European Court of Justice ruling enables taxpayers to deduct VAT earlier, addressing neutrality principle concerns.
VAT Deduction and Neutrality Principle
Deducting input tax from purchases for business purposes is one of a taxpayer’s most important rights. It represents the quintessence of implementing the EU VAT principle of neutrality.
Polish legislation has generally implemented this principle correctly, though not perfectly. Allegations of neutrality violations occasionally emerge, with some being substantiated.
Implementation in Polish Law
The basic neutrality principle is maintained in the Act of March 11, 2004 on tax on goods and services, with subsequent amendments. However, as often happens, the devil is in the details.
2014 Legislative Changes
Since 2014, Polish law has directly linked the deduction deadline for input tax from invoices to the date of document receipt. This connection, while not improper in itself, results in neutrality violations according to the author.
EU Court Confirmation
The author has highlighted this issue since its inception, and only now has the EU court confirmed that these practices violate the neutrality principle.