Full VAT Deduction on Re-invoiced Third-Party Services by Banks: Court Ruling 2025

• The Supreme Administrative Court ruled on April 17, 2025, regarding full VAT deduction for banks on services purchased from third parties and re-invoiced to clients.
• mBank, a VAT taxpayer, primarily offers VAT-exempt services but also purchases external services like legal advice and valuations, passing these costs to clients without a markup.
• The bank sought confirmation on its obligation to issue VAT invoices to clients and its right to fully deduct VAT from supplier invoices.
• The tax authority and the Warsaw Administrative Court initially ruled that only partial VAT deduction was allowed, as the services also benefited the bank.
• The Supreme Administrative Court overturned this decision, supporting the bank’s full VAT deduction claim.
• The court emphasized that external services are directly linked to specific client transactions and are essential for their execution.
• The ruling is significant for financial institutions dealing with mixed VAT situations, highlighting the importance of clearly associating expenses with taxable activities.

Source: mddp.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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