VAT and Input Tax Adjustment in Insolvency Avoidance: FG Düsseldorf Ruling Analysis

The case focused on whether repayments due to a successful insolvency challenge lead to an input tax adjustment according to the relevant tax law and which tax period is applicable.
A key issue was that settlement payments were made to a law firm’s escrow account instead of the insolvency estate’s account.
The court also had to consider potential inappropriate arrangements under the relevant tax code.
If a creditor repays funds to the insolvency estate after a successful challenge, the original claim is revived.
Both the tax amount and the input tax deduction of the service recipient must be adjusted due to the revived claim.

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.