CJEU: Member States may not postpone the application of VAT deduction until the invoice is issued if the taxpayer has the document when filing the return

We would like to draw your attention to the very interesting judgment of the Court of Justice of the EU in case T-689/24 I.T.A. of 11 February 2026 and its possible (or rather very probable) impact on the Czech VAT legislation and its interpretations.

In this case, the Court of Justice of the European Union ruled on a preliminary question as to whether the national legislation enshrined in the Polish VAT Act, which stipulates that the right to deduct tax arises at the earliest in the tax period in which the taxable person receives the relevant invoice, is in accordance with the VAT Directive and the principles of neutrality and proportionality. Thus, the legislation is essentially identical to the rules set out in Section 73 of the Czech VAT Act. This rule was introduced into the Czech VAT Act in 2011 on the basis of the then long-standing judgment of the CJEU C-152/02 in the Terra Baubedarf case.

Despite the relatively unambiguous wording of this landmark judgment C-152/02, the Court of Justice has now, rather surprisingly, ruled in a current case that such legislation is contrary to the VAT Directive, based on the differences between the substantive and formal conditions for entitlement to deduct tax, or the principles of VAT neutrality and proportionality, and that the right to deduct VAT must, in principle, be available to taxable persons already for the tax period in which the supply takes place, provided that the relevant invoice is in their possession on the date of submission of the return, and not at the end of that period already. The Court of Justice of the European Union dealt with the conflict with earlier case law, specifically by stating that in the original Terra Baubedarf judgment, the company did not have the document on the date of filing the tax return. In our opinion, the original understanding of this judgment can therefore be considered outdated.

What will be interesting now in the Czech business environment is how the Czech tax administration, and possibly the Czech legislator, will approach this current decision. In our opinion, the current judgment is sufficiently unambiguous to meet the conditions of direct effect set out in settled EU case law and payers should therefore be allowed to refer to it despite the unambiguous wording of Czech legislation. At the moment, however, there is no official statement from the Czech tax administration, so it is not certain how the individual tax authorities will approach the matter and whether it will not be necessary to go into dispute with the tax office in this respect. It is also worth noting that until the legislator reacts to this judgment by amending the VAT Act and its article 73, taxpayers may continue to proceed according to the wording of the current Czech legislation with all its consequences. This can also be advantageous for the payer in some cases.

If you would like a more detailed assessment of how this recent CJEU decision can be applied to your business, please do not hesitate to contact us. If you have any questions about the topic of this article, we are also fully at your disposal.