Exercising VAT credit right – is time a factor?

Let’s consider the following case:

The goods are sold on 12 August 2011 and the stock receipt for transfer of ownership was issued on the same date. However, the invoice was not issued as a result of an omission of the provider. In the beginning 2013, the provider performs an audit and found the omission, and the invoice was issued on 15 March 2013 and provided to the client. The latter books the invoice and pays it accordingly.

The tax event in the above example occurred on 12 August 2011, which means that the tax became due in August 2011, as well as the right for VAT credit for the buyer occurred in August 2011. However, the buyer was not able to use the VAT credit right in August 2011 because the buyer did not receive a proper invoice. Respectively, the buyer received the invoice in March 2013, dated in March 2013, and decided that he will use the VAT credit, now that he has the invoice.

The problem in this case is that the VAT credit right is limited in time, starting from the sale period (in August 2011) and ending when 12 months following the initial period (August 2012) expire. I.e. regardless that the invoice is dated March 2013, the client cannot exercise the VAT credit right, because the delivery was from August 2011, which puts the deadline for exercising the VAT credit in August 2012 at the latest.

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