2026-03-09
Invoice timing and the right to deduct VAT – EU General Court challenges Polish rules
On 11 February, the EU General Court (Case T-689/24) delivered an important judgment in a “Polish case” on the moment of input VAT deduction. The ruling may have far-reaching consequences for Polish businesses and the way VAT is settled in Poland.
The essence of the judgment
The EU General Court held that the VAT Directive precludes national rules that make the input VAT deduction dependent from the date the purchase invoice is received. Under EU law, the right to deduct arises at the time the chargeable event occurs — i.e. when the goods are supplied or the services are performed.
Holding an invoice is a formal requirement for exercising that right, yet it does not determine when the right itself comes into existence. In practical terms, if a taxpayer has met the substantive conditions for deduction (the transaction actually took place, VAT was properly charged, and the purchase is used for taxable activities) and received the invoice before filing the VAT return for the relevant period, the deduction should be available in that period. Even if the invoice had been received after the end of that calendar period.
A practical example, based on Polish monthly VAT-reporting rules
Assume a transaction took place in February, and the invoice was received on 15 March. The deadline for filing the February VAT return is 25 March.
Under current Polish regulations and practice, the taxpayer could deduct the input VAT only in March, since that is when the invoice was received. Following the General Court’s judgment, this approach is incompatible with the VAT Directive. Since the chargeable event occurred in February and the invoice was received before the February return was filed, the deduction should be available in February.
Tension with Polish legislation
Polish rules explicitly linking the input VAT deduction to the date of receipt of the invoice are unfavorable for taxpayers, since it worsens their cash-flow. In practice, this shifts the right to deduct to a later reporting period, even where the taxpayer held the invoice before the filing deadline. On one hand, Polish regulations allow to issue a sales invoice (holding the buyer’s input VAT) till the 15th of the following month. On the other hand, the seller is obligated to report output VAT in the month of sale, while the buyer is only allowed to deduct input VAT at a later month.
The judgment challenges this framework. The Court clearly distinguished between the moment the right to deduct arises (a substantive matter) and the formal conditions for exercising it. Member States may not introduce rules that effectively alter the moment that right comes into existence where all substantive requirements under
the Directive are met.
Implications for businesses
The ruling is highly significant in practice. First, it may require amendments to Polish VAT legislation to ensure full compliance with EU law. Second, it opens the door to earlier VAT deductions – directly improving companies’ cash flow. Since the implementation of structured xml-invoicing in Poland (February/April 2026) eliminates the practice, in which a seller could mention an earlier date on the invoice (e.g. issuing a PDF-invoice on March 3rd, yet dated February 28th), thus creating a chance for a quicker input VAT deduction, this ruling seems to be a blessing. In an environment of rising financing costs and increasing pressure on liquidity, accelerating a VAT deduction by even one month can have a measurable economic impact.
What’s next?
In the coming months, we can expect discussions on aligning domestic provisions with EU standards. Taxpayers may also consider revisiting prior VAT settlements and, relying directly on the VAT Directive and the Court’s judgment, seek to assert their right to earlier deductions.
The ruling reaffirms that, in the balance between domestic formalism and the substantive right to deduct, the principle of VAT neutrality prevails. In practice, this may mark a meaningful shift in how input VAT is accounted for — and potentially set a new standard in the Polish VAT system.
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