Timing of VAT Deductions — Tax Authority Confirms Invoice Must Be Held Before Deduction

Summary

• The Czech Financial Administration (Finanční správa) has issued official information stating that, for the time being, the conclusions of the EU General Court in Case T-689/24 (I. S. A.) cannot be applied in practice, because review proceedings before the Court of Justice (Case C-167/26 RX) were initiated on 4 March 2026 and remain ongoing; under Article 62b of the CJEU Statute, the reviewed answer only takes effect once the review concludes. [leitnerleitner.cz], [danovky.cz]
• Input VAT may therefore be deducted only once the taxable person holds a valid tax document (invoice), even where the chargeable event occurred in an earlier tax period. If the invoice is received only in the following period, the deduction may be claimed no earlier than in that following period, in accordance with Section 73(1)(a) and Section 73(2) of the Czech VAT Act. [danovky.cz], [leitnerleitner.cz]
• The authority also points to the CJEU judgment of 12 March 2026 in Case C-521/24 (Aptiv Services Hungary), which held that the right to deduct is in principle exercised for the tax period in which the conditions — including possession of an invoice — are met; this points in a different direction from the General Court’s conclusions, reinforcing the tax authority’s cautious stance until the review is resolved. [leitnerleitner.cz]

1. Background: the General Court judgment T-689/24 (I. S. A.)

On 11 February 2026, the General Court of the European Union delivered its judgment in Case T-689/24, I. S. A. v Dyrektor Krajowej Informacji Skarbowej, on a reference from the Polish Supreme Administrative Court (Naczelny Sąd Administracyjny). The case concerned a Polish energy trader that purchased gas and electricity, where VAT became chargeable in one tax period but the supplier’s invoice was received only in the following period — yet before the VAT return for the original period was filed. [vatupdate.com], [eur-lex.europa.eu]

The General Court distinguished between the substantive conditions for the right to deduct (which arise when VAT becomes chargeable, i.e. at the time of supply) and the formal condition of holding an invoice. It held that national legislation preventing deduction in the period in which the substantive conditions were met — solely because the invoice arrived later, but before the return was filed — is incompatible with the VAT Directive and the principles of fiscal neutrality and proportionality. [vatupdate.com], [nowium.com]

Because the Polish rules (Article 86(10b)(1) of the Polish VAT Act) are almost identical in structure to Section 73 of the Czech VAT Act, the judgment attracted immediate attention in the Czech Republic, raising the question of whether Czech practice would need to change. [pkfapogeo.cz], [pechmannova.com]

2. The Czech Financial Administration’s official position

On 13 April 2026, the Czech Financial Administration issued a notice taking an unequivocal position: the conclusions of the General Court ruling in T-689/24 cannot be applied in practice for the time being. Two reasons were given. [leitnerleitner.cz]

First, review proceedings before the Court of Justice in Case C-167/26 RX were initiated on 4 March 2026 following a request for review by the First Advocate General, and remain ongoing. Under Article 62b of the CJEU Statute, the reviewed answer only takes effect once the review is concluded. The existence of the review effectively suspends the application of the General Court’s conclusions, and reliance on the direct effect of Council Directive 2006/112/EC is not permissible in this context. [leitnerleitner.cz]

Second, the CJEU delivered a judgment on 12 March 2026 in Case C-521/24 (Aptiv Services Hungary), containing general conclusions on the timing of the exercise of the right to deduct. The Court held that the right to deduct is in principle exercised for the tax period in which the conditions for its exercise are met — including possession of an invoice. This points in a different direction from the General Court’s conclusions in T-689/24. [leitnerleitner.cz]

3. Implications for practice under Section 73

The practical consequence is that current Czech legislation remains fully binding and continues to be applied by the tax authority. Where a VAT payer receives an invoice only in the following tax period, the right to deduct may be exercised no earlier than in that following period (or in one of the subsequent periods, within the statutory time limit), in accordance with Section 73(1)(a) and Section 73(2) of the Czech VAT Act. [leitnerleitner.cz], [danovky.cz]

The right to deduct may therefore be claimed at the earliest in the period in which the taxpayer received the tax document (invoice). Czech law links the possibility to claim a deduction to the moment the invoice is received, rather than purely to the moment the VAT liability arises. [danovky.cz]

This position is consistent with an earlier discussion paper of the Coordination Committee of the Chamber of Tax Advisers and the General Financial Directorate (March 2026), which concluded that a taxpayer cannot claim a VAT deduction in a previous tax period through an additional VAT return after receiving the tax document, because possession of the tax document is a precondition for exercising the right. [kpmg.com]

4. What to watch

The final outcome depends on the result of the review proceedings before the CJEU in Case C-167/26 RX. Until Czech legislation is amended or the review concludes, taxpayers should continue to apply the existing rules under Section 73. Businesses dealing with late-received invoices relating to a previous period — particularly those with high transaction volumes or intra-group flows — should document their position and monitor developments closely, as corrections for past periods may become relevant depending on the review’s outcome. [leitnerleitner.cz], [danovky.cz]

5. Sources and further reading

• VAT deduction from a late-received invoice relating to a previous period – Czech Financial Administration’s view – LeitnerLeitner [leitnerleitner.cz]
• Claiming input VAT before receiving invoice: landmark judgment does not (yet) change Czech practice – KPMG Czech Republic [danovky.cz]
• EU General Court: VAT deduction can be claimed if the invoice is available when filing the return – LeitnerLeitner [leitnerleitner.cz]
• EGC T-689/24 (Dyrektor Krajowej Informacji Skarbowej) – Judgment – VATupdate [vatupdate.com]
• Full text of the judgment – EUR-Lex (Case T-689/24, ECLI:EU:T:2026:113) [eur-lex.europa.eu]
• Tax authority discussion paper on claiming VAT deduction in previous tax period – KPMG TaxNewsFlash [kpmg.com]