VAT in bankruptcy estates(Taxwatch (Tax news in english))
22-12-2009 13:54
Af
Diana Mønniche
The number of bankruptcy estates is historically high. Especially the real estate business is hit hard.
Only few bankruptcy estates have positive income. Consequently, income tax is normally not a very important issue. Many trustees therefore have the false belief, that the same applies for VAT. This is however incorrect. In many bankruptcy estates there are huge VAT challenges. And it could involve money. This will specifically apply in estates that have had both VAT liable and VAT exempt activities.
Therefore, as a starting point it must always be examined if excess VAT or “duty on salaries” has been paid. This is often the case in real property companies. In that case, the excess VAT or duty on salaries can be refunded.
The errors may have many causes. Many enterprises with partly VAT deduction may not be aware, that there may be incomes that should not be regarded as turnover for VAT purposes. Others are not aware of what types of expenses that should be regarded as “common expenses”. Last but not least, it may be the case, that the adjustment obligation for investment assets has not been adjusted.
When it comes to duty on salaries not very many are aware, that there may be duty exempt activities.
When the circumstances for previous years have been clarified, in groups, it is pertinent to examine whether there is common liability for VAT and duty on salaries. This is the case if the companies have been commonly registered, which will often be the case. An evaluation of the consequences of the common liability is important, if work is going on for a solution, according to which some of the companies should continue.
For real properties that bankruptcy estates must dispose of, there must be performed a computation of the adjustment obligation, which is connected to the real properties in question.
And finally, there is the VAT computation for the period of the receiver ship. The challenges are numerous.
Questions to this article can be direct to Diana Mønniche on phone 89307862 and e-mail dmp@bdo.dk
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