Recovering VAT on Unpaid Invoices from Bankrupt Customers: EU Formalities and Legal Challenges

• The article discusses how to recover VAT on unpaid invoices from bankrupt customers in the EU.
• The VAT Directive allows the supplier to claim back VAT if the debt is definitively lost.
• Different EU countries have different formalities to prove the irrecoverability of the debt.
• The article provides an example of a Portuguese company that was denied a VAT refund because the bankruptcy proceedings were not governed by Portuguese law.
• The Court of Justice ruled that the supplier had the right to request a VAT refund.
• The VAT Directive states that the taxable amount is the consideration actually received, and tax authorities cannot charge more VAT than the taxable person has received.
• Many European countries have made the refund of VAT in the event of a customer’s bankruptcy subject to various formalities.
• The article highlights the case of a Portuguese company that sold goods to a Spanish customer who went bankrupt.
• The Portuguese tax authorities refused to refund the VAT because the bankruptcy proceedings were not governed by Portuguese law.
• The Court of Justice ruled that this was contrary to the VAT Directive and that the supplier had the right to request a VAT refund.

Source: vatdesk.eu

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---