What happened?
A Polish company, I. S.A., purchased, among other things, gas and electricity. The supplies took place during a particular VAT period, but the invoices were received only in the following period. They were, however, received before the deadline for filing the VAT return for the earlier period.
In practical terms, the supply takes place in March, the invoice is received in April, but before the March VAT return has been filed. Can the VAT still be deducted in March, or only in April?
Under the Polish rules, deduction in March was not allowed if the invoice had not yet been received during that month.
The General Court’s judgment
In its judgment of 11 February 2026 in Case T-689/24, the General Court held that those rules were contrary to EU law. It distinguished between the existence of the right to deduct and the exercise of that right.
The right to deduct arises when the VAT becomes chargeable. To exercise that right, however, the taxable person must hold an invoice. According to the General Court, this does not necessarily mean that the invoice must already have been received during the original VAT period. If the invoice is received before the VAT return is filed, the taxable person should still be able to deduct the VAT in the period in which the supply took place.
The General Court relied in this respect on the principles of fiscal neutrality and proportionality. Otherwise, the taxable person would temporarily have to bear the VAT burden solely because the invoice was received shortly after the end of the VAT period.
The Court of Justice opens a review procedure
Requests for preliminary rulings continue to be submitted to the Court of Justice.
The Court then determines whether the case concerns exclusively one of the areas transferred to the General Court, including VAT, and should therefore be dealt with by that court.
The Court then determines whether the case concerns exclusively one of the areas transferred to the General Court, including VAT, and should therefore be dealt with by that court.
There is no appeal against a preliminary ruling of the General Court. The Court of Justice may, however, exceptionally review such a ruling where there is a serious risk that the unity or consistency of EU law may be affected.
On 26 March 2026, the Court decided to do so in this case. It is only the second preliminary ruling review since the introduction of the new system, following Case C-108/26 RX concerning air traffic management, and the first in the field of VAT.
This also has an important practical consequence. Under Article 62b of the Statute, where a review procedure is opened, the General Court’s answer does not, in principle, become binding until that procedure has been completed. If the Court of Justice finds that the unity or consistency of EU law has been affected, its own answer replaces that of the General Court.
As long as the review is ongoing, T-689/24 therefore cannot be regarded as the final statement of EU law on the issue.
Kokott’s analysis
Advocate General Kokott considers that the case-law of the Court of Justice follows a consistent line. In her view, Terra Baubedarf-Handel from 2004 and subsequent judgments, including Senatex, A. and the recent Aptiv Services Hungary judgment, establish that the right to deduct is exercised in the first VAT period in which two conditions are satisfied simultaneously:
- the goods have been supplied or the services have been provided and the VAT has become chargeable;
- the taxable person holds the required invoice.
If the invoice is received only during a later VAT period, the time at which the deduction may be exercised also shifts to that later period. According to Kokott, the fact that the VAT return for the earlier period had not yet been filed does not alter that rule.
Terra Baubedarf-Handel
The General Court sought to distinguish the case from Terra Baubedarf-Handel.
According to Kokott, that distinction is not convincing. In that case too, the services had been supplied during an earlier period and the invoices were received only later.
According to Kokott, that distinction is not convincing. In that case too, the services had been supplied during an earlier period and the invoices were received only later.
The Court of Justice held that the deduction had to be made in the first period in which all the conditions governing the exercise of the right were satisfied at the same time.
Senatex and Aptiv
According to Kokott, Senatex does not point in a different direction. In that case, the taxable person already held an invoice, which was subsequently corrected. The correction could have retroactive effect to the period of the original invoice. In C-167/26 RX, by contrast, there was no invoice at all during the earlier period.
Aptiv Services Hungary also fits within the same framework in her view. Aptiv protects taxable persons against losing their right to deduct simply because an invoice is received late. The present case concerns a different question: from which VAT period may the deduction be exercised?
A late invoice must therefore not result in the loss of the right to deduct, but under this approach it also does not shift the deduction back to a period in which the taxable person did not yet hold the invoice.
Neutrality and proportionality
According to Kokott, the principles of neutrality and proportionality do not require the deduction always to be allowed in the earliest possible period.
In many cases, the taxable person receives the invoice only when payment or the accounting processing of the transaction is being prepared. In her view, there is therefore no obvious reason why the deduction should be backdated to a period in which the invoice was not yet available.
The traditional rule is also straightforward: the deduction is exercised in the first period in which the VAT has become chargeable and the invoice is available. The approach adopted by the General Court would make the outcome more dependent on coincidental calendar factors. Two taxable persons receiving the same invoice on the same day could be treated differently merely because one had already filed its VAT return and the other had not.
What does this mean for the new system?
The transfer of certain preliminary VAT cases to the General Court is a major reform. Its purpose is clear: to distribute the workload more effectively while continuing to ensure high-quality judicial decisions within a reasonable period.
Case C-167/26 RX nevertheless illustrates why a review mechanism remains necessary. According to Advocate General Kokott, the General Court did not simply adopt a different but equally plausible interpretation. It departed from an existing line of case-law of the Court of Justice, which may create legal uncertainty.
There is, however, an important qualification. The earlier judgments on which Kokott relies did not deal with exactly the same situation. They did not directly answer whether an invoice received only in the following VAT period, but before the VAT return for the earlier period is filed, may nevertheless be attributed to that earlier period. The question is therefore how clearly the rule already followed from the existing case-law.
In other words, did the General Court really depart from settled case-law, or did it simply apply that case-law differently to a question that had not yet been expressly answered?
At the same time, Kokott emphasises that review must remain exceptional. The Court of Justice should not systematically substitute its own assessment for that of the General Court. The procedure is not a disguised appeal. The Court intervenes only where a ruling creates serious legal uncertainty or is difficult to reconcile with fundamental principles or existing case-law.
That does, however, raise a broader question: what happens where the divergence is less obvious?
For practitioners, this is far from insignificant. A preliminary ruling of the General Court does not necessarily represent the definitive position under EU law immediately after it is delivered. In particular, where a judgment appears to establish a new line of reasoning, it is prudent to consider how that approach sits with the earlier case-law of the Court of Justice.
Final remarks
Advocate General Kokott’s Opinion is not binding on the Court. Her position is, however, clear. If the Court follows her approach, the traditional rule will be confirmed: the right to deduct arises when VAT becomes chargeable, but may be exercised only in the first period in which the taxable person also holds the invoice.
C-167/26 RX is also the first VAT case to show in concrete terms how the relationship between the Court of Justice and the General Court operates where their approaches risk diverging. For that reason too, it is a case worth following closely.