Non-Payments in EU VAT Law

CJEU: Recent Developments in Value Added Tax 2021 (Linde 2022)

38 Pages Posted: 6 Dec 2021 Last revised: 25 Jan 2022

See all articles by Ad van Doesum

Ad van Doesum

Maastricht University, Faculty of Law, Department of Tax Law

Date Written: December 1, 2021


To ensure the neutrality of EU VAT, a supplier can (in principle) under Article 90 of the VAT Directive, reduce the taxable amount if – among other situations – the customer fails to pay for the supply (non-payment or 'bad debt'). Article 185 addresses the other side of the transaction and demands that (in principle) the input VAT deduction by the customer is adjusted if the customer (among other things) does not pay. An analysis of the current rules on bad debts and how they are applied shows that the EU VAT consequences of non-payments are manyfold and complex. The root cause of that lies in the ambiguous wording of the relevant provisions in the VAT Directive and the arduous way in which the CJEU has interpreted these provisions. Member States have made ample use of their margin of discretion under the Articles 90 and 185 to set conditions. This too, has contributed to complexity. In fact, the differences between the Member State are so substantial and the rules so detailed and complex that it is virtually impossible to device one single all-encompassing overview for all Member States. The divergences create an uneven playing field for domestic and foreign businesses, harm the functioning of the internal market and go against the neutrality of VAT. Following the path set out by the CJEU, the author proposes improvements to the current EU VAT treatment of bad debts.

Keywords: bad debts, non-payment, vat, eu vat, adjustment, adjustment of input vat, taxable amount, deduction, formal conditions, material conditions

JEL Classification: K34

Suggested Citation

van Doesum, Ad, Non-Payments in EU VAT Law (December 1, 2021). CJEU: Recent Developments in Value Added Tax 2021 (Linde 2022), Available at SSRN: or

Ad Van Doesum (Contact Author)

Maastricht University, Faculty of Law, Department of Tax Law ( email )

P.O. Box 616
Maastricht, 6200

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