10 March 2026

The right to VAT deductions – the SUE ruling

Taxpayers who use goods and services for VAT-taxable activities may deduct input VAT (Vat deductions) on the purchase of these services and goods. In Article 86, Section 10b of the VAT Act, the legislator has linked the moment at which VAT can be deducted to the settlement period in which the taxpayer received the invoice. This means that one of the factors allowing VAT deduction from an invoice is the time factor – i.e., the actual receipt of the invoice by the buyer – even if the invoice is issued within the statutory deadline – documenting the sales for the previous month.

In practice, this causes a certain delay in the ability to deduct VAT for the other party to the transaction – i.e., the seller, whose tax liability arises upon delivery of the goods or performance of the service (and not only upon documenting the transaction with an invoice).

VAT Deductions – example

According to the VAT Act, a taxpayer is required to issue an invoice documenting the sale (i.e., the delivery of goods or performance of a service) by the 15th day of the month following the month in which the transaction took place. For example, if the sale of goods occurred on January 31st, an invoice can be issued on February 2nd. However, the tax liability arises in January, so the VAT must be included in the January JPK_V7M return and paid by February 25th.

On the other side of the transaction, the VAT payer purchases and pays for the goods on January 31st, but receives the invoice on February 2nd (the day it is issued). According to Polish regulations, they can deduct VAT only in February – by submitting the JPK_V7M return by March 25th.

This example illustrates the shift between output VAT (on the seller’s side) and input VAT (on the buyer’s side) – even though there is only one tax liability for this transaction, taxpayers have different obligations and tax rights.

What does the General Court of the EU say?

The Preliminary Ruling Chamber of the European Court of Justice has ruled on Poland’s right to deduct VAT, which may have significant consequences for Polish taxpayers. The General Court of the European Union stated that: “Where a taxpayer cannot deduct input VAT related to transactions carried out during the period in which the right to deduct arose, even though the relevant invoices were available at the time of filing the VAT return for that period, the taxpayer temporarily bears the VAT burden and is therefore not fully exempt from the burden of this tax, in violation of the principles of VAT neutrality and proportionality.” According to the EU Court, the approach resulting from Polish law is inconsistent with the VAT Directive because it does not ensure tax neutrality.

The EU Court ruling indicates that a taxpayer has the right to deduct VAT for a given month, even though they may receive an invoice later – provided they have the invoice before filing the tax return for the previous month.

For example: A service was performed on July 31st, the taxpayer (seller) issued an invoice on August 3rd, and delivered it to the buyer on the same day. According to the approach presented by the EU, the buyer is entitled to deduct VAT in the July return because they received the invoice before filing the July return (i.e., by August 25th). According to the regulations, the taxpayer could deduct VAT only in the August return (filed by September 25th).

This is an important ruling because it preserves neutrality (which was intended to be neutral from the outset) and allows for a faster VAT deduction by the buyer.

Equally important, the ruling will affect both paper and electronic invoices, as well as structured invoices (issued via the National e-Invoice System). The ruling will have a significant impact on the VAT deduction process for purchase invoices by taxpayers in Poland.

It is also important to remember that EU regulations take precedence over national VAT regulations – therefore, the Ministry of Finance should also take steps to eliminate inconsistencies in national regulations and align them with the VAT Directive.