GC VAT Case T-363/25 (UNIX) – Order – VAT deductions can not be denied solely due to invoice trustworthiness if the underlying transactions occurred

On October 30, 2025, the General Court issued the Order in the case T-363/25 (UNIX).

Context: Reference for a preliminary ruling – Article 226 of the Rules of Procedure of the General Court – Answer which can be clearly deduced from the case-law – Taxation – Common system of VAT – Directive 2006/112/EC – Article 168(a) and Article 178(a) – Right to deduct input VAT – Refusal – Tax evasion – Transaction not taking place between the parties on the invoice – No prejudice to the State budget

Articles in the EU VAT Directive 2006/112/EC.

Articles 168 and 178 of the EU VAT Directive 2006/112/EC. (Right to deduct VAT)

Summary

The case involves UNIX Autó, which sought to deduct VAT on invoices for car parts purchased through an intermediary, HCR. The Hungarian tax authorities denied the deduction, claiming the transactions were fictitious and that UNIX was attempting to gain a tax advantage.
The referring court questioned whether VAT Directive provisions allow tax authorities to refuse VAT deductions based on the trustworthiness of invoices when economic transactions occurred, and no harm was done to the state budget. They sought clarification on the definitions of tax avoidance and the credibility of invoicing practices.
The General Court concluded that the VAT Directive prohibits denying VAT deductions solely due to invoice trustworthiness if the underlying transactions occurred and the state budget was unaffected. It emphasized that the right to deduct VAT is fundamental and should not be limited without substantial evidence of fraud.
The ruling stressed that tax authorities must provide concrete evidence of fraudulent activity or knowledge of fraud to deny VAT deductions. The court reaffirmed the principles of fiscal neutrality and effectiveness, stating that the economic reality of transactions must be acknowledged.
Ultimately, the General Court clarified that tax authorities cannot refuse VAT deductions based on the identity of the parties involved in the transaction, as long as the transaction occurred, the goods were supplied, and VAT obligations were met. This ruling reinforces the importance of adhering to established EU VAT principles in national practices.

Questions

(1) Are the provisions of [the VAT Directive] relating to the deduction of VAT to be interpreted as not precluding a practice of the national tax authorities where, although economic events have actually taken place, but not between the parties shown on the invoice, are to be interpreted? even if it is proven that the State budget has not suffered any damage as a result of the transaction which is the subject of that invoice, since the members of the invoicing chain have all fulfilled their obligations to declare and pay the tax? According to the Hungarian tax authorities, what in this case can be considered to constitute tax avoidance or evasion is the fact that the invoice is “not trustworthy” and that the recipient of the invoice was in a more favourable tax position and thus obtained a tax advantage.

(2) If the answer to the first question is in the affirmative, do the provisions of the VAT Directive relating to the deduction of tax, in particular Article 168(a) and Article 178(a), and the principles of fiscal neutrality and effectiveness, permit a national interpretation and practice which, although it is not disputed, consists in the fact that all the links in the invoicing chain have paid into the State budget the amount of the of the VAT due, but nevertheless refuses the right of deduction of the recipient of the invoice on the ground that the invoice is not credible, with the result that the amount of VAT actually paid which was passed on to the recipient of the invoice and which the latter did not have the right to deduct is shown twice as revenue in the State budget?

AG Opinion

None

Order

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010, read in conjunction with the principles of fiscal neutrality and effectiveness, must be interpreted as meaning that:

it precludes a national practice by which the tax authorities refuse a taxable person the right to deduct value added tax (VAT) relating to the acquisition of goods, on the ground that the invoice is not trustworthy, since the economic transaction which is the subject of that invoice did not take place between the parties listed therein and the taxable person thus obtained a tax advantage,

– although the transaction in question actually took place, the taxable person received a supply of those goods, used them for the purposes of his own taxable transactions, that supply was the subject of an invoice, and

– that the State budget has not been adversely affected, as the members of the invoicing chain have all fulfilled their obligations to declare and pay VAT.

In order to justify such a refusal of the right to deduct VAT, the tax authority must establish to the requisite legal standard that the taxable person actively participated in VAT fraud or that that taxable person knew or ought to have known that the issuer of the invoice had committed such fraud.

Source