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ECJ C-335/19 E. vs. PL – Questions – Bad debts; insolvency

Unofficial translation/summary:

Facts (simplified):

  • E is registered for VAT and provides tax advisory services in Poland
  • E has issued a VAT invoice that has not yet been paid.
  • The debtor was registered for VAT on the date the service was provided and was not yet involved in insolvency proceedings at the time.
  • The debtor is currently in liquidation.
  • E. asked the Minister of Finance/Courts whether it is possible to adjust the taxable amount and the tax due under these circumstances.
  • The verdicts so far say that one of the conditions for the right laid down in Article 89a of the VAT Act to adjust the taxable amount and the tax due is not met and that failure to comply with one of the basic conditions would not allow the taxable person to derive the ‘irrecoverable claims’ scheme directly from Union law. Only the cumulative fulfillment of all the conditions of Article 89a (2) of the Law on VAT offers the possibility to adjust the tax due, which was not the case in the present case.

1) Can a EU country use the tax status of a debtor and creditor as an argument to restrict the possibility of lowering the taxable amount in the event of partial or total non-payment?

2) More specifically: Is it allowed to use the conditions that the on the date of the service / delivery of the goods and on the day before the submission of the adjustment – the debtor is not engaged in insolvency proceedings or is in liquidation? – the creditor and the debtor are registered as actively liable for VAT?

Source: (Dutch)