A landmark judgment of the ECJ on the relief for bad debts


After the judgment of the European Court of Justice of October 15, 2020, it will be easier for Polish taxpayers to take advantage of the bad debt relief and recover the tax paid from the tax office.

In case C‑335/19, the ECJ ruled that the conditions of tax corrections in Polish regulations were too strict and inconsistent with EU law. It was emphasized, inter alia, that the right to a so-called bad debts should not depend on whether the counterparty is an active VAT payer or the creditor. The ECJ also allowed for the recovery of VAT when the debtor is in bankruptcy or liquidation.

As a consequence, taxpayers can recover the tax paid due to the currently issued invoices unpaid by contractors and also paid on due to invoices issued in earlier years, even in December or the last quarter of 2014.

If the taxpayer received a negative tax decision before the said judgment was issued, he should apply for the reopening of the proceedings. According to Art. 241 § 2 point 2 of the Tax Ordinance, application should be filed within one month from the publication of the judgment in the Official Journal of the European Union.

In the event that the case for a tax refund has already ended with a judgment of an administrative court, pursuant to Art. 277 of the Law on Proceedings before Administrative Courts, an application for reopening the proceedings must be submitted within three months from the date on which the party learned about the grounds for reopening. According to the case law, the period runs from the date of publication of the ECJ judgment in the Official Journal of the EU (eg. II GSK 2031/13).

On the other hand, if the taxpayer has not previously tried to take advantage of the bad debt relief, assuming that in his case  the conditions challenged by the Court have not been met, he should now submit a correction of the tax return together with an application for overpayment – referring to the ECJ judgment.

More on this topic – https://next.gazeta.pl/next/7,151003,26455947,fiskus-bedzie-na-potege-oddawal-pieniadze-polskim-firmom-przelomowy.html#do_w=52&do_v=66&do_a=292&s=BoxBizImg

The judgment – https://eur-lex.europa.eu/legal-content/PL/TXT/PDF/?uri=CELEX:62019CJ0335&qid=1604678331054&from=PL