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.
Source: insightplus.bakermckenzie.com
See also Roadtrip through ECJ Cases – Bad debts (Art. 90, 185)
