The EU General Court reinforces the right to deduct input VAT even where the invoice is received outside the accrual period

Judgment of the General Court of the European Union of February 11, 2026 (Case T-689/24PDF)

The recent judgment of the General Court of the European Union (General Court) of February 11, 2026, delivered in Case T-689/24, confirms a position that, although already reflected in EU case law, continues to give rise to practical disputes in the various Member States, including Spain: formal requirements, in particular possession of the invoice, cannot be made a condition for the right to deduct input VAT to arise.

What does this judgment decide?

The dispute originated in a request for a preliminary ruling referred by the Supreme Administrative Court of Poland (Naczelny Sąd Administracyjny). A Polish company subject to VAT, engaged in brokering gas and electricity transactions, had incurred input VAT in a given tax period but received the corresponding invoices in the following period, albeit before filing the VAT return for the period in which the tax had become chargeable.

The Polish tax authorities denied the deduction in the accrual period and required the company to defer it to the period in which it actually received the invoice. The national legislation made the exercise of the right to deduct conditional upon possession of the invoice within the same return period.

The General Court was clear in resolving the issue: national legislation that prevents a taxable person from deducting VAT in the period in which the substantive requirements are met, merely because it did not receive the invoice in that same period (although it did receive it before filing the return), is contrary to EU law.

The key distinction: substantive versus formal requirements

The Court’s reasoning rests on the well-established distinction between the substantive and formal requirements for deducting VAT, under Articles 167, 168, and 178 of Directive 2006/112/EC.

The substantive requirements determine when the right to deduct arises. Essentially, they require that the taxable person act as such, that the goods or services be used for taxed transactions, and that the transaction have been carried out by another taxable person. These requirements are met when the VAT becomes chargeable, which normally coincides with the supply of goods or services.

Possession of the invoice, by contrast, is a formal requirement that conditions the exercise of the right but cannot condition its inception. A Member State cannot turn a merely formal requirement into a substantive condition for the right to deduct to arise, since this would infringe the principles of fiscal neutrality and proportionality that govern the VAT system.

Implications for Spain

Although the judgment stems from a Polish dispute, its conclusions are fully applicable to the Spanish context. In practice, the Spanish tax authorities have routinely required the taxable person to hold the invoice within the same tax period in which the tax accrues in order to allow the deduction in that period.

This creates recurring problems, particularly for self-employed workers and SMEs that carry out transactions at quarter-end. Under normal invoicing timeframes, their invoices are received in the first days of the following quarter, although always within the deadline for filing the self-assessment return (Form 303).

In light of this judgment, the Spanish tax authorities should adjust their position and allow input VAT to be deducted in the period in which the substantive requirements are met, provided that the taxable person holds the invoice before filing the relevant return. Doing otherwise imposes an unjustified and disproportionate temporary financial burden on the taxpayer, contrary to EU law.

Is this really new?

Strictly speaking, no. In this judgment, the General Court reiterates well-established case law that can be found in, among others, the judgments in Senatex (C-518/14)PDF, Astone (C-32/15), Ecotrade (C-95/07 and C-96/07)PDF, and EMS-Bulgaria Transport (C-284/11)PDF. All of them agree that failure to comply with formal requirements cannot, in itself, jeopardize the right to deduct where the substantive requirements are proven and there is no risk of fraud.

However, the judgment’s relevance lies precisely in the fact that, despite this repeated case law, certain national tax authorities, including Spain’s, persist in overly formalistic approaches that, in practice, hinder the effective exercise of the right to deduct.

Conclusion and practical recommendation

At OC Tax & Legal, we recommend that business owners and professionals in this situation consider including the deduction in the accrual period. This applies to transactions accrued in one quarter whose invoice is received in the following quarter, but before the self-assessment return is filed. In doing so, they can rely on well-established EU case law and on this recent General Court judgment.

It should also be borne in mind that, with the entry into force of the Verifactu system (scheduled for January 1, 2027, for companies and July 1, 2027, for self-employed workers), the traceability of invoices and the exact time of their issue and receipt will be recorded automatically and unalterably with the Spanish Tax Agency (AEAT). This will further strengthen the position of taxpayers who can provide documentary evidence that the invoice was issued before the self-assessment return was filed, even if they received it outside the accrual period.