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V1196-24 27 May 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

VAT taxable base may be modified via contractual termination following definitive non-payment

A medical services company inquired whether it could reduce the VAT taxable base when a cryopreservation contract was terminated due to a lack of client consent, leaving an unpaid debt. The Directorate General for Taxes (DGT) ruled that it is possible to apply a modification to the taxable base through contractual termination.

The question raised

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

The DGT's ruling

When the failure to renew the client's consent results in the termination of the contract and the definitive non-payment of the debt, a cause for modification of the tax base arises pursuant to Article 80.Two of Law 37/1992. This situation is considered a termination of the transaction that alters the price, rather than a mere non-payment. Once the contract is terminated, no new invoices should be issued as the provision of the service has concluded.

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