Bad debt relief claims

The Maltese VAT Department has in November 2014 issued guidelines with respect to the conditions which would need to be met by persons registered under Article 10 of the VAT Act to successfully make a claim for bad debt relief. The conditions are as follows: 1. Claim for bad debt relief may be made following […]

Written By ACT Team

On January 5, 2015
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The Maltese VAT Department has in November 2014 issued guidelines with respect to the conditions which would need to be met by persons registered under Article 10 of the VAT Act to successfully make a claim for bad debt relief.

The conditions are as follows:

1. Claim for bad debt relief may be made following a final Court judgement showing beyond doubt and to the satisfaction of the Commissioner that the debt can never be recouped.

2. The claim must reach the Commissioner by not later than twelve months from the date of delivery of the final judgement.

3. VAT in connection with the claim must have already been accounted for and paid to the Department.

4. All VAT returns and payments due as at the date of the claim must have been submitted by that date.

5. The debt must have been written off in the claimant’s day-to-day VAT accounts and transferred to a separate bad debt account.

6. The supply must have been made to the customer, or to a third party through the customer.

7. The value of the supply must not be more than the customary selling price.

8. The debt must not have been paid, sold or factored under a valid legal assignment.

How can ACT help?

We can help you recover VAT on bad debts by providing advice and assistance as follows:

1.      Advice on whether bad debt relief is possible

2.      Advice on the amount of VAT which may be recovered

3.      Advice on the manner in which a claim for bad debt relief may be claimed

4.      Assistance in the preparation of the claim for relief

5.      Review the supporting documentation which should be submitted together with the claim for relief

6.      Advice and assistance on the manner to account for bad debt relief

7.      Advice on the records to be kept

8.      Exchange of correspondence with the local VAT authorities

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].