New rules for VAT refunds and credit insurance since 1 January 2025

A new circular 2024/C/80 has far-reaching implications for both insurance companies, which are no longer entitled to VAT refunds, and insured persons, who are only entitled to VAT refunds for the uninsured portion. 
When a customer fails to pay his invoices and the supplier has already paid the VAT to the Treasury, the supplier can obtain a refund of the VAT if the loss can be considered certain and definitive. In practice, to absorb such losses insurances are taken out in this regard where usually the insurance company is subrogated to the taxpayer's rights.  

Following a Court of Justice ruling C-482/21, the Belgian VAT administration has updated its position on the extent to which a refund can be claimed and by whom when taking out such an insurance.   
 

New position 

  • Who : Only the insured can now obtain a VAT refund. The credit insurer will never be able to apply for a VAT refund on partial or complete lost claims. 
  • Amount: Refund is limited for the part not reimbursed by the insurer, even if the credit agreement concluded provides that the insurer covers losses for a certain % excluding VAT.  
  • Example: If the creditor has a definitively lost claim of 100 euros (excluding VAT) + 21 euros (VAT), and is reimbursed by the credit insurer up to the amount of 80 euros (the insurer covers losses up to 80% of claims excluding VAT), the insured can only claim the refund of VAT included in the part of the claim that was not reimbursed, i.e. 41 euros (121 euros - 80 euros), which amounts to 7.12 euros (41 - (41/1.21)) of VAT to be refunded.  

Formalities 

  • Issuing a corrective document by the insured for the part not reimbursed by the insurer stating "VAT to be refunded to the State to the extent it was originally deducted". 
  • Reporting in box 49 (taxable amount) and box 64 (VAT amount) of the insured's VAT return. The customer should refund the VAT to the State to the extent it was deducted by him by reporting the corrective document in boxes -81/-82/-83 (taxable amount), box 85 (taxable amount) and box 63 (VAT amount) of the VAT return. 

 Please contact our VAT experts for further assistance or guidance at btw-tva@bdo.be