Central Tax Board issues ruling on deductibility of bad debts from VAT taxable base

The Central Tax Board (CTB) of Finland issued an advance ruling on 18 December 2020 (decision number KVL 2020/45) concerning credit losses incurred on supplies of electricity network services. The ruling involved a situation where a sales company supplied electricity and also recharged for electricity network services provided by an electricity distribution network operator on the sales company’s invoices, in addition to the electricity supplied. According to the ruling, the sales company supplying electricity was entitled to deduct bad debts from the taxable base for VAT related to the electricity network services, considering that the sales company had to cover the bad debts alone in the event of the end customer’s insolvency.

Source Deloitte

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