts become uncollectible, allowing for the reduction of the taxable base through credit notes even while collection efforts continue.

Lifecycle

2016-07-20PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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