Limitations on VAT Credit Compensation in Preventive Arrangements: Importance of Credit’s Origin Date

• The Italian Supreme Court confirmed that in preventive agreements, tax authorities can only offset VAT credits that arise after the procedure starts, not before.
• This principle is consistent with bankruptcy procedures, where pre-existing credits cannot be offset against credits arising after the declaration of bankruptcy.
• In preventive agreements, offsetting is allowed if the obligations’ origin is before the application, even if liquidity and collectability occur later.
• Both the taxpayer’s credit and the tax authority’s offsetting debt must arise either before or after the procedure starts to be considered homogeneous.
• Credits arising before the procedure are against the insolvent entrepreneur, while those after are against the creditors’ pool.
• Different entities hold VAT credits depending on whether they arise before or after the procedure starts.

Source: eutekne.info

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.

---

---