Blog: Four tax points, one invoice: how C-167/26 RX challenges well-accepted business processes

In VAT, the same transaction can have four or five tax points: the chargeable event, the invoicing deadline, e‑reporting, the supplier’s return and the customer’s deduction. For decades, businesses handled these differences with one pragmatic rule: deduct when the invoice is booked. The Opinion of Advocate General Kokott in C-167/26 RX is legally consistent, but combined with e‑invoicing and ViDA it challenges that rule and the routines built on it.

The case in one paragraph

A Polish company bought gas and electricity. The supplies were made in one period, and the invoices arrived in the next, before the return for the earlier period was due. The General Court (T‑689/24) allowed deduction in the period of supply, relying on neutrality and proportionality. AG Kokott says the General Court departed from Terra Baubedarf‑Handel and Aptiv Services Hungary. In her view, the right to deduct arises when VAT becomes chargeable, but can only be exercised in the period when the supply has taken place and the invoice is held. National rules blocking earlier deduction are therefore compatible with EU law. This is the first time the Court of Justice has reviewed a General Court VAT judgment, so the eventual ruling will carry extra weight. [vatupdate.com], [vatupdate.com] [vat-consult.be]

The tax-point puzzle

1. Chargeable event: supply of the goods or services (Art. 63). For intra-EU supplies, the invoice date or the 15th of the following month, whichever is earlier (Arts. 67 and 69).
2. Invoicing deadline: set nationally for domestic supplies, and the 15th of the following month for intra-EU supplies (Art. 222).
3. E‑reporting: linked to issuing or transmitting the invoice.
4. Supplier’s VAT return: output VAT for the period of chargeability.
5. Customer’s deduction: exercisable only once the invoice is held (Arts. 167, 178 and 179).

Three examples

1. Summary invoices, especially intercompany. A group manufacturing entity supplies a sister distribution company daily and issues one summary invoice per month on the 5th of the following month (Art. 223). The supplier pays March output VAT with its March return. The customer deducts in April. Within one group, the group pre-finances VAT to the tax authority every month, often on large intercompany volumes. Across several Member States and monthly returns, this becomes a permanent cash cost caused purely by billing frequency. Intercompany summary invoicing is one of the most widely accepted processes in multinational supply chains. If the AG’s approach becomes the rule, it carries a structural cash-flow penalty.
2. Domestic supply of goods. Goods are delivered on 28 March, and the invoice is issued and received on 2 April. The supplier declares output VAT in March. The customer deducts in April, even though it held the invoice well before the March return was due. This is the situation in the Polish case.
3. Intra-EU supply under reverse charge. Goods are dispatched from Germany to Belgium on 20 March. The invoice is issued on 10 April, so the acquisition VAT becomes chargeable in April (Art. 69). The invoice reaches the acquirer on 20 May, after the April return has been filed. Where national law requires the acquirer to hold the invoice before deducting (Art. 178(c)), it declares output VAT in April but deducts only in May. Member States may relax this requirement (Art. 181), but not all do. A transaction meant to be neutral becomes a temporary VAT cost. This sits uneasily with Ecotrade and Senatex, which treat the invoice in reverse-charge cases as a formal requirement rather than a substantive one.

How it worked before e‑invoicing and e‑reporting

Most companies used the invoice booking date as the tax point. A purchase invoice was posted in the ERP, and the deduction was claimed in the return for the period in which it was booked. For intra-EU acquisitions and reverse-charge services, output VAT and the deduction were declared together in that same return, netting to zero. Late invoices moved into the next return. Intercompany summary invoices were booked on both sides in the same period by agreement.

Tax authorities largely accepted this. The net budget effect was small, and they rarely had the data to see gaps between periods. EC Sales List differences were usually resolved through explanations rather than assessments.

Why this pragmatism is now at risk

With e‑invoicing, e‑reporting and pre-filled returns, authorities can see the supplier’s issue date, the transmission date, the receipt date and the customer’s booking date. Each difference becomes visible, and this has consequences:

• Reopening past returns. If authorities test deduction against the receipt date, VAT deducted too early in the “booking period” may be considered claimed in the wrong period. Mismatches between e‑reported data and returns can trigger corrections to returns already filed, with interest and penalties, even though the VAT itself is fully due and fully deductible.
• Reverse charge losing its neutrality. Booking output and input VAT in the same return was the reason reverse charge cost nothing. Splitting them across periods creates assessable timing differences.
• Intercompany flows under scrutiny. Matching data on both sides of the same group makes period differences between affiliates immediately visible.
• ERP logic becomes outdated. Posting-date logic, built into most systems, no longer matches the legal tax point.
• Reconciliation becomes continuous. It moves from a year-end check to a monthly control, before each return is filed.

Why ViDA makes it sharper

Under ViDA, structured e‑invoices and digital reporting become the backbone of intra-EU control. Once the e‑invoice is the data record matched against both parties’ reports, holding the invoice stops being a simple formality. In practice, it becomes a substantive condition for deduction. That conflicts with the substance over form principle the Court has long defended. If the CJEU follows the AG, case law and digitalisation will point the same way: the document determines deduction. That improves legal certainty, but it comes at the expense of neutrality and established business practice.

How to deal with it

• Build a tax-point matrix linking supply date, invoice date, e‑report date, receipt date, booking date and return period.
• Reconcile before filing, matching e‑reported and pre-filled data against the ledger, to avoid reopening returns later.
• Revisit intercompany summary invoicing. Move to weekly or transaction-level invoicing, or issue invoices before period close.
• Separate output and deduction logic in the ERP for reverse-charge flows.
• Tighten invoicing timelines (e.g. 14 days) with no year-end exceptions.
• Map country rules, including where Art. 181 flexibility applies.
• Push for a policy fix: allow deduction in the period of chargeability when the e‑invoice is received before the return is filed. Real-time data makes this easy to verify.

Expert views

VAT Consult highlights the practical “March supply, April invoice” problem and calls the case an early stress test for the General Court’s new VAT jurisdiction. PwC sees the Opinion as an effective overturning of the General Court’s judgment, tying deduction to the period in which the invoice is held. Global VAT Compliance confirms that Member States may require possession of the invoice before deduction. [vat-consult.be] [knowledgen…or.pwc.com] [globalvatc…liance.com]

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