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V1339-20 11 May 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Taxpayers must issue corrective invoices and rectify deductions if the taxable base of an advance payment is modified

A taxpayer inquired about the implications of an advance payment originally intended for construction works being applied to engineering services if the works are not carried out. The DGT ruled that if the works are not executed, the taxpayer must rectify the taxable base and the deductions; however, if the payment becomes the consideration for the engineering services actually provided, the accrual and the deduction remain correct.

The question raised

Question posed: Possibility of modifying issued invoices to adjust to the new reality, as well as the procedure for the deduction of Value Added Tax amounts incurred by said advance payment.

The DGT's ruling

In construction works, the recipient is the taxable person under the reverse charge mechanism. If the operation is nullified or the price is altered, the taxable person must modify the taxable base and rectify the output tax through a credit note. Likewise, any deductions made must be rectified. However, if the advance payment constitutes consideration for engineering services actually rendered, the accrual and the deduction are correct without the need for rectification.

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