Bulgaria: No adjustment of input VAT deductions for scrapped or destroyed goods (CJEU judgment)

A CJEU judgment concerning an adjustment of input VAT deductions when goods are scrapped or destroyed

No adjustment of input VAT deductions for scrapped or destroyed goods

The Court of Justice of the European Union (CJEU) held (case file C-127/22) that no adjustment of input value added tax (VAT) deductions is made when goods are scrapped or destroyed.


A Bulgarian telecommunications company acquired various goods for which input VAT deductions were made, but the goods were subsequently scrapped because the taxable person considered them unsuitable for use or sale for various reasons, including wear and tear, defects, or obsolescence.

The tax authority adjusted the input VAT initially deducted upon their acquisition in accordance with Art. 79 of the Bulgarian VAT Act, and thereafter the company submitted a claim for reimbursement of the sums paid in connection with the above adjustments on the grounds that Art. 79 of the Bulgarian VAT Act is incompatible with the applicable EU rules (Art. 185 of Directive 2006/112/EC). The tax authority rejected the company’s claim, and the company appealed to the Bulgarian Supreme Administrative Court, which referred the issue to the CJEU.

The CJEU concluded that Directive 2006/112/EC does not require adjustment of input VAT when goods are scrapped (whether the scrapped goods are followed by a taxable supply of the goods in the form of waste or followed by a voluntary destruction/disposal of the goods) and precludes national law which provides for such an adjustment.

Read a May 2023 report prepared by the KPMG member firm in Bulgaria


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