VAT

VAT Bad Debt Relief — Recover VAT from an Unpaid Invoice in 2026

May 2, 2026 ~7 min read

You issued an invoice, the client never paid, yet you already remitted the VAT to the tax office? Polish law lets you recover that VAT — through the so-called ulga na złe długi (bad debt relief). It kicks in 90 days after the payment due date. Here is the step-by-step procedure.

Article illustration — VAT, rates and limits 2026

What is bad debt relief

Ulga na złe długi (bad debt relief, Article 89a of the VAT Act) allows the creditor to recover VAT from an invoice that the counterparty has not paid within 90 days of the payment due date.

How it works:

  1. You issue a VAT invoice (e.g., 23% × PLN 10,000 = PLN 2,300 VAT)
  2. You remit the VAT to the tax office in your JPK_V7M (Standard Audit File for VAT) return
  3. The client does not pay for 90+ days past the due date
  4. You file a correction applying the relief — recovering PLN 2,300 in VAT
  5. If the client eventually pays — you restore the VAT to the tax office

Conditions for using the relief

  • Invoice — issued, correct, and reported in your VAT return
  • Payment due date — at least 90 days have passed since the date the client was supposed to pay
  • Counterparty — must be an active VAT taxpayer (registered as VAT-czynny)
  • No contract termination or insolvency proceedings — the relief cannot be used during ongoing enforcement or insolvency proceedings
  • Invoice no older than 2 years — counted from the end of the year in which it was issued

Procedure — how to recover the VAT

  1. Verify — 90 days have passed since the payment due date
  2. Notify the debtor — provide written notice of your intent to use the relief (e-mail, registered letter, or electronic delivery)
  3. Wait 14 days — the debtor may pay or raise an objection
  4. File a corrected JPK_V7M — in the current period, marking the relief
  5. VAT is returned — as an overpayment or a reduced tax liability

The relief correction is filed as a separate entry in JPK_V7M (code "54.7" + invoice details).

Consequences for the debtor

The client who fails to pay has corresponding tax obligations:

  • After 90 days past the due date — the debtor must return the deducted VAT to the tax office (if it was previously claimed as input VAT)
  • The debtor receives notice from the creditor — 14 days to make payment
  • If the debtor eventually pays — the right to deduct input VAT is restored

This mechanism disciplines the market — a robust system of controls encourages timely payments.

Frequently asked questions

What if the client says they will pay next month?
You may delay the correction — but watch the 2-year deadline from the end of the year in which the invoice was issued. After that, the relief is no longer available.
Can I use the relief for instalment agreements?
Yes, separately for each instalment — starting from the moment 90 days have passed since the due date of that specific instalment. You do not need to wait for the entire agreement to default.
What if the client has declared bankruptcy?
A better option is to file your claim in the insolvency proceedings. Bad debt relief cannot be used in parallel with insolvency proceedings.

Need help?

The Księgowość 365 team — experienced accountants — will handle your bookkeeping and settlements in line with current regulations. First online accounting consultation is free.

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