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.

Source: datenbank.nwb.de

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.

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