European VAT provisions (article 90 of the VAT Directive 2006/112/EC) allow for the reversal of output VAT in case of non (or partial) payment. In the past, the European Court of Justice consistently ruled against EU countries which do not allow refund of VAT paid on bad debts.
There are countless court rulings confirming that VAT should be neutral to businesses and that the tax authorities may not, in any circumstances, collect a VAT amount exceeding the tax which the taxable person has himself received as compensation.
The recent European judgment (Euler Hermes; C-482/21) revolves around the question of whether credit insurers are able to reclaim VAT on unpaid debts.
Source VATconsult
See also
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- For an overview of ECJ cases per article of the EU VAT Directive, click HERE
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