Comments on ECG T-689/24: Confirms Incompatibility of Polish Input VAT Deduction Rules with EU Law

The General Court, in case T‑689/24 (I. S.A. v Dyrektor Krajowej Informacji Skarbowej), upheld the view that Polish rules on input VAT deduction are incompatible with the VAT Directive, marking a successful first appearance before the Court for the author.
Beyond reaffirming that unmet formal requirements cannot override fulfilled material conditions for VAT deduction, the ruling crucially addresses the treatment of so‑called “late invoices” under Polish law.
The Court distinguished the case from earlier case law (notably C‑152/02 Terra Baubedarf‑Handel), confirming that where an invoice is received before the deadline for filing the return for the relevant period, restricting deduction to a later period breaches EU law—making legislative change in Poland unavoidable.

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Immediate VAT Deduction Right Affirmed Despite Invoice Receipt Delay

The court ruled that the right to VAT deduction cannot be postponed to the period of invoice receipt if the invoice is already in possession at the time of filing the tax return for the period of supply.
The case involved the Polish company ISA, which faced delays in receiving invoices for gas and electricity purchases, leading the tax authority to assert that VAT deductions could only be claimed once the invoice was received, contrary to EU VAT directives.
The court emphasized that the right to deduct VAT arises when the tax becomes due, and delaying this right based solely on formal conditions violates principles of tax neutrality and proportionality, aligning with prior case law.