Bad debt relief – important judgment of PAC in Warsaw

In October 2020, the CJEU ruled that the above premise conflicted with the EU VAT directive. 

As a result, the company applied to the head of the tax office in January 2021 for the confirmation of VAT overpayment for the period from July to October 2018 and filed the respective amended VAT returns.  

The authority did not agree with the company and did not allow correcting the invoices for the bad debt relief as the company did not comply with the statutorily required deadline, i.e. the period of two years of the end of the year in which the respective invoices were issued. 

The company appealed against that decision to the Provincial Administrative Court (PAC). Eventually, the PAC agreed with the company and held that if the debtor was in the process of restructuring during the statutory time limit for taking advantage of the bad debt relief, the company could not have been required to file an amended return, contrary to the express provision of the statute. At the time when the company was supposedly required to take advantage of the bad debt relief, the then-applicable provision regarding the debtor's status conflicted with the VAT directive.