Decision of the Spanish Central Economic Administrative Court dated 17 July 2014, on the period of one month to inform the Spanish Tax Authorities about the modification of a tax base due to bad debt


A Company proceeded to amend the taxable base of a transaction as a result of bad credit, as provided in Article 80.Four of VAT Law 37/1992.

Nevertheless, although the Company meet with the deadline of three months to make the change, computed from the end of the period of one year from the accrual of the transaction, the Company failed to meet the deadline described in the VAT Regulation of one month to comply with the obligation to inform the tax authorities about such modification, computed from the date of issue of the rectifying invoice.

The Court solves this issue saying that although it is clear that the Company has failed with the one month deadline for informing the Spanish Tax Authorities. However, such failure does not necessarily entail the loss of the right to rectify the tax bases.

On the assumption that the failure of the one month period did not allow the Spanish Tax Authorities to exercise the adequate management controls necessary to ensure proper assessment and collection of VAT, then such failure would have a direct impact on the right of rectification of the taxpayer, may constitute grounds for refusing the exercise of that right of rectification.

Notwithstanding this, in the present case, there has been communicated to the tax authorities the information necessary for proper control adjustments, and a corresponding adjustment to the taxpayer’s VAT returns of the operations of rectification and the recipient of such operations. While this communication was late, it is not apparent in this issue, to what the extent has affected the delay incurred in the proper management and control of tax incumbent on the Administration.

For its part, the Court, in this case, does not appreciate reduction in the chances of a proper exercise of those functions by the Spanish Tax Authorities. Then, this Court decides in favour of the Company.

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TEAC 17 07 2014

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