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Practical VAT manual 2023.

6. Bad debts

With effect from January 1, 2023, for its adaptation to community law, some aspects of the procedure to recover VAT from bad debts are modified:

  • The modification of the tax base is allowed in the case of bad debts as a result of an insolvency process declared by a court of another Member State to which Regulation (EU) 2015 is applicable /848. The period for the amendment shall be two months from the end of the equivalent period in the insolvency legislation of the Member State for the calling up of creditors.

  • Regarding the bad debts:

    • If the recipient of the unpaid transaction is a final consumer, minimum amount of the taxable base of said transaction is reduced from 300 to 50 euros, VAT excluded.

    • It is permitted to replace the judicial claim or previous notarial requirement to the debtor with any other means that reliably proves the claim for collection from said debtor.

    • The period to recover VAT is extended from 3 to 6 months from when the credit is declared uncollectible, adding a transitional regime so that they can apply this new term for taxpayers whose modification terms have not expired on January 1, 2023.