IVA devengado: owed even when you have not been paid
It is the part of the tax that causes the most grief, and not because of the arithmetic: because of the timing. VAT arises with the transaction, not with the money landing in the account.
The VAT generated by the period's transactions, regardless of whether the client has paid or not.
Article 75 of the VAT Act fixes the moment of the chargeable event, and it does not mention payment anywhere:
- Supplies of goods: when they are made available to the buyer.
- Supplies of services: when they are performed, carried out or completed.
- Continuous supplies — rent, maintenance charges — at the moment each payment falls due.
- Advance payments: paragraph Two brings it forward to when the money is received, for the amounts actually received.
An example with numbers
An invoice for €5,000 plus €1,050 of VAT, issued on 28 March for work delivered on the 25th, and paid on 15 May. The €1,050 goes to the first quarter and is paid over before 20 April, almost a month before the money arrives.
If that invoice is never paid, the VAT is not lost: it is recovered with a corrective invoice for a bad debt, within the deadlines in article 80.Four.
The only real exception
The special cash basis regime delays the chargeable event until payment, but it is a regime you have to opt into expressly, it has requirements and it also delays your own deductions. It is not something you choose invoice by invoice.
The mistake that comes up most
Declaring only what you have been paid without being on the cash basis regime. The discrepancy surfaces on its own: form 390 does not reconcile with the sum of the four quarters, and the client's 347 declares transactions that do not appear on your 303.
Where this carries on in Cairos: Form 303, quarter by quarter.
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.
Devengo (the chargeable event)
The moment a transaction is treated as having taken place and the tax obligation arises, regardless of when it is paid for.
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.
VATFiling period
The interval each self-assessment is worked out and filed for: quarterly as a general rule, monthly in a defined set of cases.
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.