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Requirement to adjust deductions without the need for the amending invoice

Baker Tilly 24 April, 2024

The Central Economic-Administrative Court has issued a key ruling that sets out the guidelines for rectifying input VAT payments when a transaction is cancelled, and the rectifying invoice is not received. 

The Central Economic-Administrative Court (RES. TEAC 523/2022 of 20/02/2024) has established the following about the rectification of input VAT quotas in the case of cancellation of a transaction without the taxable person having received the rectifying invoice:

  1. The non-existence of the transactions means that the input VAT on these transactions cannot be deducted. Therefore, the input and deducted VAT that has become inappropriate must be rectified, in accordance with the case law of the Court of Justice of the European Union (CJEU).
  2. The rectification obligation exists irrespective of the actions taken by the taxable person passing on the tax. If the elements considered to determine the initial deduction are modified, the deduction must be adjusted.
  3. The situation is different from those in which the correction of the charge can only be known by the taxable person who bore it through the issuing of the correcting invoice. In this case, the taxable person who bears the charges must rectify the deduction made, even if he has not received the correcting invoice.
  4. About the statute of limitations on the Administration's right to regularise the transactions, it is established that the rectification of the input tax must be made in the self-assessment period in which the rectifying invoice is issued, not in the period in which the rectified tax is returned to the third party charged, in accordance with the case law of the Supreme Court.
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