Tax administration activities

The General Financial Directorate (GFD) has published a statement on the recent judgment of the General Court of the Court of Justice of the European Union in case T-689/24 I. S. A., concerning the dispute as to whether the right to deduct VAT may be exercised already in the tax period in which the taxable supply occurred, or only in the tax period in which the tax document was received. Although the General Court took the view that the right may be exercised in the tax period in which the taxable supply occurred, the GFD considers this conclusion incorrect. The GFD continues to maintain that the right to deduct VAT may only be exercised in the tax period in which the tax document was received.

CJEU case law

• In case C-513/24 Oblastní nemocnice Kolín, the Court of Justice examined the application of a partial right to deduct VAT in relation to minimum technical equipment of a healthcare facility, which constitutes a statutory condition for the provision of both exempt healthcare services and other taxable services. Without such minimum technical equipment, neither exempt healthcare services nor other taxable services can be provided. According to the CJEU, the mere fact that such equipment is required by law, taken in isolation, is insufficient to give rise to a right to deduct VAT. However, the right to deduct arises if the equipment is required, for example, to ensure safety or comfort within the healthcare facility. The CJEU even provides further lines of reasoning supporting the existence of a right to deduct, thereby taking a rather favourable approach to the possibility for healthcare institutions to exercise input VAT deduction.
• In case C-521/24 Aptiv Services Hungary, the CJEU examined whether a Member State may restrict a taxpayer’s right to deduct VAT in situations where the customer is required to self-assess VAT on the intra-Community acquisition of goods. Under specific Hungarian rules, such acquisition must be taxed, and the corresponding right to deduct VAT may only be exercised on the date the invoice is received. To claim the deduction, an additional tax return must be filed for the period in which the acquisition took place. In this case, the supplier delivered the invoice to the customer only four years after the intra-Community supply occurred. The Hungarian tax authority subsequently refused the right to deduct on the grounds that the two-year time limit for filing an additional tax return had expired. According to the CJEU, the right to deduct VAT arises only when the customer has the tax document at their disposal, and the deduction cannot be refused. Given the specific nature of the national rules in question, this judgment is unlikely to have a significant impact on common practice in the Czech Republic.
• In case C-527/24 Harry et Associés, the CJEU ruled on a claim for a VAT refund that had been rejected by the tax authority solely due to technical issues in the electronic transmission of the refund request between tax authorities. The CJEU held that the tax authority was not entitled to refuse the refund on the basis of issues occurring on its own side.
• In case C-515/24 Randstad, the Court examined whether Member States may retain restrictions on the right to deduct VAT that were applicable prior to their accession to the EU. Specifically, it assessed the Spanish regime limiting the right to deduct VAT on entertainment expenses. According to the CJEU, such a limitation is consistent with the intention of the EU legislature. Conversely, allowing deduction for such expenses would, in the Court’s view, be contrary to that intention. This conclusion does not have a significant impact on common practice in the Czech Republic.
• In the Opinion in case T-397/25 A&P Deco NV, the Advocate General assessed the VAT deduction regime in a situation where A&P Deco transferred its business to another company but retained ownership of the building in which the business had been carried on and leased it (VAT-exempt) to the acquirer. Prior to the transfer, A&P Deco had refurbished the building and claimed input VAT deduction, which, according to the tax authority, should have been adjusted. The Advocate General concluded that the lease of the building does not form part of the transfer of a business and, since the lease is exempt, an adjustment of the input VAT deduction is required on the part of the lessor. According to the Advocate General, it is irrelevant how the tenant uses the building.