Bad debt relief in Germany
Bad debt relief is available in Germany provided the supplier has sufficient evidence that the relevant transaction became a bad debt.
The process to recover this VAT is simpler than in most countries. There are no time limits, threshold or specific application to be made. The adjustment is made in the current period by reducing the output VAT. In case the adjustment refers to historic VAT periods for which the annual VAT return has already been submitted, a corrective annual VAT return should be filed.
Businesses claiming input VAT in bad debt supplies must keep all relevant documentation to prove that the invoice has not been paid. There is no exhaustive list of documents that must be kept, however, such documentation must provide enough evidence of the VAT credit.