Bad Debts

Is your company having cash flow problems due to the delay of payments of your client/s? Invoices have been raised and VAT have been paid to Spanish Inland Revenue although your company has not got paid yet by its client/s?

Sara Duarte, professional English speaking Spanish accountant in Marbella of Arcos & Lamers Asociados is informing you on the way forward!.

At the present time many companies are suffering with Debts from which they are having difficulty to recover.  If this is happening with your Company you will need to now the following:

A debt can be considered a total or partial “Bad Debt” when all the following conditions apply:

1. That a full year has elapsed since the accrual of the output tax without the payment of all or part of the debt having been received.

2. The fact that this has been recorded in the books of the Company.

3. The supplier or recipient of the operation acts as a entrepreneur or professional. If this is not the case, the tax base (amount before vat) should be higher than 300,00 €uros.

4. That the tax payer has claimed the debt through a lawsuit or through a notary requirement.

The amendment should be made within three months following the end of the one year period referred to in condition 1 above and contact should be made with the Tax Agency in the period specified by regulation.

On completion of the reduction in the tax base, this change will not be reversed even if the taxpayer should obtain the total or partial payment of the debt, unless the debtor is not acting in the capacity of an entrepreneur or professional.

Arcos & Lamers Asociados, Your accountant and tax adviser in Spain!. Accountants in Marbella, Málaga, Spain.

Marbella, April, 2013.

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Wim Lamers

Founder and Director of the Firm at Arcos & Lamers Asociados

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