The government has proposed to change the rules for write-off of VAT calculated on sales to related companies. It is proposed to introduce a 24-month time limit for creditors to write off the claim.
The right to write off outstanding claims often arises in situations where a seller does not receive payment from a buyer for a service that has been delivered.
If the seller has sold a VAT-liable good or service, the seller is in principle obligated to report and pay VAT to the state based on the calculation basis. This applies regardless of whether the buyer has actually paid the invoice including VAT or not.
The seller does not have the right to deduct the reported and paid VAT, because it is not for use in the seller's business.
The rules in the VAT Act provide the right to correct the calculation basis for outstanding claims for which outgoing VAT has previously been calculated if the outstanding claim is considered definitively established as lost due to the debtor's lack of ability to pay. Specific requirements are set, both based on the nature of the claim and collection attempts, for when a claim can be considered definitively lost. These are generally strict requirements.
For related parties, i.e., cases where buyer and seller have direct or indirect ownership or control over each other, a 24-month time limit is proposed for the right to write off claims between the parties.
This is justified by the fact that the right to write off outgoing VAT is reserved for what must be considered to constitute a loss on customer claims, not circumstances that must be considered to constitute a loan or capital contribution.
The government has highlighted that particularly between related parties there is a risk that what is actually a loan or capital contribution is given in the form of credit on VAT-liable deliveries, especially if the claim remains unsettled over time and there is a risk that the claim changes character over time.
To limit the need for assessments of what the actual relationship between related parties is, it is proposed that the right to write off VAT lapses after 24 months if the VAT relates to a claim between related parties.
It is proposed that the changes take effect from January 1, 2026. For VAT calculated for VAT periods in 2025 or earlier, it is proposed that the current rules for write-offs apply.
The conditions for considering a claim definitively lost include, among other things, that active collection measures are taken by the creditor, including enforcement, debt collection, and reminders of the claim.
If there is a claim between related parties, the seller will therefore, if this deadline is introduced, have a deadline to also complete the various measures the seller is obligated to complete within the same deadline, before the claim can be considered definitively lost, and thus written off.
If the new regulation is adopted, this will mean that companies that sell services to related parties must become significantly more careful about which outstanding claims they have, and when the deadline for write-off starts, as well as ensure that the company carries out the required collection steps that must be completed within the deadline to be able to write off the claim.
It is recommended that companies at an early stage of the sale clarify whether the buyer is related or not, and if the buyer is related, have control over when the VAT was calculated so that the seller can ensure that correct collection measures are taken within the deadline.