Due to the extraordinary situation, taxpayers do not have to declare an input VAT reduction when they receive COVID-19 contributions from the public sector, although the contributions continue to qualify as subsidies. The FTA published this in its practice specification on May 7, 2021 - contrary to the draft publication.
This practice covers all COVID-19 contributions that have been granted by the public sector since March 1, 2020, based on a legal basis for COVID-19 measures. This includes, in particular, à-fonds-perdu payments, interest advantages on loans or even repayment waivers.
The COVID-19 contributions have to be declared under “III. Other cash flows, box 910” of the VAT return because their receipt do not trigger a reduction of input VAT anymore.
If taxpayers have already declared input VAT reductions due to COVID-19 contributions received, these can be reclaimed from the FTA by filing a correction return or annual return.
