Case T-689/24: EU court confirms Poland cannot delay input VAT deduction
The European General Court’s decision in I.S.A. v. Dyrektor Krajowej Informacji Skarbowej (Case T‑689/24) marks a decisive moment in the long‑running debate over Poland’s restrictive approach to input VAT deduction.
Delivered on 11th February 2026, the ruling confirms that Polish rules around the right to deduct Polish VAT on the prior possession of an invoice are incompatible with EU law.
This is the first Polish VAT case before the General Court to result in a clear victory for taxpayers, and it has significant implications for both administrative practices and legislative alignment with the EU VAT Directive.
Situation actuelle
For decades, Polish tax authorities have interpreted national VAT legislation to mean that a taxpayer may only deduct input VAT in the period in which they physically possess the invoice. This interpretation effectively made the invoice not merely a procedural requirement but a substantive condition for the existence of the right itself.
The applicant, I.S.A., challenged this approach after seeking an individual tax ruling concerning the timing of VAT deduction on invoices related to electricity and gas purchases. The dispute centred on whether the right to deduct arises:
- when the taxable event occurs, or
- only once the taxpayer receives the invoice, as Polish authorities maintained
The General Court’s key findings
- Right to deduct arises when VAT becomes chargeable
The Court held unequivocally that the right to deduct input VAT arises the moment VAT becomes chargeable, not when the taxpayer receives the invoice.
The invoice constitutes a formal step in claiming the VAT, but it does not determine whether the right itself arises. The mere timing of paperwork should not delay or deny a deduction that is justified.
- National rules that delay Input VAT deduction are not compatible with EU Law
The ECJ held that national legislation cannot prevent a taxpayer from claiming input VAT in the period when the conditions are met simply because the invoice was received late, provided the taxpayer holds the invoice by the time the VAT return is filed.
Such a rule effectively defers the deduction, forcing businesses to bear the economic cost of VAT for an additional period.
- Principles of EU Law reinforced
The decision references core principles of the EU VAT regime:
- Fiscal Neutrality: VAT should not be a cost to taxable persons when they meet conditions for deduction.
- Proportionality & Effectiveness: Procedural formalities cannot undermine the right to deduct or make it unduly difficult.
Outcome of the case
The ECG’s ruling effectively confirms that Poland’s approach of imposing a strict invoice timing rule that defers VAT deduction is incompatible with the EU VAT Directive.
If Poland continues to uphold such rules in domestic legislation, it risks violating EU law and may need to amend its VAT Act to align with the Directive.
Impact on businesses
For companies operating in Poland this ruling clarifies that:
- Input VAT must be deductible in the period the VAT becomes chargeable, as long as the invoice is held by the VAT return deadline.
- Taxpayers will no longer be able to be forced to deduct Input VAT in later periods merely due to late invoices, provided they can document the supply before filing.
Conclusion
The ECG’s preliminary ruling in Case T-689/24 is an important step in reinforcing consistency between national VAT procedures and EU law.
By confirming the right to deduct arises when VAT becomes chargeable, and that a rigid requirement for the invoice to be received within the same VAT period is unreasonable, this decision strengthen fiscal neutrality and proportionality. Deferral of the input VAT is only justified when the invoice is not held by the time the VAT return is filed.