Downpayments – a VAT credit right in case of registration under the VAT Act

I will neither comment on the general conditions of the VAT credit right nor the overall procedure of using a VAT credit in case of registration under the VAT Act. I will only review the possibility of a VAT credit right for downpayments made before the date of VAT registration.

Under Article 74, paragraph 1 of the VAT Act the VAT credit right applies for any available assets as of the date of the VAT registration under the meaning of the the Accountancy Act.

Under Article 14 of the Accountancy Act, assets and liabilities are classified and presented in the financial statements under the terms and order of the applicable accounting standards, i.e. Accountancy Act transfers the definition of “assets” to the relevant applicable standards.

Under both BG GAAP and IFRS, advance payments (downpayments) are included in the group of the assets. This means that if the rest conditions for VAT credit right for available assets as of the VAT registration date are met, then the VAT credit right is also valid for the made downpayments prior to the VAT registration date.

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