VAT refund for irrecoverable debts

Due to the current coronacrisis, your clients may no longer be able to pay your invoices. There is a possibility to reclaim the VAT you have paid in this context, subject to conditions. In addition, it is a good idea to take a look at whether you have any irrecoverable debts from the past, for which you can reclaim VAT.

VAT on irrecoverable debts may be reclaimed as soon as it is certain that the claim will no longer be paid (in part) by your client. This is the case, for instance, when your client goes bankrupt. In addition, the VAT may be reclaimed in any case one year of the date on which the invoice becomes due. A claim is due and payable when the deadline for payment stated on the invoice has expired. If there is no deadline for payment on the invoice, the standard payment term of 30 days applies.

You process the amount of the reclaim in the tax return for the period in which the irrecoverability arose or the 1-year term has expired. The VAT on an invoice dated 1 January 2019 with a standard payment term, which becomes irrecoverable as a result of the 1-year term, should therefore be reclaimed in the tax return for the first quarter of 2020.

Would you like to improve your current cash flow? If so, we advise you to check whether you have any irrecoverable debts from the past, for which you may still reclaim the VAT. If the term has already expired (because you were already entitled to a reclaim in 2019, for example), you must submit the reclaim in a supplementary tax return. We will of course be happy to help you when you have irrecoverable debts for which you may reclaim VAT. We also like to think along with you to see if there are other options for you to improve your current cash flow position.