Debt waivers and VAT

A company partially waived rental debts to another company. Although the debtor company did not incur VAT on the rents concerned by the writing off, it requested the refund of the related VAT on the ground that VAT became due by the lessor subsequently to the writing off and created a right to deduct VAT in favour of the company.

According to the Court, at the date of the refund request, the debt was not definitively written off since the debt waiver was subject to a better fortunes clause. The transaction could therefore not be considered as a “payment” within the meaning of article 269 of the FTC, rendering the VAT amount due by the lessor. Consequently, the applicant company’s right to deduct VAT could not be regularly exercised.

The VAT consequences induced by debt waivers should therefore be carefully monitored.

Michel Guichard

Michel Guichard, Partner, leads the Indirect Tax activity. With more than 30 years’ experience in International and French Tax law, he advises his clients on indirect tax matters. Michel is […]

Odile Courjon

Odile Courjon, Partner, has developed a strong expertise in indirect tax issues (VAT, wage taxes, excise taxes, export control and customs) in France and overseas. She advises her clients in […]

Bertrand Jeannin

Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT and customs policies. Major focuses of Bertrand’s input involve the […]

William Stemmer

William Stemmer, Partner, has more than 15 years’ experience in Indirect Tax matters. William particularly specializes in the real estate and financial sectors. William is a lecturer at the University […]

Nicolas Kazandjian

Barrister registered with the Hauts-de-Seine Bar, he started my career in the indirect tax service line of Deloitte Taj in 1999. My current position is Director. My area of expertise […]

Vanessa Irigoyen

With more than 16 years of experience, Vanessa has extensive expertise in the implementation of international efficiency business models for customs, export control and indirect tax purposes. Her functions notably […]

Anne Gerometta

Anne, Managing Director, has been advising companies on indirect tax issues for more than 17 years. Anne is in charge of the FSI sector (Bank, Insurance, Asset Management) within TAJ […]

Delphine Nicault

Delphine Nicault is an Attorney-at-Law at the French Bar. She joined Deloitte in 2002 and assists her clients on day-to-day VAT issues. She developed an expertise in the VAT and […]