Under what circumstances can you claim impairment?
To claim trade debt as impairment losses for tax purposes, it is essential to be able to demonstrate the probability that the loss is due to special circumstances during the taxable period and not a general business risk.
Impairment losses in the time of COVID-19
In their 2020/C/45 circular, the Belgian tax authorities confirmed that the coronavirus crisis is indeed an exceptional circumstance. If your business has outstanding receivables for customers with solvency issues due to the coronavirus and the associated government measures, impairment may be indicated.
Note that this does not apply for all outstanding debt. When filing your corporate tax return, under statement 204.3 you must describe in concrete terms why the coronavirus outbreak was the cause of payment difficulties for each individual debtor. However, in the event of an audit the tax authorities are likely to be flexible in their assessment. Either way it is a good idea to provide a solid justification for your impairment losses. After all, the tax audits will (hopefully) take place long after the pandemic is past.
Do you have any further questions regarding impairment losses due to COVID-19 or do you want to know whether your outstanding receivables qualify as such? Please contact your account manager or one of our experts at email@example.com.
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.