Als hoofdregel geldt dat bij de niet-betalende ondernemer geen aftrekcorrectie plaatsvindt, terwijl wel geldt dat een correctie plaatsvindt bij de leverancier die de vergoeding niet betaald krijgt. V-N 2006/47.16 voegt daaraan toe: “het zij zo”.
Er bestaat tussen 29 lid 1 en lid 2 niet een zodanige samenhang dat moet worden aangenomen dat alleen dan omzetbelasting op grond van het tweede lid is verschuldigd, als op grond van het eerste lid een recht op teruggaaf bestaat.
In brief Article 90 of the VAT Directive allows for corrections of VAT in cases where suppliers do not receive payments (or receive only partial payments) for their supplies. However, due to the wording of Article 90 of the VAT Directive, there have been various interpretations and opinions regarding whether and under which conditions the EU member states can refuse to correction of VAT in case of bad debts. The ambiguities have resulted in litigations and later in multiple decisions of the Court of Justice of the European Union (CJEU), the latest one from February 2023, the judgment in case C-482/21 (Euler Hermes). In this decision, the CJEU repeated that a member state cannot altogether exclude the possibility of reducing the taxable amount of VAT in the event of non-payment (or partial payment) for a supply. The EU member states only have the right to set conditions under which the VAT corrections can be made. ________________________________________
Key takeaways There are multiple decisions of the CJEU stating that the EU member states must allow for VAT corrections in case of bad debts for the principle of fiscal neutrality to be maintained. The CJEU also confirmed that the EU member states have a right to state the conditions under which the VAT corrections can be made. Although the CJEU limits the conditions in certain way, it is necessary to carefully verify the local rules implemented by the particular jurisdiction.
In depth The need for corrections of paid VAT in case of bad debts has become a topic that companies deal with more often. The possibility to correct the VAT in cases where suppliers do not receive payments (or receive only partial payments) for their supplies, is given by Article 90 (1) of the VAT Directive: In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States. Nevertheless, as Article 90 (2) of the VAT Directive states that “in the case of total or partial non-payment, Member States may derogate from paragraph 1,” ambiguities arose around whether this provision gives an option to the member states to refuse a VAT correction in case of bad debts (or, in general, in case of total or partial non-payments of invoices) and under which conditions. One of the member states that took a very strict approach on VAT adjustments in respect of bad debts was the Czech Republic. Its very strict approach was subject to two of the litigations referred to the CJEU (case C-127/18 (A-Pack) and case C-398/20 (Elvospol)). Can the EU member states refuse the VAT corrections under Article 90 (2) of the VAT Directive? For the refusal of the VAT corrections in case of bad debts, the CJEU has been very clear and ruled that this is not possible. The member states must allow the taxpayers to correct the VAT in case of bad debts (or, in general, in case of total or partial non-payments for supplies) to guarantee one of the fundamental principles of the VAT Directive — the principle of fiscal neutrality. The provision of Article 90 of the VAT Directive gives member states only the right to set conditions under which such corrections can be made. The interpretation of the provisions of Article 90 of the VAT Directive can be found, for example, in the following decisions of CJEU:
Although it is relevant that the Member States may counteract the uncertainty as to the non-payment of an invoice or the definitive nature of that non-payment, such a power of derogation cannot extend beyond that uncertainty, and in particular cannot extend to whether a reduction of the taxable amount may not be carried out in situations of non-payment.
Moreover, to accept that it is possible for Member States to exclude any reduction of the VAT taxable amount would run counter to the principle of the neutrality of VAT.
Conditions for VAT corrections in selected EU member states As mentioned above, the VAT Directive and EU case law do not allow the member states to exclude the entitlement to correct the VAT in case of bad debts (or, in general, in case of total or partial non-payments for supplies). However, it allows member states to set conditions for such corrections.
Below, we provide you with an overview of the conditions under which the VAT can be claimed back in case of bad debts in selected EU countries.
Belgium In Belgium, a taxpayer is generally entitled to reclaim any VAT already paid to the tax authorities in respect of bad debts or partially paid debts.
A claim for VAT bad debt relief will generally be accepted in the following instances:
More specific rules apply to insolvency proceedings. In case of bankruptcy, the supplier can request reimbursement of VAT as of the date the customer is declared bankrupt (date of the judgment). In this case, no credit note needs to be issued. When a debtor becomes solvent again and pays (a part of) the claim that was deemed to be irrecoverable, the supplier will have to pay back the VAT to the authorities corresponding to the amount recovered.
Czech Republic
The Czech VAT law allows creditors to correct the tax base in the case of bad debts under the following conditions: i. The debt is being enforced in enforcement proceedings and at least two years have elapsed since the first enforcement order was issued ii. The debt has been subject to enforcement proceedings that have been terminated due to a lack of assets of the debtor iii. The debtor is in insolvency proceedings and bankruptcy has been decided/insolvency arrangement has been approved/insolvency proceedings have been suspended and it is obvious that the debt will not be paid iv. The debtor has died.
The Czech VAT law also excludes corrections if, for example, any of the following situations apply: i. The creditor and the debtor were capital related parties ii. The debtor was an unreliable VAT payer iii. The debtor is not sufficiently known to the creditor.
In 2019, there were significant changes in the Czech VAT law regarding the VAT corrections in case of bad debts because of the decision of the CJEU (judgment in Czech case C-127/18 (A-Pack)). In this decision, the CJEU confirmed that the Czech authorities cannot refuse the VAT correction as the debtor is no longer the VAT payer at the time the creditor claims the VAT refund.
Another Czech case that was decided in favour of taxpayers was case C-398/20 (Elvospol). In this case, the CJEU ruled that it is contrary to the VAT Directive if the ability to correct the tax base is only available if the debt was incurred no later than six months before a court decision declaring insolvency of the debtor.
Italy In Italy, bad debt relief is generally available. According to Italian VAT law, the tax base in case of bad debts can be corrected by the VAT payers under the following conditions: i. If the customer is subject to a bankruptcy procedure, the period is calculated from the date on which the procedure began ii. The debt has not been recovered in enforcement proceedings that have been unsuccessfully terminated.
If the above criteria are met, the supplier (creditor) is entitled to recover the output VAT paid through its deduction.
Netherlands In the Netherlands, in case of bad debts or other instances of non-payment, the VAT taxable amount should be reduced according to the amount of the non-payment. The creditor becomes eligible for a refund of the output VAT originally remitted to the Dutch tax authorities (DTA), corresponding to the amount of the non-payment. This refund right arises when the non-payment is established. According to Dutch legislation, for VAT purposes, non-payment is deemed to ultimately occur where the payment is not fulfilled one year after it became due. This one-year period also applies on the side of the debtor responsible for the non-payment, who may have previously claimed input VAT recovery on the payment obligation under the debt. Thus, this person becomes liable to pay back to the DTA the amount of input VAT originally claimed, if no payment was made one year after it became due. The above-mentioned refund right of the creditor does not depend on whether the debtor actually remits this VAT to the DTA.
If, after this one-year period and the corresponding correction in VAT recovery, the debtor makes the payment, the VAT charged on this payment can be reclaimed again as input VAT by the debtor. This follows the regular VAT recovery rules and should be done in the period when the payment was eventually made. Logically, the VAT on the payments also becomes due by the creditor receiving the payment. A special rule in Dutch VAT legislation is the “substitution” rule, which means that when a debt is transferred to another taxable party, that party replaces the original creditor regarding the Dutch implementation of Article 90 of the VAT Directive. Consequently, the new creditor receives the right to a refund as if they were the original creditor of the debt. This includes the one-year period as mentioned above.
Poland In Poland, taxpayers may correct the taxable base and output tax with respect to B2B transactions if the receivable has not been received (or sold in any form) within 90 days from the date of its payment specified in the contract or invoice and if the following conditions are additionally met: i. On the day preceding the date of submission of the tax return in which the correction is made, the taxpayer is registered as an “active” (i.e., non-VAT exempt) VAT payer ii. From the date of issue of the invoice documenting the claim, three years have not passed, counting from the end of the year in which it was issued.
Furthermore, with respect to B2C transactions, an adjustment may be made in any of the following cases: i. The claim has been confirmed by a final court decision and directed to enforcement proceedings ii. The claim has been entered in the debt register kept at the national level iii. The debtor was declared bankrupt based on separate regulations.
In the past, the Polish regulations were much more restrictive. Nevertheless, they were liberalized following the judgment of the CJEU, ref. no. C-335/19 issued in the Polish case. In that judgment, the court ruled that the EU VAT law:
… must be interpreted as precluding national legislation which makes the reduction of the taxable amount for the purposes value added tax (VAT) subject to the condition that, on the day of delivery of the goods or provision of the services and on the day preceding that on which the adjusted tax return seeking that reduction is filed, the debtor is registered as a taxable person for the purposes of VAT and is not the subject of insolvency or winding-up proceedings, and that, on the day preceding the date of filing of the adjusted tax return, the creditor is itself still registered as a taxable person for the purposes of VAT.
At the same time, the Polish VAT law provides — on the purchaser side — that if the amount due under the invoice documenting the supply of goods or the provision of services is not paid within 90 days from the date of expiry of the payment deadline specified in the contract or on the invoice, the debtor is obliged to correct the deducted input VAT resulting from this invoice, in the settlement for the period on which 90 days have elapsed from the date of expiry of the payment deadline specified in the contract or on the invoice. The above obligation does not apply if the debtor has paid the amount due no later than on the last day of the settlement period (month/quarter) in which the 90th day from the date of expiry of the payment deadline for this amount has elapsed.
Spain In Spain, bad debt relief may generally be claimed if the recipient has not performed the payment and it qualifies as totally or partially uncollectable. The payment will qualify as uncollectable in the following circumstances: i. At least a year has passed since the VAT tax point without the payment from the customer being collected; or after six months, if the annual turnover of the taxpayer does not exceed the large taxpayer threshold ii. The invoices must be included in the VAT books of the issuer of the invoices iii. The taxpayer must have sought collection by legal claim, notarial request or other means that irrefutably accredits the claim for collection (a burofax is enough) iv. The debt amount must exceed EUR 50. Bad debt relief must be claimed within six months following the end of the one-year or six-month non-collection period set above. Within the six-month period, the issuer of the invoice must do the following:
a. Copy of the amending invoice and document that justifies that the recipient has received the amending invoice b. Copy of the document that justifies that the company has sought the collection by legal claim, notarial request or other means accepted (burofax)
Note that Law 31/2022 on the General State Budget amended, with effect from 1 January 2023, Article 80 of the VAT Law, specifically, the bad debt relief procedure for uncollected VAT by providing more “flexible” requirements to apply the VAT bad debt relief, as follows:
Contributors to this article: Olivier Van Baelen, Counsel (Belgium); Piotr Tatara, Senior Associate (Poland); Thijs van Luijt, Associate (Amsterdam) and Albert Arenas, Associate (Barcelona)
Connoisseur Belgium
HvJ 9 december 2011, Zaak C‑69/11, Connoisseur Belgium BVBA, ECLI:EU:C:2011:825
21 Deze uitlegging strookt met het beginsel van fiscale neutraliteit, dat inherent is aan het btw-stelsel en dat beoogt enkel de eindverbruiker te belasten en de belastingplichtigen gelijk te behandelen. Ingevolge dit beginsel kan de maatstaf van heffing van de aan de fiscus af te dragen btw niet hoger zijn dan de door de eindverbruiker daadwerkelijk betaalde tegenprestatie, waarover de uiteindelijk door hem verschuldigde btw is berekend (zie arrest van 24 oktober 1996, Elida Gibbs, C‑317/94, Jurispr. blz. I‑5339, punt 19). Dat beginsel zou in omstandigheden als die in het hoofdgeding immers worden geschonden wanneer de belastingplichtige btw over niet aan zijn afnemer aangerekende bedragen verschuldigd zou zijn.
Bron: Elsevier BTW almanak 2004 blz. 298, nr. 18.1.1.5, Inkoopcombinaties
In contracten tussen een inkoopcombinatie en haar leveranciers is vaak bepaald dat de inkoopcombinatie de door haar leden verschuldigde bedragen voldoet aan de leveranciers. Als nu de inkoopcombinatie die bedragen niet of niet volledig van haar leden ontvangt, rijst de vraag of aan de inkoopcombinatie een teruggaaf wegens oninbare vordering kan worden verleend. Als de inkoopcombinatie als zelfstandige ihandelsschakel optreedt, hetgeen het geval is als de leveranciers de goederen aan de combinatie leveren en de combinatie de goederen verolgens aan haar leden levert, kan aan de inkoopcombinatie teruggaag wegens oninbare vorderingen worden gegeven. Als de inkoopcombinaite echter niet als zelfstandige handelsschakel optreedt- de l;everanciers leveren de gederen rechtstreeks aan de leden van de combinatie - , kan de inkoopcombinatie geen aansporaak maken op een teruggaaf weges oninbare vorderingen. Bezien vanuit de positie van de leverancier van de goederen is de vordering immers voldaan, nameijk door de inkoopcombinatie. Deze laatste treedt op als financier voor de afnemer (het lid van de inkoopcombinatie. Dit houdt tevens in dat de afnemer de afgetrokken voorbelasting noet terug hoeft te betalen (V-N 1996, blz. 4883).
ECJ Cases Pending
Lijstje niet-betalingen