It happens that an entrepreneur has issued an invoice and paid the tax on it, yet the contractor still fails to pay. Tax law provides a solution for this situation — bad-debt relief („ulga na złe długi”). It allows you to recover VAT and income tax (PIT) on receivables that could not be collected despite the deadline passing. Below we explain how the relief works in 2026, what conditions the creditor must meet and what obligations the debtor must keep in mind.
What bad-debt relief is
Bad-debt relief is a mechanism that allows you to correct the tax settlement of an invoice that ultimately went unpaid. It operates in two taxes at once — VAT and income tax (PIT). The common denominator of both is the same period: 90 days. If 90 days pass from the payment deadline stated on the invoice, in the contract or on the bill without the receivable being paid, the uncollectibility of the receivable is deemed to be substantiated. For the creditor this means a right to recover the tax; for the debtor — an obligation to give it back.
VAT — when the creditor can recover the tax
As the seller (creditor) you may correct the taxable base and the output tax if the buyer has not paid the amount due for goods delivered or services provided in Poland. The conditions must be met jointly: the receivable must remain unpaid for at least 90 days from the payment deadline, no more than three years may have passed from the end of the calendar year in which the invoice was issued, and on the day preceding the correction you must be an active VAT taxpayer.
You make the correction in the settlement for the period in which the uncollectibility is deemed substantiated, provided that by the day you file the JPK_V7M or JPK_V7K for that period the receivable has still not been paid or disposed of. Using the relief on the seller's side is a right, not an obligation. If, however, the contractor pays after the correction, or you sell the receivable, you must increase the taxable base and output tax again — with partial payment, only to the corresponding extent.
VAT — the debtor's obligations
The relief has a flip side. If you are the buyer, deducted VAT from the invoice and did not pay it within 90 days of the payment deadline, you are obliged to correct the input tax you had previously deducted. The correction is made in the settlement for the period in which the 90th day from the payment deadline fell. This is not a right but an obligation — regardless of whether the seller made use of their relief.
The correction is not required if you settle the receivable no later than the last day of the settlement period in which the 90th day falls. If you pay only part, you correct input tax solely on the unpaid amount. If you settle the invoice after the correction, you have the right to increase input tax again in the settlement for the period in which you paid.
Bad-debt relief in income tax
An analogous mechanism operates in PIT. A creditor who counted the invoice value towards revenue but nonetheless received no payment may reduce the tax base by the unpaid and undisposed receivable — in the return for the year in which 90 days from the payment deadline elapsed. Importantly, the relief can be taken into account already at the stage of advance payments during the year; there is no need to wait for the annual return. The debtor, on the other hand, is obliged to add the unpaid amount to their tax base. Analogous rules apply under the lump-sum tax on recorded revenue (ryczałt) — the creditor reduces revenue, and the debtor increases it.
In income tax, additional conditions apply. The debtor may not be undergoing restructuring or insolvency proceedings or be in liquidation, the transaction must be concluded within business activity, and its revenue taxed in Poland. The relief does not apply indefinitely — no more than two years may pass from the date the invoice was issued or the contract concluded, counting from the end of the calendar year. If the receivable is paid after the correction, the creditor increases the base accordingly again, and the debtor reduces it in the settlement for the period in which this occurred.
What to keep in mind
Bad-debt relief does not replace debt collection — it does not cancel the debt or release the contractor from the obligation to pay. It merely allows you to recover the tax that unfairly burdens an unpaid sale. What is crucial is monitoring payment deadlines and counting the 90 days from the correct date, as well as keeping documentation confirming that the invoice remains unpaid. It is also worth remembering that, within this relief, VAT and PIT are settled separately, under their own conditions and deadlines. For the debtor, one conclusion matters most: an invoice not paid on time means an obligation to correct the deducted tax — something easy to forget.