VAT deduction on losses on irrecoverable debts
SKAT has paraphrased the text in the Legal Instructions 2014-2, section D.A.18.104.22.168.4.8, so that it now appears that it is not a condition for adjusting for loss on claims in excess of DKK 3,000 outside bankruptcy and composition, etc. after a specific assessment that an independent debt collection agency has attempted to collect the claim.
This means that it is possible to adjust for losses on irrecoverable debts in excess of DKK 3,000, if the creditor has attempted to collect the claim according to an established dunning procedure. We can therefore recommend that the company takes care of having a written procedure for following-up on debtors and also can document that the procedures are followed.
Companies which have refrained from adjusting for losses on irrecoverable debts in excess of DKK 3,000 outside bankruptcy and composition, etc. can request for resumption of the tax liability for the tax periods in which the loss was noted.
The deadline for resumption is 16 March 2015. Resumption can take place for commenced tax periods, but which have not yet expired in June 2010. The company must be able to document calculation of the repayment claim by means of accounting records and other relevant supporting appendices, which in the company’s opinion can contribute to documenting the claim. In addition, the company must be able to document that the losses have gone through a dunning procedure, rendering probable that the loss has incurred.