How to adjust Spanish VAT on an unpaid invoice

Use the Article 80 timeline, reliable collection evidence, a correcting invoice and Form 952 to adjust VAT without giving up the debt.

An unpaid invoice can leave a Spanish business funding VAT that has never reached its bank account. Non-payment does not cancel the tax automatically. Spanish law instead provides a structured route to reduce the VAT taxable amount when a receivable becomes wholly or partly bad, provided every timing, evidence and reporting condition is met.

This is more than issuing a credit note. The original transaction, the collection claim, the correcting invoice, the VAT ledger and the electronic notice to the Spanish Tax Agency must form one coherent record.

What the adjustment changes and what it leaves intact

Reducing the VAT taxable amount does not waive the commercial debt. The supplier can continue to pursue payment unless the debt is settled, released or extinguished under a separate arrangement.

That distinction matters. Writing down a receivable in the accounts does not, by itself, recover output VAT. Conversely, a correcting invoice cannot manufacture a VAT reduction unless the statutory bad-debt conditions already exist.

The timeline has three separate clocks

The general rule requires one year from the VAT tax point to pass without full or partial collection. A creditor whose turnover in the immediately preceding calendar year did not exceed €6,010,121.04 may choose a waiting period of six months or one year.

Once that waiting period ends, the supplier has a further six months in which to make the adjustment by issuing the correcting invoice. A third clock then starts: the electronic notice to the AEAT must be submitted within one month from the correcting invoice date.

The ordinary sequence is therefore:

1. the supply takes place, VAT becomes chargeable and the original invoice is issued;
2. six months or one year passes without collection, as applicable;
3. the correcting invoice is issued within the next six months;
4. The correcting invoice is sent to the customer and evidence of dispatch is retained;
5. the electronic AEAT communication and supporting evidence are filed within one month;
6. the correction is reflected in the VAT ledger and the correct return period.

The three periods should never be collapsed into one deadline. A creditor can satisfy the waiting period and still lose the route by missing the subsequent invoice or communication window.

A dated example

Suppose a Spanish consultancy supplies a service and issues an invoice on 15 March 2026 for €10,000 plus €2,100 VAT. The customer pays nothing. The consultancy was below the statutory turnover threshold in the prior year and elects to use the six-month period.

• The temporal bad-debt condition can be met on 15 September 2026.
• The consultancy then has the following six months in which to make the adjustment.
• If it issues the correcting invoice on 20 October 2026, its AEAT communication is due within one month of that issue date.

For an ordinary transaction, the tax calculation starts from the VAT tax point, not simply the payment date printed on the invoice. Genuine instalment or deferred-price transactions have a different rule.

Instalments and partial receipts

For this purpose, an instalment or deferred-price transaction is one in which successive payments or a single future payment were agreed and the period between the VAT tax point and the last or only due date exceeds the relevant statutory period.

The one-year period, or the available six-month alternative, then runs from the due date of the unpaid instalment. Pursuing one instalment through an accepted collection method is sufficient to reduce the taxable amount proportionately for the unpaid instalment or instalments.

Any receipt collected before the adjustment is treated as containing net consideration and VAT in the same ratio as the invoice. A supplier cannot allocate every euro collected to net revenue and treat all output VAT as unpaid.

If a €12,100 invoice comprises a €10,000 taxable amount and €2,100 VAT and the customer pays half, the unpaid balance contains €5,000 of taxable amount and €1,050 of VAT. That proportional balance is the starting point for a partial adjustment, subject to all other conditions.

The statutory bad-debt conditions

Time alone is not enough. The Spanish VAT Act requires the receivable to satisfy all of the following:

1. the applicable six-month or one-year period has expired without full or partial collection;
2. the non-payment is properly reflected in the required VAT ledgers;
3. the customer acts as a business or professional or, where it does not, the VAT-exclusive taxable amount exceeds €50;
4. the creditor has pursued payment through court proceedings, a notarial demand or another method that reliably proves the collection demand;
5. neither the receivable nor the customer falls within a statutory exclusion.

The law now permits reliable collection evidence beyond court and notarial routes. That flexibility should not be confused with informality. The evidence needs to establish the debt, debtor, amount, demand date and delivery or receipt with enough certainty to withstand review.

Excluded and partly protected receivables

The adjustment is unavailable or limited where the receivable benefits from specified protection or involves an excluded relationship. A proper review covers:

• security over assets, for the secured portion;
• bank or mutual-guarantee backing, for the guaranteed portion;
• credit or surety insurance, for the insured portion;
• receivables between related persons or entities for Spanish VAT purposes;
• supplies to customers not established in the Spanish VAT territory, the Canary Islands, Ceuta or Melilla;
• pre-insolvency receivables once a formal insolvency order has changed the applicable route.

Public-body debts use a dedicated evidence rule. A certificate from the competent public body replaces the ordinary court claim or notarial demand.

These limitations are applied proportionately. A receivable insured for 70% may still leave an uninsured portion that merits its own analysis.

Insolvency is a separate legal route

Article 80 distinguishes between:

• a customer subject to a qualifying insolvency proceeding; and
• an ordinary bad debt that has matured through the six-month or one-year process.

Once an insolvency order exists, a supplier should not continue the ordinary timeline by default. Pre-order supplies are governed by the insolvency route and its own deadline. The order date, publication and legal status of the receivable need to be checked immediately.

This distinction is practical, not academic. The same unpaid invoice can move from one procedural path to another when the customer's legal status changes.

Building the correcting invoice

The new invoice must use a specific series and state that it is corrective, explain the reason, identify the original invoice or invoices and record their issue dates. The supplier may show the amount of the correction directly or show the post-correction totals, provided the adjustment itself remains explicit.

Where Spanish invoice-reporting systems use invoice-type codes, a bad-debt correction under Article 80.Four is currently reported under the relevant R3 category. A reporting code is not a substitute for the legal content of the document.

The correcting invoice must then be sent to the customer. Keeping a PDF in the supplier's files proves that a document was created; it does not prove that the recipient received or was sent it. Dispatch evidence belongs in the same file.

The electronic AEAT filing

The AEAT provides the electronic procedure commonly identified as Form 952 for taxable-amount adjustments in insolvency and bad-debt cases. Supporting documents are first filed through the electronic registry, which produces a registration code used in the communication.

A creditor's evidence pack should include at least:

• the correcting invoice;
• the numbers and issue dates of the corrected invoices;
• the court claim, notarial demand or other reliable collection evidence;
• the public-body certificate where relevant;
• evidence that the correcting invoice was sent to the customer;
• the additional invoice schedule required from large businesses, where applicable;
• the VAT sales-ledger entry and the corresponding return treatment.

The communication is due within one month from the correcting invoice date. It is a transaction-level compliance step, not an item to postpone until the annual accounts are prepared.

The customer's side of the correction

A business customer that previously deducted the VAT must reduce its input VAT in the return period in which it receives the correcting invoice. It must also notify the AEAT electronically of the receipt and the corrected amount within the filing period for that return.

The supplier does not control the customer's accounting. It can, however, remove unnecessary friction by sending a clear document through a channel that preserves evidence and makes the underlying original invoice easy to identify.

What happens if the customer eventually pays

Where the customer acted as a business or professional, a later full or partial payment does not generally require the supplier to increase the taxable amount again. The commercial debt can be collected while the valid VAT adjustment remains in place.

Important exceptions apply. If the supplier withdraws the court claim or reaches a payment agreement after a notarial demand, it must increase the taxable amount again and issue the corresponding correcting invoice within one month of the withdrawal or agreement. Later payments by non-business customers also follow a specific proportional rule.

The evidence file therefore remains live after Form 952. Any settlement, withdrawal or later collection should be linked back to the original demand and VAT correction.

Where a US LLC fits into the analysis

A US LLC can be the contractual, banking or operating company in an international structure. Its presence does not automatically make a supply Spanish, nor does it create a right to correct Spanish VAT that should never have been charged.

Before using the bad-debt procedure, establish:

1. which entity actually supplied the service or goods;
2. where the transaction is located for VAT purposes;
3. which entity and VAT registration issued the invoice;
4. whether the customer is established in a territory admitted by Article 80;
5. which bank account or processor received any partial payment;
6. which taxable person reported the original output VAT.

An international B2B service may be subject to the reverse charge and carry no Spanish output VAT. A digital B2C sale may turn on evidence of the customer's country. The invoice must be classified correctly before non-payment treatment is considered.

A well-structured LLC brings contractual reach, business banking and operational flexibility. The strength comes from keeping the contract, invoice, collection account and tax obligation with the correct entity rather than forcing unrelated flows into one VAT rule.

How Exentax coordinates the case

Exentax starts with the invoice and reconstructs the complete transaction: issuing entity, tax point, customer, payment terms, partial receipts, VAT ledger, collection demands and the debtor's current legal status. We use that record to identify the correct ordinary or insolvency route and map every deadline before a document is issued.

Where a US LLC, multi-currency accounts or payment processors are involved, we also delimit the cash flows by entity. The aim is to secure the available VAT treatment without surrendering the commercial collection right or introducing contradictions across contracts, invoices and bank evidence.

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Practical questions about VAT on unpaid invoices

Can I correct the VAT as soon as the invoice falls due?

Not under the ordinary bad-debt route. One year from the VAT tax point must normally pass, with a six-month or one-year choice for eligible smaller creditors. Genuine instalment transactions use the specific rule tied to the unpaid due date.

Must I always sue the customer?

No. Spanish law accepts court proceedings, a notarial demand or another method that reliably proves the collection claim. Whichever route is used must identify the debt and preserve credible delivery evidence.

How long do I have to issue the correcting invoice?

Six months after the relevant six-month or one-year waiting period ends. The separate AEAT communication is then due within one month of the correcting invoice date.

Can the correction cover only the unpaid balance?

Yes. The reduction can be proportional. Any earlier partial receipt is divided between net consideration and VAT in the same ratio as the original invoice.

Is this the Spanish cash accounting scheme?

No. Spanish VAT cash accounting changes the tax point for transactions within that special regime. The bad-debt adjustment acts later on output VAT that has already become due.

What if the VAT was reported but the business cannot pay the return?

That is a separate AEAT tax-debt deferral question. A deferral finances a reported liability; a bad-debt adjustment corrects a qualifying transaction under Article 80.

Treat the first missed payment as the start of an evidence file

A valid VAT adjustment is not created by a line on a credit note. It is created by a correctly classified supply, a traceable non-payment, credible collection evidence and a sequence of documents filed within their own deadlines.

When the work begins at the first material default, the supplier protects two positions at once: the right to keep collecting the commercial debt and the right not to fund indefinitely the VAT on consideration it has never received. That is what disciplined international tax and operating structure should achieve.