Return of VAT Deduction Claims for Unpaid Obligations: What Do the New Rules Mean for Your Business?

The recent amendment to the VAT Act, effective January 1, 2025, introduces updated requirements regarding the return of VAT deduction claims on unpaid obligations. This article outlines the principal changes and assesses their implications for businesses.

Adjustment of Deduction Claimed

Under the new legislation, VAT payers are required to reduce VAT deductions related to received taxable supplies if payment has not been fully settled by the last day of the sixth month following the month in which the obligation became due. The adjustment must be applied in the VAT return corresponding to that specific tax period.

Should partial or full payment of the obligation occur after the deduction has been reduced, the VAT payer may increase the VAT deduction accordingly. This adjustment can only be made in the tax period during which the payment is completed. If the deduction increase coincides with the same tax period as the initial reduction, no further correction is necessary.

Impacts on Businesses

Effective management of purchase invoices and their respective due dates is essential when making deductions adjustments. For instance, if an invoice was due on April 15, 2025, but payment occurred on November 15, 2025, monthly VAT payers should reduce the deduction in the VAT return for October 2025. Quarterly VAT payers would not need to adjust as the payment and deadline expiration fall within the same quarter.

The revised rule applies to supplies with a tax point after January 1, 2025, meaning July 2025 could be the first period where a claimed deduction must be reversed under these provisions.

Additional guidance on the practical aspects of reporting required adjustments in the VAT return and control statement is provided in the latest Information from the General Financial Directorate. This guidance addresses scenarios necessitating reduction or increase of tax deductions, including cases involving multiple concurrent criteria.

Need Advice?

If your business has overdue obligations, these changes are directly applicable. It is advisable to establish appropriate monitoring systems and procedures to ensure accurate VAT reporting. Please feel free to contact us for tailored advice; we would be pleased to assist you with any questions, practical implications, or specific concerns.