- Understanding taxation rules for destroyed goods is crucial in some sectors. A recent case in Bulgaria highlights the importance of input tax adjustments.
- A telecommunications company wrote off unsellable electronic devices due to wear and tear, defects, or other issues, destroying some items or selling them as waste. The Bulgarian tax authorities reduced the input tax due to these actions.
- The VAT directive in Bulgaria specifies that adjustments must be made when changes occur after the VAT return is submitted, affecting the factors used to determine the deductible amount. However, no adjustment shall be made in confirmed destruction, loss, or property theft. The subsequent sale of goods as waste leads to a decrease in input VAT, while the destruction of goods severs the direct link between the right to deduct VAT and VAT-taxable activities.
- However, destruction exempt from input VAT adjustment must be proved or confirmed, and the goods must have lost all usefulness objectively.
- It is essential to provide a strong basis to prove the useless nature of the goods when writing them off. 1StopVAT’s team can provide professional help in tax compliance.
Source 1stopvat
See also
- Summary of ECJ C-127/22: No Adjustment of deductible VAT if he destruction is duly proven and the goods had objectively lost all usefulness in the taxable person’s economic activities
- C-127/22 (Balgarska telekomunikatsionna kompania) – Judgment – No Adjustment of VAT deductions if scrapping of goods is duly proven
- Roadtrip through ECJ Cases – Adjustment of deductions – Recalculation (Art. 184 – 186)
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- For an overview of ECJ cases per article of the EU VAT Directive, click HERE
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