Recovering output VAT from unpaid invoices: Everything you need to know

VAT → Recovery of unpaid VAT from issued invoices

From the beginning of 2023: The following are considered unpaid invoices, and therefore it is possible to obtain the reimbursement of the unpaid VAT from Spanish tax offices, as long as the following requirements are all fulfilled:

• That a period of one year has elapsed since the accrual of VAT without the client having totally or partially paid the output VAT. (The time limit starts from the expiry of the unpaid instalment(s)).
  • 6 months or 1 year (to be chosen by the supplier) as of the date of the tax accrual, when the total turnover of the supplier was less than €6,010,121.04.
• That there has been a correct registration of the unpaid invoice in the accounting books.
• That the customer/recipient of the unpaid invoices is an entity or freelancer, OR that the taxable amount of the transaction is higher than 50 euros if the recipient is an individual or final consumer.
• That a credit note, amending or cancelling the output VAT of the unpaid invoice, is issued within 6 months of the expiration of the previously mentioned one-year or 6-month period, depending on the case.
  • Additionally, within a 1-month period from the issue date of the credit note, the modification or cancellation of the VAT must be reported to the Spanish Tax Offices through a specific tax procedure.
• The supplier is obliged to start a legal claim or notarial request against the debtor (recipient of the goods or services) or any other procedure that reliably and convincingly proves that the supplier has requested the payment from the debtor. The procedure must also prove the forwarding of the content, the identity of the sender and addressee, as well as the amount due and the date of delivery. The General Directorate of Taxes (DGT), following the Supreme Court criteria, has confirmed that the use of a Burofax may be accepted as proof of the claim for unpaid invoices.

VAT is not recoverable when the debts are:

• Secured claims (secured by collateral; guaranteed by credit institutions or mutual guarantee societies; covered by a credit insurance or surety insurance contract).
• Credits between related persons or entities for VAT purposes.
• Credits with a recipient outside the Spanish VAT territory, or in the Canary Islands, Ceuta, and Melilla.
• In the event that the customer has been declared bankrupt, no modification of the Taxable Base is allowed, but a reduction mechanism is outlined in specific procedure Article 80. Three of the VAT Law.