Comments on ECJ C-314/22: Bad Debt Relief: Creditor Entitled to Interest

The CJEU ruled that a member state can limit the time for a creditor to apply bad debt relief in the case of a debtor’s default on payment.
The CJEU also confirmed that additional conditions imposed by national legislation for the creditor to benefit from bad debt relief, such as correcting the original invoice and notifying the debtor, are permissible as long as they are not overly burdensome for the taxpayer.
The CJEU stated that if the tax authority fails to refund the VAT amount under bad debt relief within a reasonable time, the creditor is entitled to demand an increase in the refund amount with interest.
The judgment was based on a case involving a Bulgarian construction company that applied for an overpayment of VAT due to non-payment by debtors, which was rejected by the Bulgarian tax authorities.
The CJEU emphasized the taxpayer’s right to compensation in the form of interest if the VAT refund is not made within a reasonable period of time.

Source MDDP