Scheme of arrangement: write-off VAT debt

Before the amendment, Article 182 ter of Bankruptcy Law provided for the possibility of extending or partially cutting back some tax debts. However, this rule excluded the VAT debt and withholding tax, for which it was possible to propose only an extension of the terms, excluding the possibility of writing-off the nominal value of the debt.

With the changes introduced by L. 232/2016, Article 182 ter allows to include into debt write-off also VAT debt and withholding taxes.

The debtor may propose partial or extended payment of all type of taxes administered by the Tax Agencies, provided that the plan provides for the satisfaction of privileged tax credits not less than the satisfaction achieved in the event of liquidation of the goods or rights on which the privilege is based.

Moreover, in case of privileged tax debt, the amount to be paid, timing of payment and guarantees may be not less suitable than those offered to creditors who have a lower degree of privilege.

Furthermore, in the event of a partial payment of privileged tax debt, the degraded credit amount must always be included in a special class.

If the majorities required by law are present, the negative vote by the tax authorities will not preclude the approval of the procedure in case of a scheme of arrangement that includes the cut back of privileged tax debts, such as VAT debt and withholding tax.