Hasznos

Reclaiming VAT on bad debts

Conditions for reclaiming VAT

The recovery of VAT is subject to strict conditions, so it is worth considering carefully in advance - if possible with the involvement of an expert - whether they are fulfilled, which primarily means examining the following:

• whether the given claim is considered irrecoverable from the point of view of VAT,

• whether documents supporting irrevocability are available,

• whether the claim is time-barred, if so, is it still possible to reclaim it,

• whether the other legal conditions are met (e.g. whether the fact of non-recovery is certain, whether the partner has been notified, etc.).

Tax authority inspection:

The VAT recovery will most likely result in an audit by the tax authority, during which the tax authority examines, considers and evaluates the tax base and the tax payable in accordance with the basic principle of proper exercise of the right.

Possibilities of VAT recovery

The reduction of the tax base is possible within the limitation period within the framework of a self-audit.

The taxpayer can apply to the state tax and customs authority to enforce the refund of the tax paid by him on bad debt if the reason for accounting as bad debt occurs after the expiration of the statute of limitations.

Source: Tax Online