VAT recovery
April 2020
IMPORTANT CHANGES IN THE REGIME OF RECOVERY OF VAT OF DOUBTFUL COLLECTION CREDITS AND / OR UNCOVERABLE
With the OGE that came into force on April 1, 2020 and with the interpretations contained in Circular Letter No.: 30219, of 2020-04-02, the regime in force was amended as follows:
1 – The arrears of the credit are reduced from 24 to 12 months for the purposes of the possibility of regularizing VAT on doubtful debts, in which the debtor is a taxable person under the normal or mixed regime and for credits of a higher value at € 750, VAT included, in the case of a private debtor or taxable person in the exemption regime.
Credits that, at the date of entry into force of the OE2020 Law, had been in arrears for less than 24 months, but for more than 12 months from the moment when the respective maturity occurred, pass on that date (1 April), to be considered as doubtful debts, verified as the remaining requirements for the effect.
Bearing in mind that paragraph 1 of article 78-B establishes a period of six months, counting from the date on which the credits are considered doubtful, to submit a request for prior authorization with a view to deducting the tax associated with them, it should be considered that, in the case provided for in the previous paragraph, this period begins on the date of entry into force of the OE2020 Law, that is, on April 1. (Article 78 (2) (a))
2- Regularization procedure with a view to deducting the VAT contained in doubtful debts (article 78-B) – The deadline for the tacit rejection of the prior authorization to be submitted with a view to deducting the VAT contained in bad debts, from 8 to 4 months, which allows the taxpayer to react quickly.
At the end of this period without having been assessed, requests for prior authorization are considered:
– Rejected – if the amount is equal to or greater than € 150,000, VAT included, per invoice;
– Deferred – if less than € 150,000, VAT included, per invoice.
3- Certification of the conditions for the deduction of VAT contained in bad debts and bad debts (art. 78-D) The certification of the conditions for the deduction of VAT of bad debts and bad debts becomes also be carried out by an independent Certified Accountant (CC).
In doubtful debts, for situations in which the regularization of tax does not exceed € 10,000.00 per periodic declaration, the certification may be carried out by CC or by Statutory Auditor (ROC); above this value, certification is carried out exclusively by ROC.
For bad debts, certification may be carried out by ROC or CC, in which case no limit value for CC certification is established.
Thus, paragraphs 1, 2 and 3 of article 78-D are replaced by the following:
“1 – The identification of the invoice for each doubtful credit, the identification of the purchaser, the invoice amount and the tax paid, the performance of collection procedures by the creditor and the failure, total or partial, of such measures , as well as other elements that demonstrate the performance of the operations in question, must be documented and be certified in the following terms:
- a) By a statutory auditor or certified independent accountant, in situations where the regularization of tax does not exceed € 10,000 per periodic declaration;
- b) Exclusively by a statutory auditor, in other situations.
2 – Certification by the statutory auditor or independent certified accountant provided for in the preceding paragraph is carried out for each of the documents and periods referred to in the regularization and until the delivery of the corresponding request, under penalty of the request for prior authorization not being made. if it is considered presented, and the certification must be made, if the settlement of the credits does not depend on a request for prior authorization, until the end of the period established for the submission of the periodic declaration or until the date of delivery of the same, when it occurs outside the deadline.
3 – The statutory auditor or certified independent accountant must also certify that the legal requirements for deducting the tax in respect of credits considered uncollectible have been verified, taking into account the provisions of paragraph 4 of article 78-A. . ”
This communication is of a general nature and is merely informative, not intended for any particular entity or situation, and does not replace professional advice appropriate to the specific case. Vitis will not be responsible for any damage or loss arising from decisions made based on the generic and synthetic information described here.
The text was prepared based on the best information available at the time of its edition