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- Introduction
ECJ and General Court jurisprudence remains fundamental to the uniform interpretation of the EU VAT system. Court rulings and pending references can affect established positions on input VAT deduction, transfers of going concerns, chain transactions, VAT refunds, special schemes, taxable-person status, fixed establishments and the limits of national implementation.
This overview covers VAT-related developments posted on VATupdate.com from 1 August through 30 September 2026. The reporting period is determined by the publication date on VATupdate.com, not necessarily by the date of the underlying judgment, opinion, reference or registration.
The overview combines:
- ECJ and General Court judgments and orders;
- Advocate General Opinions;
- cases for which facts or questions were released;
- infringement actions;
- newly registered ECJ and General Court cases without substantive details;
- consultant and Member State commentary on the implementation of relevant jurisprudence.
No new substantive VAT judgment was identified as having been delivered during August 2026. The principal judgments covered in this reporting period were delivered in September. August nevertheless produced several new references, infringement actions and implementation-related publications. The VATupdate.com 2026 case overview confirms the five VAT judgments delivered on 2, 9 and 10 September 2026. [vatupdate.com], [vatupdate.com], [vatupdate.com]
- ECJ and General Court Judgments
- Issue: Application of the special VAT scheme for travel agents to promotional excursions financed partly through sales of goods.
- Question: Whether structurally loss-making promotional excursions fall within the special scheme and whether a negative margin produces a right to a VAT refund.
- Decision: The special scheme applies, but a negative margin does not confer a right to deduct or obtain a refund of the input VAT on purchased travel services.
Detailed analysis
P‑GmbH organised promotional excursions using transport and other travel services purchased from third parties. Participants paid a fee that covered only part of those costs. The remaining costs were financed from goods sold during the excursions, although participants were not obliged to purchase those goods.
The Court held that the travel service had a distinct purpose for customers and was not merely ancillary to the sale of goods. The special scheme therefore applied even though P‑GmbH was not formally a travel agent and the travel element generated a structurally negative margin.
The Court declined to follow the Advocate General’s narrower approach to the scope of the scheme. It emphasised that fiscal neutrality cannot override an express derogation laid down by the EU legislature. Input VAT on third-party services supplied for the direct benefit of the traveller was therefore not deductible or refundable. Nor could a negative margin be used to obtain a refund or offset profits from other supplies. [vatupdate.com], [vatupdate.com]
VAT compliance implications
Businesses combining travel, excursions, events or hospitality with product promotion should determine whether they act in their own name and use travel services bought from third parties. The assessment is required even where travel is not the principal activity and is cross-subsidised by other revenue.
TOMS configurations should calculate the margin at the legally required transaction level. Businesses should also review whether ERP systems incorrectly deduct input VAT on purchased travel services merely because the travel component is loss-making.
The VATupdate.com case page includes the related podcast and briefing materials. [vatupdate.com]
- Issue: Whether donating an undertaking in two equal half-shares qualifies as a transfer of a totality of assets.
- Question: Can Article 19 apply where each recipient receives only half of an undertaking and intends subsequently to contribute that share to a jointly owned partnership?
- Decision: No. Each transfer must be assessed independently, and neither half-share constituted an autonomous business capable of carrying on an independent economic activity.
Detailed analysis
The case concerned the donation of an undertaking to two daughters, each receiving a 50% share. They intended to contribute their respective shares immediately to a partnership through which the activity would continue.
The General Court treated the donations and the proposed contributions as separate transactions. The later continuation of the overall business by the partnership could not correct the absence of an independently operational business at the time of each donation.
Article 19 requires the assets transferred to a recipient to constitute a business or an autonomous part of a business capable of carrying on an independent economic activity. A half-share that could not independently support that activity did not meet the condition. [vatupdate.com], [vatupdate.com]
VAT compliance implications
Family succession, demerger and contribution-in-kind arrangements should be tested at each legal transfer step. Documentation should demonstrate that each recipient obtains the assets, contracts, rights and operational resources required to continue an independent activity.
A planned second transfer or later aggregation of fragmented assets may not retrospectively bring the first transfer within the Article 19 no-supply rule.
The VATupdate.com case page includes the related podcast and slide deck. [vatupdate.com]
- Issue: Attribution of a single intra-Community movement in a supply chain involving excise goods.
- Question: Whether movement under an excise-duty suspension arrangement and taxation of the final customer automatically establish that the first supply qualifies for the Article 138 exemption.
- Decision: No. The transport must be attributed by examining the transfer of the right to dispose of the goods as owner and which party organised and controlled the movement.
Detailed analysis
A Latvian supplier sold petroleum products to intermediaries, which immediately resold them to customers in other Member States. Only one cross-border movement occurred.
The General Court held that physical departure from Latvia, the excise-duty suspension arrangement and the possible application of the triangular-transaction simplification did not determine which supply benefited from the intra-Community exemption. The attribution required an overall assessment of the contractual and commercial circumstances.
The decisive factors included when the right to dispose of the goods as owner passed, who organised the transport and at what point the final customer obtained control of the goods. [vatupdate.com], [vatupdate.com]
VAT compliance implications
Businesses should preserve contracts, Incoterms, title and risk provisions, transport instructions, CMRs, excise documents and communications between the participants. Excise movement documentation cannot substitute for a separate VAT chain-transaction analysis.
Tax-determination logic should not attribute the zero-rated movement solely by reference to physical dispatch or the identity of the party liable for excise duty.
- Issue: Input VAT adjustment after a transfer of a going concern followed by exempt letting of retained property.
- Question: Whether the Article 19 successor fiction transfers the adjustment obligation to the transferee where the transferor retains the property and lets it VAT-exempt to the transferee.
- Decision: The transferor remained responsible for the adjustment because its exempt letting changed the use of the retained property.
Detailed analysis
A&P Deco transferred its garden-centre activity but retained the premises on which the business operated. It subsequently leased those premises VAT-exempt to the transferee.
The General Court did not interpret the Article 19 succession mechanism as transferring the adjustment history of assets that were not included in the business transfer. The property remained with the transferor, whose exempt letting represented a change in use relevant to Articles 184 to 190 of the VAT Directive. [vatupdate.com], [vatupdate.com]
VAT compliance implications
TOGC documentation must distinguish transferred assets from retained assets. Capital-goods adjustment schedules should remain linked to the owner of retained property.
Where premises are retained and leased to the business transferee, the VAT treatment of the lease and the remaining adjustment period should be modelled before completion. This is particularly relevant in Belgium, where buildings can be subject to extended adjustment periods.
- Issue: National restrictions on the Article 19 transfer-of-assets regime.
- Question: Whether Austria could exclude transactions involving assets generating rental or leasing income from the no-supply rule.
- Decision: Article 19 precludes an income-category restriction not authorised by the VAT Directive and may have direct effect where a Member State has exercised the option but implemented it too narrowly.
Detailed analysis
The proceedings concerned the contribution of developed properties, previously let subject to VAT, to a company controlled by the transferor. Austrian legislation restricted the transfer-of-assets treatment by reference to domestic income-tax categories.
The General Court focused instead on whether the assets constituted an operational economic unit capable of continuing an independent activity. A domestic income-tax classification could not impose a limitation unsupported by Article 19. [vatupdate.com], [vatupdate.com]
VAT compliance implications
Domestic TOGC exclusions should be tested against Article 19 and not accepted automatically because they appear in national legislation. Businesses must nevertheless evidence that the assets form an operational unit and that the transferee intends to continue the activity.
The judgment is particularly relevant to real-estate contributions, incorporations of individual businesses and transfers involving rental activities.
- Advocate General Opinion
- Facts: A Polish company received invoices after the tax period in which the supplies occurred but before the filing deadline for the VAT return for that earlier period.
- Question: Whether input VAT may be deducted in the supply period where the taxable person did not yet possess the invoice during that period.
- AG View: Deduction should be exercised in the period in which both the supply has occurred and the taxable person possesses the invoice.
Analysis
Advocate General Kokott considered that the General Court’s judgment in T‑689/24 departed from established ECJ case law by permitting deduction for a period in which the taxable person did not yet hold the invoice.
The right to deduct arises when VAT becomes chargeable, but its exercise requires both the substantive conditions and possession of an invoice. If followed, the Opinion would restore the distinction between the origin of the right and the period in which it may be exercised. [vatupdate.com], [vatupdate.com]
Compliance relevance
Businesses should preserve reliable invoice-receipt timestamps and distinguish the invoice issue date, transmission date, receipt date, validation date and accounting date.
Member State implementation: Czech Financial Administration
A VATupdate.com article published on 5 August reported that the Czech Financial Administration would continue to require possession of the invoice before deduction while the review proceedings remain pending. It stated that an invoice received in the following period could not be deducted in the earlier supply period merely because it arrived before the earlier return was filed. The article cited commentary from LeitnerLeitner and Danovky.cz. VATupdate.com: Czech VAT deduction timing after Court ruling. [vatupdate.com]
This is a concrete example of national administrations maintaining established invoice-possession requirements pending the final ECJ review ruling.
- Cases and Actions for Which Facts or Questions Were Released
C‑504/26, Commission v Spain: Failure to Transpose the EU SME VAT Scheme
- Facts: The European Commission brought an infringement action alleging that Spain failed to adopt or communicate the measures necessary to implement Directive (EU) 2020/285.
- Question: Whether Spain failed to fulfil its EU obligations concerning the revised special scheme for small enterprises.
- Relief sought: A declaration of infringement, a lump-sum payment and, if the infringement continued until judgment, a daily penalty.
The revised SME regime was due to be transposed by 31 December 2024 and applied from 1 January 2025. It allows qualifying small enterprises to benefit from exemptions in Member States other than their Member State of establishment, subject to the EU turnover threshold and national conditions. [vatupdate.com], [vatupdate.com]
Compliance relevance
Small enterprises using, or seeking to use, the cross-border SME scheme should verify actual availability in Spain rather than relying only on the Directive’s formal application date. Larger groups should also review vendors claiming SME exemption status, as incorrect status can affect invoice validation and deduction controls.
C‑512/26, Commission v Spain: Failure to Transpose the 2022 VAT Rates Reform
- Facts: The Commission alleged that Spain failed to adopt or communicate the measures necessary to transpose Directive (EU) 2022/542.
- Question: Whether Spain failed to fulfil its obligations concerning the revised EU framework for VAT rates.
- Relief sought: A declaration of infringement and financial penalties under Article 260(3) TFEU.
The Directive changed the framework for reduced rates, certain virtually attended activities and aspects of the special arrangements for taxable dealers. The required measures were due to apply from 1 January 2025. [vatupdate.com], [vatupdate.com]
Compliance relevance
Businesses should base Spanish VAT-rate determination on enacted Spanish legislation and effective dates. The infringement action does not itself implement the missing provisions or authorise taxpayers to apply a preferred rate.
T‑407/26, Wagner Sport Signage: Missing VAT Identification Number in an EU VAT Refund Application
- Facts: A refund application under Directive 2008/9/EC was rejected in its entirety because the VAT identification number or tax reference relating to one invoice was missing.
- Questions: Whether the application could be treated as not submitted; whether the authority had to request additional information; and whether the valid part of the application should still be examined.
The questions engage the principles of fiscal neutrality, effectiveness, proportionality and good administration, as well as Articles 8 and 15 of Directive 2008/9/EC. [vatupdate.com]
Compliance relevance
Refund applicants should validate all invoice-level mandatory fields before submission. Tax teams should nevertheless preserve arguments against full rejection where an isolated formal omission can be corrected and the remaining claim is complete.
T‑518/26, Wlecka: Sale of Previously Leased Land and Taxable-Person Status
- Facts: An individual sold inherited land previously leased to a farmer for consideration but undertook no significant development or marketing comparable to a professional property trader.
- Question: Whether the previous long-term leasing was sufficient to make the later sale an economic activity under Article 9(1) of the VAT Directive.
The case may clarify whether the taxable status arising from exploitation of property through leasing necessarily extends to its subsequent disposal. [vatupdate.com]
Compliance relevance
Property owners should assess the sale separately from the prior leasing activity. Relevant evidence includes the asset’s allocation, development work, subdivision, marketing measures and the seller’s degree of commercial activity.
T‑537/26, M Car Sofia: Second-Hand Vehicle Margin Scheme and Purchase Price
- Facts: A dealer acquired rights relating to leased second-hand vehicles from private individuals, while legal ownership was transferred through arrangements involving the leasing company.
- Questions: Whether the transactions form a single supply, whether the vehicles were supplied by a non-taxable person and which payment constitutes the purchase price for the margin scheme.
Compliance relevance
Dealers should document the legal supplier, recipient of each payment, transfer of title and composition of the statutory purchase price. Margin-scheme systems should not assume that every payment connected with obtaining the vehicle forms part of that purchase price. VATupdate.com’s Week 39 newsletter confirms that the case was among the newly reported pending VAT proceedings.
T‑548/26, Finanzamt Freising: Input VAT Adjustment After Leaving the Agricultural Flat-Rate Scheme
- Facts: A German farmer moved from the agricultural average-rate scheme to standard taxation and sought an adjustment of VAT on inputs acquired before the change but used for later taxable outputs.
- Question: Whether Germany’s EUR 1,000 de minimis threshold unlawfully prevents an adjustment under Articles 184, 185 and 192 of the VAT Directive.
The case may define the boundary between permissible administrative simplification and a substantive restriction of the adjustment mechanism. [vatupdate.com]
Pending German Reference: Automated Sludge-Drying Installation and Fixed Establishment Without Own Personnel
- Facts: An Austrian company operated an automated sludge-drying installation at a German municipal wastewater plant. The facility was mainly monitored remotely, with limited local activities performed by a subcontractor.
- Question: Whether equipment can constitute a fixed establishment where the taxable person has no personnel of its own permanently present at the location.
The reference is relevant to automated manufacturing, energy, infrastructure, environmental services, logistics and other remotely operated facilities. VATupdate.com’s Week 39 newsletter identified the reference and its focus on whether a fixed establishment can exist without personnel.
Compliance relevance
Businesses should document who controls local equipment, who performs operational functions, whether subcontracted personnel are available as if they were the business’s own resources, and whether the local structure can receive or make the supplies concerned.
- Newly Registered ECJ and General Court VAT Cases
C-978/26 (Rompetrol Rafinare) – No details known yet – VATupdate
- Court: ECJ.
- Status: VAT-related case registered. No substantive facts, legal questions, Opinion or judgment had been released in the material available during the reporting period.
- Description: “VAT-related case registered; details on facts and referred questions have not yet been released.”
T‑519/26, Liege Cargo Agency & T-520/26 (Frexport)
The circumstances and reasoning are almost identical to those of the request for a preliminary ruling F-53/26. The questions referred for a preliminary ruling are identical.
T‑540/26, Fumanko: Newly Registered Polish VAT Case
- Court: General Court.
- Status: Polish reference lodged on 20 July 2026.
- Description: “VAT-related case registered; details on facts and referred questions have not yet been released.”
T‑555/26, Gemeinde A: Newly Registered VAT Case
- Court: General Court.
- Status: VAT-related case registered without published facts or questions.
- Description: “VAT-related case registered; details on facts and referred questions have not yet been released.”
T‑575/26, Société Ecurie HZ: Newly Registered French VAT Case
- Court: General Court.
- Status: French reference lodged by the Conseil d’État on 5 August 2026.
- Description: “VAT-related case registered; details on facts and referred questions have not yet been released.”
The case was identified as concerning VAT, but the substantive issue had not yet been published. [vatupdate.com]
- Consultant Commentary and Member State Reactions
Czech Republic: invoice possession remains required
The Czech Financial Administration maintained the position that input VAT may be deducted only once the taxable person possesses the invoice. The publication cited LeitnerLeitner and Danovky.cz and explained that the reviewed General Court answer in T‑689/24 could not yet be applied while C‑167/26 (RX) remained pending. VATupdate.com article. [vatupdate.com]
Financial services: post-assignment credit management
A VATupdate.com publication reported that credit-management services performed by an original lender after assignment of the loans are taxable. The credit-management exemption applies within the lender-borrower relationship, but not necessarily where the original lender supplies management services to an assignee or securitisation vehicle. The publication highlighted possible irrecoverable VAT costs for SPVs, securitisation structures and covered-bond arrangements. VATupdate.com: Post-assignment credit management services. [vatupdate.com]
This publication concerned the implications of the earlier T‑184/25 judgment rather than a new August judgment. It is relevant because it represents market commentary posted within the reporting period. The VATupdate.com decided-cases overview records T‑184/25 as a judgment of 17 June 2026. [vatupdate.com], [vatupdate.com]
- Practical Takeaways for EU VAT Compliance
- Review TOGC positions: Reassess transfers involving divided ownership, retained real estate, contributions in kind and domestic restrictions narrower than Article 19.
- Strengthen chain-transaction evidence: Retain documentation showing transport responsibility, transfer of disposal rights and the relationship between VAT and excise movements.
- Review promotional travel models: Determine whether bundled travel, excursion, event or hospitality services fall within the travel agents’ margin scheme.
- Record invoice receipt dates: Maintain receipt data separately from supply, issue, validation and posting dates pending the final ruling in C‑167/26 (RX).
- Validate EU refund applications: Introduce invoice-level completeness checks, but preserve proportionality and good-administration arguments where a minor omission causes full rejection.
- Review property disposals: Do not assume that prior leasing automatically makes every later property sale taxable. Assess the seller’s conduct and the asset’s business allocation.
- Review second-hand goods processes: Confirm the identity of the statutory supplier and the amount forming the purchase price in lease-exit and multi-party acquisitions.
- Assess automated fixed-establishment risks: Identify foreign installations operated remotely and examine access to local technical and human resources.
- Monitor Spanish implementation: Follow the infringement proceedings on the SME scheme and VAT rates, while continuing to apply enacted Spanish law.
- Update litigation trackers: Add C‑504/26, C‑512/26, C‑978/26, T‑407/26, T‑518/26, T‑519/26, T‑537/26, T‑540/26, T‑548/26, T‑555/26 and T‑575/26.
- Align digital controls: E-invoicing and real-time reporting do not alter substantive VAT conditions, but systems should retain the evidence needed to determine deduction periods, rates, exemptions and transaction classification.
- Conclusion
The developments posted from 1 August through 30 September 2026 show three clear trends.
First, the Courts continue to require a transaction-specific analysis. Subsequent restructuring steps, cross-subsidisation, excise arrangements and broad domestic classifications cannot replace the factual tests prescribed by the VAT Directive.
Second, procedural questions are becoming increasingly important. Invoice possession, refund-application completeness, adjustment thresholds and the evidence supporting cross-border exemptions can determine whether a substantive VAT right can be exercised in practice.
Third, several newly registered proceedings concern operating models affected by digitalisation and complex legal ownership structures, including automated establishments, lease-exit vehicle acquisitions and structured transfers of business assets.
EU VAT compliance teams should combine monitoring of ECJ and General Court proceedings with national administrative practice and consultant commentary. This is particularly important where Member States adopt different interim positions while litigation remains pending. Continuous monitoring of VATupdate.com case analyses, newsletters and podcasts provides a practical basis for updating VAT determination rules, internal guidance, documentation standards and audit-defence files.
Briefing Document
This briefing document provides an overview of key VAT-related developments posted on VATupdate.com from August 1 through September 30, 2026. It synthesizes judgments, Advocate General opinions, new case references, infringement actions, and expert commentary to highlight the most important themes, decisions, and compliance implications for businesses operating within the EU VAT system.
The reporting period saw no new substantive VAT judgments delivered in August, but a significant five judgments were issued in September, alongside numerous new references and infringement actions.
Key Trends Identified
The developments underscore three overarching trends in EU VAT jurisprudence:
- Transaction-Specific Analysis: Courts consistently demand a detailed, fact-based analysis for each transaction. Broad domestic classifications, subsequent restructuring steps, cross-subsidisation, or excise arrangements cannot override the specific factual tests prescribed by the VAT Directive.
- Importance of Procedural Compliance: Procedural aspects, such as invoice possession, completeness of refund applications, and proper documentation of cross-border exemptions, are increasingly critical. These procedural requirements can determine whether a substantive VAT right can be effectively exercised.
- VAT Implications of Modern Operating Models: A growing number of new cases address complex operating models driven by digitalization and sophisticated legal ownership structures, including automated fixed establishments, lease-exit vehicle acquisitions, and structured business asset transfers.
ECJ and General Court Judgments (September 2026)
1. C‑565/24, P‑GmbH & Co. KG: Travel Agents’ Margin Scheme and Negative Margins (ECJ, 10 September 2026)
- Issue: Application of the special VAT scheme for travel agents (TOMS) to promotional excursions partly financed by sales of goods, particularly when the travel element generates a negative margin.
- Decision: The ECJ ruled that “The special scheme applies, but a negative margin does not confer a right to deduct or obtain a refund of the input VAT on purchased travel services.”
- Analysis: The Court found that the travel service had a distinct purpose for customers and was not merely ancillary to the sale of goods, thus falling under TOMS, even if P-GmbH was not formally a travel agent. It emphasized that fiscal neutrality cannot override an express derogation in EU law. Consequently, input VAT on third-party services directly benefiting the traveller was neither deductible nor refundable, and a negative margin could not be used to obtain a refund or offset other profits.
- Compliance Implications: Businesses combining travel, excursions, events, or hospitality with product promotion must assess if they act in their own name using third-party travel services, even if travel is not their principal activity or is cross-subsidized. ERP systems should be reviewed to prevent incorrect input VAT deductions on purchased travel services solely because the travel component is loss-making.
2. T‑366/25, Szytelbiecka: Donation of an Undertaking in Equal Shares and Article 19 (General Court, 9 September 2026)
- Issue: Whether donating an undertaking in two equal half-shares qualifies as a transfer of a totality of assets (TOGC) under Article 19 of the VAT Directive.
- Decision: The General Court held: “No. Each transfer must be assessed independently, and neither half-share constituted an autonomous business capable of carrying on an independent economic activity.”
- Analysis: The case involved the donation of an undertaking to two daughters, each receiving a 50% share, with an intent to immediately contribute these shares to a partnership. The Court treated the donations and subsequent contributions as separate transactions. It stressed that Article 19 requires “the assets transferred to a recipient to constitute a business or an autonomous part of a business capable of carrying on an independent economic activity.” A half-share, unable to support independent activity, failed this condition.
- Compliance Implications: Family succession, demerger, and contribution-in-kind arrangements must be rigorously tested at each legal transfer step. Documentation must demonstrate that each recipient obtains sufficient assets, contracts, rights, and resources to continue an independent activity. A planned subsequent aggregation of fragmented assets does not retrospectively bring the initial fragmented transfer within the Article 19 no-supply rule.
3. T‑614/25, Trading 4: Attribution of Transport in an Intra-Community Chain Transaction (General Court, 9 September 2026)
- Issue: Attribution of a single intra-Community movement in a supply chain, specifically concerning excise goods.
- Decision: The Court ruled: “No. The transport must be attributed by examining the transfer of the right to dispose of the goods as owner and which party organised and controlled the movement.”
- Analysis: The General Court clarified that factors like physical departure from a Member State, excise-duty suspension arrangements, or the potential application of triangular transaction simplification do not automatically determine which supply in a chain benefits from the intra-Community exemption. Instead, attribution requires “an overall assessment of the contractual and commercial circumstances,” focusing on when ownership rights passed, who organized transport, and when the final customer obtained control.
- Compliance Implications: Businesses must diligently preserve contracts, Incoterms, title and risk provisions, transport instructions, CMRs, excise documents, and communications between participants. Excise movement documentation alone cannot substitute for a separate, detailed VAT chain-transaction analysis.
4. T‑397/25, A&P Deco: TOGC, Retained Immovable Property and Input VAT Adjustment (General Court, 2 September 2026)
- Issue: Input VAT adjustment after a TOGC where the transferor retains the business premises and subsequently leases them VAT-exempt to the transferee.
- Decision: The General Court held that “The transferor remained responsible for the adjustment because its exempt letting changed the use of the retained property.”
- Analysis: A&P Deco transferred its garden-centre activity but retained the premises, which it then leased VAT-exempt to the transferee. The Court clarified that the Article 19 succession mechanism does not transfer the adjustment history of assets not included in the business transfer. The transferor’s exempt letting of its retained property constituted a “change in use relevant to Articles 184 to 190 of the VAT Directive.”
- Compliance Implications: TOGC documentation must clearly distinguish between transferred and retained assets. Capital-goods adjustment schedules should remain linked to the owner of retained property. If premises are retained and leased to the business transferee, the VAT treatment of the lease and the remaining adjustment period should be modelled thoroughly before completion, especially given extended adjustment periods in some Member States like Belgium.
5. T‑413/25, Peckeger: Article 19 TOGC Treatment and Unlawful National Restrictions (General Court, 2 September 2026)
- Issue: National restrictions on the Article 19 transfer-of-assets regime, specifically Austria’s exclusion of transactions involving assets generating rental or leasing income.
- Decision: The Court ruled: “Article 19 precludes an income-category restriction not authorised by the VAT Directive and may have direct effect where a Member State has exercised the option but implemented it too narrowly.”
- Analysis: Austrian legislation restricted TOGC treatment by referencing domestic income-tax categories. The General Court dismissed this, focusing instead on whether the assets constituted “an operational economic unit capable of continuing an independent activity.” It affirmed that a domestic income-tax classification cannot impose limitations unsupported by Article 19 of the VAT Directive.
- Compliance Implications: Businesses should scrutinize domestic TOGC exclusions against Article 19 and not automatically accept them if they appear unduly restrictive. It remains essential to evidence that the assets form an operational unit and that the transferee intends to continue the activity. This judgment is particularly relevant for real-estate contributions, incorporations of individual businesses, and transfers involving rental activities.
Advocate General Opinion
C‑167/26 (RX), Dyrektor Krajowej Informacji Skarbowej: Input VAT Deduction Period and Invoice Receipt (AG Opinion, 10 September 2026)
- Facts: A Polish company received invoices after the tax period in which supplies occurred but before the filing deadline for the VAT return for that earlier period.
- Question: Can input VAT be deducted in the supply period if the invoice was not yet held during that period?
- AG View: Advocate General Kokott opined that “Deduction should be exercised in the period in which both the supply has occurred and the taxable person possesses the invoice.”
- Analysis: The AG considered that a General Court judgment (T‑689/24) permitting deduction without invoice possession in the supply period departed from established ECJ case law. The Opinion seeks to restore the distinction between when the right to deduct arises (when VAT becomes chargeable) and when it may be exercised (requiring both substantive conditions and invoice possession).
- Compliance Relevance: Businesses should maintain reliable invoice-receipt timestamps, distinguishing them from the invoice issue date, transmission date, validation date, and accounting date, pending the final ECJ ruling.
- Member State Reaction: The Czech Financial Administration has already confirmed it will continue to require invoice possession before deduction, explicitly stating that an invoice received in a subsequent period cannot be deducted in the earlier supply period, even if received before the earlier return was filed. This highlights the importance of monitoring national administrative practices while litigation is pending.
Cases and Actions for Which Facts or Questions Were Released
Several new cases indicate emerging areas of focus:
- C‑504/26, Commission v Spain: Infringement action for Spain’s alleged failure to transpose the EU SME VAT Scheme (Directive (EU) 2020/285). Compliance teams should verify the actual availability of the cross-border SME scheme in Spain rather than relying solely on the Directive’s formal application date.
- C‑512/26, Commission v Spain: Infringement action for Spain’s alleged failure to transpose the 2022 VAT Rates Reform (Directive (EU) 2022/542). Businesses should base Spanish VAT-rate determination on enacted Spanish legislation, as the infringement action itself does not implement missing provisions.
- T‑407/26, Wagner Sport Signage: Questions regarding the rejection of an EU VAT refund application due to a missing VAT identification number on a single invoice, engaging principles of fiscal neutrality, proportionality, and good administration. Refund applicants should validate all invoice-level mandatory fields but be prepared to argue against full rejection for isolated formal omissions.
- T‑518/26, Wlecka: Concerns whether an individual’s sale of inherited land, previously leased to a farmer but without significant development or marketing, constitutes an “economic activity” under Article 9(1) of the VAT Directive. Property owners should assess sales separately from prior leasing, considering asset allocation, development, marketing, and commercial activity.
- T‑537/26, M Car Sofia: Addresses the second-hand vehicle margin scheme, specifically concerning the definition of the purchase price when a dealer acquires rights to leased vehicles from private individuals, with legal ownership transfer via a leasing company. Dealers must carefully document the legal supplier, recipient of payments, title transfer, and the statutory purchase price composition.
- T‑548/26, Finanzamt Freising: Questions the legality of Germany’s EUR 1,000 de minimis threshold for input VAT adjustment after a farmer transitions from the agricultural flat-rate scheme to standard taxation. This case may redefine the balance between administrative simplification and substantive restriction of adjustment mechanisms.
- Pending German Reference: Automated Sludge-Drying Installation and Fixed Establishment Without Own Personnel: A significant case addressing whether equipment can constitute a fixed establishment (FE) if the taxable person has no personnel permanently present at the location, but operations are mainly remote with local tasks subcontracted. Businesses operating remotely controlled facilities (e.g., automated manufacturing, energy, infrastructure) should document control of local equipment, operational functions, subcontractor resources, and the local structure’s capacity to receive or make supplies.
Newly Registered ECJ and General Court VAT Cases
Several new VAT-related cases have been registered without substantive details yet, including C-978/26 (Rompetrol Rafinare), T‑519/26 & T-520/26 (Liege Cargo Agency & Frexport), T‑540/26 (Fumanko), T‑555/26 (Gemeinde A), and T‑575/26 (Société Ecurie HZ). Continuous monitoring is advised as details emerge.
Consultant Commentary and Member State Reactions
Beyond the formal judgments and opinions:
- The Czech Financial Administration has publicly affirmed its stance requiring invoice possession for input VAT deduction, despite a pending General Court review, exemplifying national administrations’ interim positions during litigation.
- Commentary on financial services highlighted that credit-management services performed by an original lender after loan assignment are generally taxable, as the credit-management exemption typically applies within the lender-borrower relationship. This has implications for SPVs and securitisation structures facing potentially irrecoverable VAT costs.
Practical Takeaways for EU VAT Compliance
To navigate these developments, EU VAT compliance teams should:
- Review TOGC Positions: Reassess transfers involving divided ownership, retained real estate, contributions in kind, and domestic restrictions that are narrower than Article 19.
- Strengthen Chain-Transaction Evidence: Ensure documentation (contracts, Incoterms, transport instructions, CMRs) clearly supports transport responsibility, transfer of disposal rights, and the relationship between VAT and excise movements.
- Review Promotional Travel Models: Determine whether bundled travel, excursion, event, or hospitality services fall under the Travel Agents’ Margin Scheme.
- Record Invoice Receipt Dates: Maintain separate receipt data from supply, issue, validation, and posting dates, especially while the C‑167/26 (RX) ruling is pending.
- Validate EU Refund Applications: Implement invoice-level completeness checks but be prepared to argue proportionality and good-administration principles against full rejection due to minor omissions.
- Review Property Disposals: Do not automatically assume prior leasing makes every subsequent property sale taxable; assess the seller’s conduct and asset allocation.
- Review Second-Hand Goods Processes: Confirm the identity of the statutory supplier and the precise amount forming the purchase price in lease-exit and multi-party acquisitions for margin schemes.
- Assess Automated Fixed-Establishment Risks: Identify foreign installations operated remotely and examine local technical/human resources, subcontractor arrangements, and the ability to receive/make supplies.
- Monitor Spanish Implementation: Track infringement proceedings on the SME scheme and VAT rates, while continuing to apply enacted Spanish law.
- Align Digital Controls: Ensure e-invoicing and real-time reporting systems capture the necessary evidence to determine deduction periods, rates, exemptions, and transaction classifications, even if they don’t alter substantive VAT conditions.
Continuous monitoring of ECJ and General Court proceedings, combined with an understanding of national administrative practices and consultant commentary, remains crucial for maintaining robust EU VAT compliance.
Latest Posts in "European Union"
- ECJ & General Court VAT Cases decided in 2026
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- Comments on T-773/25: EU Court Rules Late Reverse-Charge Wording Does Not Retroactively Activate Triangulation Simplification
- EU Updates Statistical Reporting for CESOP and the SME VAT Scheme
- VAT is due on the EU’s €2 Union Handling Fee for E-Commerce Imports
