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.