The Court of Justice of the European Union (CJEU) held (9 February 2023 – case C-482/21 – Euler Hermes) that the basis for assessment for value added tax (VAT) was not reduced as a result of related irrecoverable debts.
The taxpayer, a Hungarian insurance company, insured policyholders for unpaid customer debts. The amount of the compensation was generally 90% of the value of the unpaid debts including VAT. Under the insurance contract, the taxpayer became the legal successor of its policyholders with regard to such irrecoverable debts.
Source: KPMG
See also C-482/21 (Euler Hermes) – Judgment – Taxable amount and Insurance of Indemnities
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