Fundamental Reassessment of the Timing for Claiming VAT Deduction - Judgment of the Court of Justice of the EU T 689/24 I.T.A.
3. 3. 2026
On 11 February 2026, the Court of Justice of the European Union issued a significant judgment in case T 689/24 I.T.A., which may have an immediate impact on Czech practice as well as on the very construction of Section 73 of Act No. 235/2004 Coll., on Value Added Tax (VAT).
The Court was asked a preliminary question regarding the compliance of the Polish VAT legislation with EU law, specifically the VAT Directive. The Polish VAT Act, similarly to the Czech § 73 VAT Act, provided that the right to deduct VAT arises at the earliest in the taxable period in which the taxpayer receives an invoice.
This construction had long been considered compatible with EU law, particularly with reference to older case law, notably judgment C 152/02 Terra Baubedarf. In fact, this judgment was one of the argumentative foundations for establishing the current wording of § 73 of the Czech VAT Act in 2011.
However, in the current ruling, the Court of Justice made a fundamental distinction between the substantive conditions for the emergence of the right to deduct and the formal conditions for exercising it. The Court confirmed that the right to deduct VAT arises at the moment the tax liability occurs, i.e., upon the supply of the taxable transaction. Holding the invoice is not a condition for the emergence of the right but only a procedural requirement for exercising it vis-à-vis the tax authorities. The decisive moment is the submission of the VAT return, not the end of the relevant taxable period. If the taxpayer has the invoice available on the date of filing the return, they must be allowed – provided the substantive conditions are met – to claim the deduction already for the period in which the supply occurred.
The Court also addressed a potential conflict with earlier case law. It explained that in Terra Baubedarf, the taxpayer did not have the tax document available even at the time of submitting the return. The original broad interpretation of this judgment – that the mere receipt of the invoice determines the deduction period – is, according to the current interpretation, outdated. The Court concluded that legislation systematically postponing the possibility to claim a deduction solely because of the later delivery of an invoice is incompatible with the principles of tax neutrality and proportionality as set out in the VAT Directive. Member States may adopt measures against tax evasion, but such measures must not, in practice, negate a fundamental element of the VAT system – the right to deduct.
The Czech tax authorities have not yet commented on this judgment. The procedure under the VAT Act can still be recommended, but the direct effect of the CJEU ruling is evident.
The Court was asked a preliminary question regarding the compliance of the Polish VAT legislation with EU law, specifically the VAT Directive. The Polish VAT Act, similarly to the Czech § 73 VAT Act, provided that the right to deduct VAT arises at the earliest in the taxable period in which the taxpayer receives an invoice.
This construction had long been considered compatible with EU law, particularly with reference to older case law, notably judgment C 152/02 Terra Baubedarf. In fact, this judgment was one of the argumentative foundations for establishing the current wording of § 73 of the Czech VAT Act in 2011.
However, in the current ruling, the Court of Justice made a fundamental distinction between the substantive conditions for the emergence of the right to deduct and the formal conditions for exercising it. The Court confirmed that the right to deduct VAT arises at the moment the tax liability occurs, i.e., upon the supply of the taxable transaction. Holding the invoice is not a condition for the emergence of the right but only a procedural requirement for exercising it vis-à-vis the tax authorities. The decisive moment is the submission of the VAT return, not the end of the relevant taxable period. If the taxpayer has the invoice available on the date of filing the return, they must be allowed – provided the substantive conditions are met – to claim the deduction already for the period in which the supply occurred.
The Court also addressed a potential conflict with earlier case law. It explained that in Terra Baubedarf, the taxpayer did not have the tax document available even at the time of submitting the return. The original broad interpretation of this judgment – that the mere receipt of the invoice determines the deduction period – is, according to the current interpretation, outdated. The Court concluded that legislation systematically postponing the possibility to claim a deduction solely because of the later delivery of an invoice is incompatible with the principles of tax neutrality and proportionality as set out in the VAT Directive. Member States may adopt measures against tax evasion, but such measures must not, in practice, negate a fundamental element of the VAT system – the right to deduct.
The Czech tax authorities have not yet commented on this judgment. The procedure under the VAT Act can still be recommended, but the direct effect of the CJEU ruling is evident.