Pursuant to the Rulebook on the application of the Value Added Tax Act, if a taxpayer has missed the deadline for paying other taxes, the tax authority will reallocate the amount recognised as a tax credit to settle those other outstanding taxes.
What does this mean in practice?
If you have a recognised VAT-based tax credit while simultaneously having unpaid other tax liabilities (corporate income tax, income tax and contributions on salaries, local surtax), the unpaid taxes are converted into a tax credit and automatically applied to pay off those debts — in accordance with the VAT rulebook.
Practical tip
Monitor the state of your VAT credit in each accounting period and reconcile it with current obligations. The Finance Plus accounting team regularly performs this check for clients in order to avoid unnecessary debt and the calculation of interest on overdue liabilities.
Do you need help with VAT or other tax obligations? Contact us.
