When can I get credit tax relief?

defiscalizzazione del credito con Credit Group Italia

Any company or business that draws up an accounting balance sheet can face a bad debt.

It is in this case that the credit tax exemption tool can be used, a fundamental opportunity to pay less taxes.

What does it mean to “tax credit”

One of the most common risks faced by companies is the presence of unpaid credits. There are several ways to obtain the collection of a sum from a debtor, but in some cases the recovery of the debt becomes impossible.

However, a tool is available, provided for by the Consolidated Income Tax Act and confirmed by the Revenue Agency, which is precisely the tax exemption of credit, better defined as the deductibility of credit losses, to be used precisely in the event that the credit is unrecoverable.

This is a technique widely used by credit management that allows companies to reduce tax income and therefore the taxes to be paid!

When we are faced with bad debt

For admission to the tax exemption procedure, it is first of all necessary to understand when a credit is considered irrecoverable. According to Law 134/2012, a credit is considered uncollectible when it has expired for at least 6 months and falls within the category of small credits, as established:

  • 2500 euros for companies with a turnover of up to 100 million euros.
  • € 5,000 for companies with turnover over € 100 million.

Now all other credits are considered bad debts according to the regulations in force, essentially when the losses result from certain and precise elements such as:

  • cases in which the debtor is subjected to insolvency proceedings such as that which refers to the extraordinary administration of large companies: to avoid bankruptcy, companies considered important not only economically but also socially, with more than 200 employees, they can be part of the so-called “extraordinary administration of large companies”, to fulfill both the rights of creditors and safeguard the interests of workers .
  • in the event that the right to collection, exercised through credit recovery, has not been successful.
  • insolvency;
  • unavailability of the debtor;
  • failures;
  • compulsory administrative liquidation.

When all the ways foreseen by law have been tried to recover a credit and this is unobtainable, it is therefore possible to access the deduction of credit losses.

The unrecoverability of a credit is sanctioned only in some specific cases:

  • untraceable debtor due to inaction or flight ascertained by decree
  • identity theft of the debtor
  • absence of the debtor on the basis of art. 49 Civil Code
  • when all enforcement actions by the creditor fail
  • in situations of proven precarious economic situation of the debtor
  • credits of minimal amounts
  • assignments of credits
  • in the case of transactions and settlements
  • when the creditor waives the collection of the debt
  • when a company of debt collection proves through a relationship that they exist certain situations of impossible collection
  • in the event of the debtor’s death

The case of prescription

There is another situation in which it is possible to lead to a loss of the uncollected credit, or when the collection has been prescribed because it has exceeded the 10 years required by law. The tax exemption can be used but only if there are certain and precise elements even prior to the prescription, without however exceeding the tax period to which the law prescribes.

The cancellation of the credit from the balance sheet

To extricate themselves from difficult tax matters, it is increasingly important for companies to have capable Credit Managers at their side, to identify the most effective way to recover a credit or, in more complex cases, to reduce the tax burden. In fact, there is another way to lose credits, even in the absence of certain and precise elements as required by law. This happens when the cancellation of credits from the balance sheet is applied, the loss can thus be deducted without the need to present certainty and accuracy requirements.

To summarize: lost credit can be deducted in the reporting period as a negative component of a company’s income!

Credit Group Italia is a company of credit recovery leader in the sector which operates at the highest levels throughout the national and international territory. To avoid reaching extreme solutions, such as tax relief on credit, we will be able to support you in preventive actions for the recovery of your credits, protecting your company by offering you constant and targeted advice.

Do you need further clarification? Our experts are at your disposal.


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    Credit Group Italia is accredited by the Bankruptcy Section of the Court of Milan as a judicial and extrajudicial debt collection company.