End of tax from nothing!

In case of definitive non-recovery of receivables, it is possible to get back up to a third of the value from the State using the tax system

In addition to the possibility of tax deductible provisions and tax deductible write-off of receivables under the rules defined in the Income Tax Act, there is also a potential possibility in the value added tax (VAT) area. The Court of Justice of European Union (CJEU) has repeatedly ruled that in the case of unenforceable receivables EU member states are obliged to allow the correction of the tax base. This means the supplier should be returned the VAT paid to the state budget when supplying the goods or services. This ensures the VAT neutrality and adherence to the principle that no VAT is levied when the supplier has received no consideration for the delivery.

Rules for the correction of VAT on unrecoverable receivables still absent in the Slovak law, however, we believe that in this case it is possible to rely on the direct effect of the VAT Directive and the CJEU case law.

Vladimíra Mačuhová