There is a legal procedure to recover VAT amounts from unpaid invoices which have already been transferred to the Public Treasury.
• There must exist irrecoverable quotas:
– Small and medium-sized enterprises (“PYMES” with a business volume during the immediately preceding calendar year of less than 6,010,121.04 €): 6 months after the chargeable event or after one year without the corresponding credit being totally or partially collected.
– All other enterprises: after one year without the corresponding credit being totally or partially collected.
• The said circumstance must be reflected in the VAT books.
• The recipient is an Enterprise or a self-employed, or the base quantity of the transaction exceeds 300 euros.
• The outstanding debt must either be claimed judicially or by notary request.
Accordingly, a company may recover VAT amounts from unpaid invoices after six months (depending on the business volume) or after one year since accrual, i.e. as from the date of delivery or the provision of services.
Once the aforementioned requirements have been met, a corrective invoice must be issued and transmitted (by “burofax”) within three months after expiry of the six months’ or the one year’s term since VAT has been charged but not collected.
Finally, but not later than one month from the corrective invoice date, the tax administration must be informed about the modified tax bases.
3. Special situation: Arrangement with creditors
To recover VAT amounts charged to recipients in insolvency, the corresponding corrective invoice must be sent within 3 months from the declaration of insolvency being published in the Official State Gazette to the debtor.
The possibility of recovering VAT amounts already paid but not collected, regardless of whether the debtor has or has not applied for an arrangement with creditors, reduces the impact on the company’s treasury in case of default.