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V1119-16 21 March 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

Legal claim or notary requirement needed to apply reduction for bad debts

The taxpayer asks whether they can reduce the tax base for bad debts following a court ruling, or the timeframe for rectification if an invoice is declared undue. The DGT rules that for bad debts, specific collection proceedings must be initiated, and for undue invoices, the limitation period is four years.

The question raised

If a final judgment declares the invoice to be due, but the debtor subsequently falls into default, the possibility of considering it uncollectible in court and applying the terms of Article 80.Four of Law 37/1992. If the final judgment declares the invoice as not due, the period available to issue the corrective invoice of the taxable base.

The DGT's ruling

If the judicial ruling concerns whether the invoice is due or not, it does not count as a judicial claim for collection. To apply the reduction for uncollectibility, the taxpayer must pursue collection through a judicial claim or a notarial requirement following the ruling. If the resolution declares the invoice as not due, the rectification must be carried out via a corrective invoice as soon as there is evidence and within a maximum period of four years from when said circumstance occurred.

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