VAT recovery procedure in case of the beneficiary insolvency

Question:

Our company, A, issued invoices for performed consulting services to the beneficiary, B. The invoices have not been cashed-in in the period of 3 years of commercial prescription, with all our efforts to recover the debit, the period in which the beneficiary of the services went into insolvency. We submitted an application for registration on the list of creditors, but the respective amounts have not been collected until now.

Therefore, we requested from the Trade Register an official document stating that B was erased in August 2017.

We didn’t record any bad debts provisions for respective amounts, VAT was collected and the invoices are recorded under Clients balance sheet position. We are mentioning that we are recorded as profit tax payer.

What is the VAT recovery procedure and how is it recorded the write-off of these amounts from the accounting records, and what justifying documents need to be prepared according to the legislation on 31.12.2019?