are unfortunately many companies have suffered any default on their bills, especially in recent years of crisis. In these cases it is logical that the entrepreneur or professional issuing the bill wants to recover at least part of the impact corresponding VAT. This will involve, for and in general, the rectification of the tax had been passed. However to do accounting rules area they must be respected, but above all tax matters.
What criteria must be respected in tax matters?
In the fiscal, the rules governing VAT, in the version in force since 1 January 2015, provides that the tax base may be reduced when credits for contributions inputs of taxable transactions wholly or partly bad result. And that such loans can be considered as uncollectible must meet, fiscally, the following conditions:
- Let there be a year since the accrual of output tax without having obtained the collection of all or part of the credit derivative thereof.
- This period becomes six months when the rightholder credit is an SME, ie, whether it is a businessman or professional whose turnover in the previous calendar year immediately did not exceed 6,010,121 04 euros. However, since 01/01/2015, SMEs may well change the tax base when the said period of six months has elapsed or may expect the general period of one year is required for all other companies.
We must also remember that, in operations within the year or, where appropriate, within six months shall run from the deadline or unpaid time, not from the accrual of output tax and that sufficient instar the collection of one of the deadlines for the tax credit is considered uncollectible and the tax base can be reduced in the proportion corresponding unpaid for a period or periods.
- As it can not be otherwise, the issue is complicated with reference to transactions to which is applied the special regime cash basis, in fact, has had a very low host for the reasons know too well.
- Another obvious condition is that all these circumstances have been adequately reflected in the books VAT records.
- It also requires that the target of the operation acting on an entrepreneur or professional.
- And finally, that the taxpayer has urged its collection through legal claim or through notarial requirement .
What criteria must be respected in the accounting field?There are several inquiries made to the Institute of Accounting and Auditing (ICAC), all of them indicated as a common basis and in general, the regulation on corrective invoices in any case causes a change in the accounting treatment of these transactions. That is, issuing a corrected invoice, accounting alone will lead to adjustments arising from operations that have given rise to their issue.
And since entering the specific issue at hand, the ICAC understand that, about the situations listed in Article 80, paragraph four of the VAT Law, the accounting reflection of a situation of credit risk, to the extent they occur the circumstances according to the tax laws give effect to the reduction in the tax base for VAT, the company must record the decrease in starting debt to the Treasury by the VAT due on the occasion of the delivery of goods or rendering service, for which you can use the account 477. “Public Finance output tax” contained in the fifth of the PGC, which in any case will lower debt with the Public Administration. The counterpart is an income to be included in the profit and loss account as an adjustment to indirect taxation. As we can see no practical details expatiates but offers us all an accounting entry in the purest writing.
You can contact this professional office for any questions or doubts they may have about it.
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- Another obvious condition is that all these circumstances have been adequately reflected in the books VAT records.
- As it can not be otherwise, the issue is complicated with reference to transactions to which is applied the special regime cash basis, in fact, has had a very low host for the reasons know too well.
