Devengo: the instant the obligation is born
It is a three-line concept in the General Taxation Act and the cause of half the quarterly discrepancies in this country.
The moment a transaction is treated as having taken place and the tax obligation arises, regardless of when it is paid for.
The General Taxation Act defines it in article 21 as the moment the taxable event is treated as having taken place. Each tax then pins that moment down.
In VAT
Article 75 of the VAT Act: supplies of goods, when they are made available; services, when they are performed; advance payments, when they are received. The invoice date does not appear anywhere: that is why the regulations require the transaction date to be shown when it differs from the issue date.
In IRPF and Corporation Tax
The accruals principle in article 11 of the Corporation Tax Act governs, and article 28 of the Personal Income Tax Act refers to it: income and expenses are assigned to the period in which they arise, regardless of the date they are paid or received.
There is a way out for anyone not keeping commercial accounts: article 7.2 of the IRPF Regulations allows you to opt for the cash receipts and payments basis. You tick it on your annual return, it applies to all your activities and it binds you for at least three years.
An example with numbers
Goods delivered on 29 June for €8,000 plus €1,680 of VAT, invoiced on 4 July and paid for on 30 August:
- The chargeable event falls in June, so the VAT goes to the second quarter.
- The invoice, issued on 4 July, is within the deadline: where the customer is a business or professional it can be issued up to the 15th of the following month.
- For IRPF purposes, the income belongs to June.
The mistake that comes up most
Entering everything by invoice date. When the delivery falls at the end of a quarter and the invoice at the start of the next one, the transaction is declared a quarter late, and that gap turns up again in the annual summary.
Where this carries on in Cairos: What is filed and when.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
VAT accrued (IVA devengado)
The VAT generated by the period's transactions, regardless of whether the client has paid or not.
VATCash basis regime
The special regime that delays the chargeable event for VAT until payment is received, and the deduction of input VAT until payment is made.
InvoicingDelivery note
The document evidencing the delivery of goods and its date; it is not an invoice and has no tax effect on its own.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.