Samuel Ortega is a web developer in Córdoba. In January 2026 he finished a booking platform for a travel agency in Lyon and invoiced it 7,800 €, without Spanish VAT because it was a service to a company in another EU country. In March he built the personal website of an amateur photographer in Toronto and, as he could not find his service in the list of exceptions for private individuals outside the Union, he invoiced him 1,500 € plus 315 € of VAT. In September he still has not been paid for either. A colleague told him that after six months he could "recover the VAT" with a corrective invoice. For Samuel, that answer is of almost no use.
First question: was there any VAT?
Reducing the taxable base under article 80 of the Spanish VAT Law serves one specific purpose: recovering the VAT you charged on an invoice, paid over in your 303 (the quarterly VAT return) and never collected. If the invoice carried no VAT, there is no tax to recover.
That is the case with the Lyon agency. Its service was located in France under article 69.One.1, the invoice was issued under the reverse charge, and in Samuel's 303 it appeared as a transaction not subject to the tax, with no tax due. He paid nothing over, so there is nothing to give back to him. The non-payment costs him 7,800 € of money not received, but not VAT paid in advance.
The same goes for any business client outside the Union: invoices to the United States, the United Kingdom or Switzerland do not carry Spanish VAT either, as we explain in whether I have to charge VAT to a client in the United States.
Second question: where is the client?
With the Toronto photographer there was VAT: 315 € charged and paid over. Here a rule comes in that many people are unaware of. Article 80.Five, rule 2, of the VAT Law states that the taxable base may not be reduced when the recipient is not established in the territory where the tax applies, nor in the Canary Islands, Ceuta or Melilla. The only exception it contains is for debts that cannot be collected because of insolvency proceedings declared by a court of another member state to which Regulation (EU) 2015/848 applies.
Samuel's client lives in Canada. However long he waits, claims and documents, he cannot reduce the base or recover those 315 € through article 80. If the client lived in Seville, on the other hand, he could follow the ordinary procedure, which we describe in a client is not paying me: can I recover the VAT?.
| Client | Did it carry Spanish VAT? | Can the base be reduced for non-payment? | Reason |
|---|---|---|---|
| Company in another EU country | No (reverse charge) | There is no tax to recover | Art. 69.One.1 of the VAT Law |
| Company outside the EU | No (not subject) | There is no tax to recover | Art. 69.One.1 of the VAT Law |
| Private individual outside the EU with a service subject to tax in Spain | Yes | No | Art. 80.Five, rule 2, of the VAT Law |
| Client in another member state in court insolvency proceedings under Regulation 2015/848 | Depends on the case | Possible, through art. 80.Three | Express exception in art. 80.Five |
| Client established in Spain, the Canary Islands, Ceuta or Melilla | Depends on the case | Yes, subject to requirements | Art. 80.Four of the VAT Law |
For debts owed by clients established in Spain, article 80.Four allows the base to be reduced once a year has passed since the tax point, or six months if turnover in the previous year did not exceed 6,010,121.04 €, provided payment has been claimed through the courts, through a notary or by another reliable means. With clients not established here, that wait opens no door. It is worth knowing this before spending money on a notarial demand with the VAT in mind.
What you can make use of: the non-payment in income tax
The non-payment has another effect that does work in Samuel's favour. His business earnings are calculated, under article 28 of the IRPF Law (Spanish personal income tax), according to the Corporation Tax rules. And article 13.1 of Law 27/2014 treats as deductible impairment losses on debts owed by insolvent debtors when, at the date the tax falls due, any of these circumstances applies: six months have passed since the obligation fell due, the debtor is in insolvency proceedings, the debtor has been charged with fraudulent concealment of assets, or the debt has been claimed in court or is the subject of litigation. This rule does not distinguish between Spanish and foreign clients, but it excludes, among others, debts owed by related persons or entities, except in specific insolvency situations.
With Samuel's figures, assuming both invoices were due at 30 days:
- Lyon invoice: 7,800 €, due on 14 February 2026.
- Toronto invoice: base 1,500 €, due on 10 April 2026.
- By 31 December 2026 more than six months have passed since both due dates.
- Income declared for those invoices in 2026: 7,800 + 1,500 = 9,300 €.
- Deductible impairment loss in 2026: 9,300 €, if they are still unpaid at the end of the year.
- Net effect on the 2026 IRPF base: zero for these two transactions.
- The 315 € of VAT paid over for the Toronto invoice remains a cost that cannot be recovered through VAT.
If he is paid later, the amount recovered becomes income again in the year it is received.
How to claim from a client in another EU country
For the Lyon agency there is a tool designed for undisputed cross-border debts: the European order for payment procedure, governed by Regulation (EC) No 1896/2006. It is filed with standard forms, without having to go through the other country's national procedure. If the debtor does not oppose it, the order is declared enforceable and can be enforced in the debtor's state. If the debtor opposes it, the matter moves to the appropriate ordinary proceedings. Which court has jurisdiction and how enforcement then works in France are procedural questions worth reviewing before filing anything; enforcement itself in another country is governed in part by its law.
Before turning to the order for payment, it helps to have the out-of-court claim documented: a written demand, in a language the client understands, with the invoice, the contract and proof of delivery. It serves to try to get paid, to prove the claim and to support the impairment in income tax if the court route is chosen.
For the Toronto photographer, a court claim is governed by Canadian rules. How to do it there is confirmed by a lawyer in Canada; we do not give opinions on that law or offer a network of correspondents abroad.
What to change for the next client
Samuel's experience leaves three practical lessons: ask new clients abroad for an advance, especially if they are private individuals; split projects into milestones with payment before each delivery; and set out in the contract the governing law and the competent court. If you have several unpaid invoices from foreign clients and do not know which can already be deducted as impairment, you can send them through the form for self-employed people with international clients. How a corrective invoice is issued, when it is appropriate, is in I have made a mistake on an invoice already issued, and the guide to where each service is taxed helps you know in advance whether an invoice will carry VAT.
The tax consequences of non-payment, together with the other obligations of people who invoice clients in other countries, are explained on the Salama Tax page for self-employed people with international clients.