The Court of Justice of the European Union (CJEU) entered judgment on 11 February 2026 in case T‑689/24, which, importantly for Polish businesses, resolves the issue of when VAT is to be deducted if the purchase invoice was issued and received in a subsequent reference period but the taxable person had it at its disposal before submitting the return for the period during which substantive conditions for the deduction were satisfied.

The case involved the deduction of VAT charged on supplies of gas and electricity. The taxable person argued that purchase invoices covering a reference period were received by him in the subsequent period but before the VAT return filing for the period to which the purchase applied.

The taxable person requested a tax ruling and the ruling authority held that certain formal conditions must be met to enable the exercise of the right of deduction, one of them being that an invoice must be received. The ruling was sent to tax courts for judicial review. The lower tax court (Wojewódzki Sąd Administracyjny w Warszawie) upheld the position but the supreme tax court (Naczelny Sąd Administracyjny) had doubts about whether the underlying national regulations are compatible with VAT Directive, arguing that their practical effect is a delayed deduction even though the vendor settled output tax while the customer held an invoice when filing its return.

CJEU ruled that the VAT Directive and the principles of VAT neutrality and proportionality must be interpreted as precluding national legislation under which a taxable person may not assert his or her right to deduct input tax, in a return submitted in respect of a period in which he or she satisfied the substantive conditions for exercising that right if, during that period, he or she had not yet received the corresponding invoice, even though he or she did receive the invoice before submitting the return.

In particular, the court observed that:

  • the right of deduction arises when VAT becomes chargeable;
  • having an invoice is a formal requirement for being able to exercise the right of deduction but not a precondition for the existence of this right;
  • the right of deduction should as a rule be exercised in the same period in which it arises;
  • the principles of VAT neutrality and proportionality are violated where you have to temporarily bear the burden of VAT because you are prevented from deducting the tax by reference to the relevant period despite having the invoice at the time of filing.

CJEU further made a point of noting that while Member States may impose obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, such measures must be proportionate and cannot be of a general nature so as to systematically impede the right of deduction, especially where the taxable person holds a valid invoice at the time it submits its tax return, which enables the tax authority to perform the necessary checks.

The case may have the effect of accelerating VAT deduction but doing so as a permanent procedure would require a detailed review.

If this issue pertains to your business and you are interested in our assistance, please contact us.

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