A VAT refund following the CJEU judgment – inconsistency of Polish VAT rules with EU law
Photo by Guillaume Périgois on Unsplash
On 11 February 2026, the General Court of the EU delivered its judgment in Case T-689/24, which had been brought following a request for a preliminary ruling from the Supreme Administrative Court concerning the interpretation of the provisions of the VAT Directive relating to VAT deduction.
The judgment in question was delivered not by the Court of Justice of the European Union (CJEU), but by the General Court of the EU – a consequence of changes to the rules governing the CJEU. The reform was intended to relieve the Court, which was ‘overburdened’ with questions relating to tax issues, whilst at the same time speeding up the process of examining preliminary rulings.
The issue before the General Court concerned determining the correct time for a VAT taxpayer to exercise their right to deduct input tax, specifically whether it is possible to deduct input tax for a tax period in which the substantive conditions for deduction were met (including the performance of a VAT-taxable transaction), if the taxpayer had not received the invoice by the end of that period (but had come into possession of it before the VAT return deadline for that period).
The Court of Justice of the European Union held that, in such a situation, EU law precludes national provisions such as Article 86(10b)(2)(1) of the VAT Act, which provides that a taxpayer may not exercise the right to deduct input tax in a return submitted for the period in which the substantive conditions for the right to deduct were met, if the taxpayer did not receive the invoice during that period (even though the taxpayer received the invoice before submitting the return for that period).
The Court of Justice of the European Union emphasised that VAT should be neutral for the trader, with which such a deferral of the right to deduct is incompatible, as it may lead to the taxpayer financing VAT from their own resources.
Consequently, the Court of Justice of the European Union created a loophole in the formal rule laid down in the VAT Act, which defers the exercise of the right to deduct VAT until the period in which the invoice was received.
However, it transpired that the potential consequences of this judgment concerned the First Advocate General. Recognising that there was a serious risk of undermining the unity or consistency of EU law, he requested the CJEU, under a special procedure, to review the judgment in question (although a detailed statement of reasons in this regard has not been published).
In accordance with the Statute of the CJEU, the Court will decide independently whether to review the aforementioned judgment. If it finds that the judgment of the General Court infringes the unity or consistency of EU law, the Court’s response to the questions subject to review will supersede that of the General Court.
The case has been registered under case number C-167/26 RX and is currently pending. Until the CJEU has ruled, the effectiveness of the General Court’s judgment remains suspended.