On 11 February 2026, the General Court of the European Union delivered a significant judgment in a Polish case addressing when the right to deduct input VAT arises when an invoice is received after the taxable transaction but before the deadline for filing the VAT return (Case T-689/24). The ruling reinforces the core principle of VAT neutrality and pushes back on overly formalistic national rules that restrict deduction rights.
Notably, the ruling comes from the General Court, not the Court of Justice, reflecting ongoing procedural reforms intended to streamline EU judicial review and reduce the caseload of the Court of Justice.
The case involved a Polish entity operating as a clearing house for exchange-traded gas and electricity transactions. Acting as both purchaser and reseller, the company sought confirmation from the Polish tax authorities that it could deduct input VAT in the settlement period in which the underlying transactions occurred, even though the relevant invoices were received in the following period but before the statutory VAT return deadline. The tax authorities rejected this position, relying on domestic rules that condition the right to deduct VAT on the physical receipt of an invoice.
The General Court held that articles 167, 168(a) and 178(a) of the EU VAT Directive, read in conjunction with the principles of neutrality and proportionality, preclude national legislation that delays the emergence of the right to deduct VAT solely because an invoice is received later. The court drew a distinction between the moment the right to deduct arises, which is tied to the chargeability of VAT, and the exercise of that right, which may legitimately depend on formal conditions, such as holding an invoice. Crucially, the court found that member states cannot impose additional substantive conditions that effectively postpone the right itself.
Accordingly, when the material conditions are fulfilled, i.e., a taxable transaction has occurred, it is used for taxable activities and the taxpayer holds a valid invoice before filing the VAT return, the deduction must be allowed in the original settlement period.
The General Court judgment reaffirms the primacy of EU law and confirms that formal shortcomings cannot override substantive VAT rights. For Polish taxpayers, the decision may open the door to revisiting historical VAT settlements where deductions were deferred solely due to late invoice receipt.
However, the practical impact of the decision remains uncertain. The case has been referred to the Court of Justice for review, and its effect is currently suspended pending further examination. Moreover, the rollout of mandatory e-invoicing systems—such as Poland’s KSeF—may reduce the likelihood of similar disputes by standardising the moment an invoice is deemed to be received.
This ruling represents a meaningful development in the interpretation of VAT deduction rights and the limits of national formal requirements. Taxpayers should continue to monitor the case as it proceeds through review before making changes to their compliance processes.
Emilia Wolnowska
BDO in Poland
Notably, the ruling comes from the General Court, not the Court of Justice, reflecting ongoing procedural reforms intended to streamline EU judicial review and reduce the caseload of the Court of Justice.
Background
The case involved a Polish entity operating as a clearing house for exchange-traded gas and electricity transactions. Acting as both purchaser and reseller, the company sought confirmation from the Polish tax authorities that it could deduct input VAT in the settlement period in which the underlying transactions occurred, even though the relevant invoices were received in the following period but before the statutory VAT return deadline. The tax authorities rejected this position, relying on domestic rules that condition the right to deduct VAT on the physical receipt of an invoice.
Judgment and Reasoning
The General Court held that articles 167, 168(a) and 178(a) of the EU VAT Directive, read in conjunction with the principles of neutrality and proportionality, preclude national legislation that delays the emergence of the right to deduct VAT solely because an invoice is received later. The court drew a distinction between the moment the right to deduct arises, which is tied to the chargeability of VAT, and the exercise of that right, which may legitimately depend on formal conditions, such as holding an invoice. Crucially, the court found that member states cannot impose additional substantive conditions that effectively postpone the right itself.Accordingly, when the material conditions are fulfilled, i.e., a taxable transaction has occurred, it is used for taxable activities and the taxpayer holds a valid invoice before filing the VAT return, the deduction must be allowed in the original settlement period.
Implications for Taxpayers
The General Court judgment reaffirms the primacy of EU law and confirms that formal shortcomings cannot override substantive VAT rights. For Polish taxpayers, the decision may open the door to revisiting historical VAT settlements where deductions were deferred solely due to late invoice receipt.However, the practical impact of the decision remains uncertain. The case has been referred to the Court of Justice for review, and its effect is currently suspended pending further examination. Moreover, the rollout of mandatory e-invoicing systems—such as Poland’s KSeF—may reduce the likelihood of similar disputes by standardising the moment an invoice is deemed to be received.
This ruling represents a meaningful development in the interpretation of VAT deduction rights and the limits of national formal requirements. Taxpayers should continue to monitor the case as it proceeds through review before making changes to their compliance processes.
Emilia Wolnowska
BDO in Poland