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V0233-22 10 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

VAT taxable base may be modified due to contract termination and definitive non-payment

A telecommunications company has inquired whether it can modify the VAT taxable base when terminating contracts due to repeated non-payment and writing off debts after the statute of limitations for collection has expired. The DGT ruled that, once contract termination and definitive non-payment have occurred, the modification of the taxable base is appropriate.

The question raised

Whether, under the indicated circumstances, the modification of the Value Added Tax base would proceed regarding the portion of the credits that are definitively uncollectible, pursuant to the provisions of Article 80.Two of Law 37/1992.

The DGT's ruling

When the non-payment of a service provision becomes definitive and leads to the termination of the contract, a cause for modification of the tax base arises pursuant to Article 80.Two of Law 37/1992. This situation should not be classified as a mere non-payment, but as a rescission of the transaction that reduces the consideration initially owed. Therefore, the entity may modify the tax base by the corresponding amount.

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