General Court T-689/24 (Dyrektor Krajowej Informacji Skarbowej) – Judgment – VAT deductible for the right period if you get the invoice before filing

Explanatory document

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On February 11, 2025, the General Court issued the judgment in the case T-689/24 (Dyrektor Krajowej Informacji Skarbowej).

Context: Reference for a preliminary ruling – Taxation – Common system of VAT – Right to deduct input VAT – Article 167, Article 168(a) and Article 178(a) of Directive 2006/112/EC – Issuing of the invoice showing the VAT during the tax period following that in respect of which the right of deduction is exercised – Fiscal neutrality and proportionality

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Summary of the Case

• Factual Background
  I. S.A. purchased gas and electricity and sought to deduct input VAT for the period in which the supplies occurred, even though the invoices were received only in the following period. The Polish tax authority held that the deduction could arise only when the invoice was received, delaying the right of deduction.
• Questions to the Court
  The referring court asked whether Articles 167, 168(a) and 178(a) of the VAT Directive permit national law to postpone the right of deduction until the invoice is received. It further asked whether such postponement violates the principles of neutrality, proportionality and effectiveness.
• Court’s Assessment
  The General Court examined the distinction between substantive conditions (when VAT becomes chargeable) and formal conditions (holding an invoice). It found that the right of deduction arises when VAT becomes chargeable, and holding the invoice is only a condition for exercising the right, not for its creation.
• Decision
  The Court held that national legislation preventing a taxpayer from deducting VAT for a period in which the substantive conditions were met, solely because the invoice arrived later, is incompatible with EU law. It concluded that the deduction must be allowed if the invoice is available when the return is submitted.
• Justification of the Decision
  The Court reasoned that postponing the deduction forces the taxable person to bear VAT temporarily, breaching fiscal neutrality and the immediate character of the deduction. It also held that such restrictive legislation is disproportionate, because it exceeds what is necessary to prevent evasion when the invoice is available at the time of filing.

 

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Articles in the EU VAT Directive

Articles 167, 168(a) and 178(a) of Council Directive 2006/112/EC

Article 167

Right of deduction:
“A right of deduction shall arise at the time the deductible tax becomes chargeable.”

Article 168

Deductions allowed:
“In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person.”

Article 178

Conditions under which the right of deduction may be exercised:
“In order to exercise the right of deduction, a taxable person must meet the following conditions:
(a) for the purposes of deductions pursuant to Article 168, in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Articles 226 to 230.

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Facts

• Parties Involved: The case involves I. S.A., a company engaged in clearing and settlement activities related to gas and electricity trading, as the applicant, and the Dyrektor Krajowej Informacji Skarbowej (Director of the National Tax Information Service) as the defendant.
• Advance Ruling Request: I. S.A. sought an advance ruling regarding its right to deduct VAT on purchases of electricity and gas, specifically in a situation where it received the corresponding invoices in a subsequent tax period, but before the deadline for submitting its VAT return.
• Director’s Ruling: On 12 November 2019, the Director ruled against the applicant, stating that the right to deduct VAT arises only upon receipt of the invoice, thereby denying the applicant’s claim to deduct input tax for the period in which the tax obligation arose.
• Judicial Proceedings: The Regional Administrative Court in Warsaw dismissed I. S.A.’s appeal on 9 October 2020, supporting the Director’s interpretation that the right to deduct input VAT requires holding an invoice at the time of submitting the VAT return.
• Supreme Court’s Inquiry: The Supreme Administrative Court of Poland raised concerns about the compatibility of the Polish VAT law with EU VAT Directive 2006/112/EC, questioning whether the requirement to hold an invoice to exercise the right to deduct violates principles of fiscal neutrality and the substantive conditions outlined in EU law.

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Question

Must Articles 167, 168(a) and 178(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, as amended) and the principles of fiscal neutrality, effectiveness and proportionality be interpreted as precluding a provision of national law, such as Article 86(10b)(1) of the [Ustawa o podatku od towarów i usług (Polish Law on VAT)], under which a taxable person may not assert the right to deduct input tax in a return submitted for a period in which that person met the substantive conditions for exercising that right if, during that period, he or she had not yet received an invoice, even though that person did receive the invoice before submitting the return?

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AG Opinion

None

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Decision

Article 167, Article 168(a) and Article 178(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principles of value added tax (VAT) neutrality and of proportionality,

must be interpreted as precluding national legislation under which a taxable person may not assert his or her right to deduct input tax in a return submitted for a period in which he or she satisfied the substantive conditions for exercising that right if, during that period, he or she had not yet received the corresponding invoice, even though he or she did receive the invoice before submitting the return.

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Source 

• Curia

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Executive summary

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Other ECJ Cases referred to

Core principles: neutrality, immediacy, scope of deduction

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