Tax News – May 2023
CJEU: no obligation to adjust tax credit when assets are scrapped
The Court of Justice of the European Union in case C 127/22 ruled that taxpayers are not obliged to adjust the VAT deducted when assets or goods are scrapped or destroyed, provided that the destruction is duly proven.
The ruling addresses two main situations:
- Sale of scrap goods as scrap.
- Voluntary destruction or disposal of assets.
In all cases, the CJEU confirms that there is no basis for adjusting the tax credit, even if the sale as waste is not part of the usual economic activity or the value of the goods is lower than the original.
The decision is binding on the NRA and Bulgarian courts, including for tax periods that have already ended. It allows businesses to reassess past adjustments and, in appropriate circumstances, request a VAT refund.
Also, taxpayers can plan future actions on a deductible tax credit upon asset disposal, in accordance with the interpretation of the CJEU.