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VAT correction benefiting from bad-debt relief allowed (court decision)

The Regional Administrative Court in Gdańsk on 15 February 2022 issued a decision (case I SA/Gd 1240/21) allowing a taxpayer to submit a value added tax (VAT) correction enabling them to benefit from bad-debt relief.

Summary

  • A taxpayer wanted to submit a value added tax (VAT) correction including the bad-debt relief, but the tax office challenged the correction because the taxpayer’s counterparty was in bankruptcy when they submitted the correction.
  • The taxpayer invoked an October 2020 CJEU judgment (case file C-335/19) which held that the requirement that in order to use bad-debt relief the debtor cannot be in bankruptcy is inconsistent with Article 90 of Directive 112.
  • Moreover, the initial correction was made within the statutory deadline set under Article 89a(2)(5) of the VAT law, with the subsequent correction being made at the tax office’s request.

Source KPMG

See also ECJ case C-335/19 (E. Spzoo) – Judgment – No conditions on customer position can be imposed on the VAT Adjustment on Bad debts

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