In a preliminary ruling transferred from a Lithuanian court, the Court examines the procedural conditions Member States may impose before granting a VAT base reduction where a subcontractor’s debt remains uncollected.
The EU General Court delivered a ruling in Case T-233/25 (Mokoryte) on April 22nd, 2026. The case originated as a preliminary reference from a Lithuanian court and was transferred to the General Court under Article 50 ter of the Statute of the Court of Justice. It concerns Article 90 of the VAT Directive, which allows taxable persons to reduce their VAT tax base when they have not received full payment for a supply.
The facts arise from a construction subcontracting dispute, where a subcontractor provided services, issued invoices, and accounted for VAT on those supplies, which the main contractor did not pay. The subcontractor sought to reduce its VAT base, effectively claiming back the VAT it had already remitted to the Lithuanian state on a debt that proved uncollectable. Lithuanian tax authorities rejected the base reduction on the ground that the conditions under national law had not been satisfied. The subcontractor challenged that refusal before the referring court.
According to the Court’s ruling, Member States have discretion to set conditions for granting a VAT base reduction, but those conditions must not make the right to reduce the base effectively impossible or excessively difficult. The Court clarified how that standard applies in a construction subcontracting context where insolvency proceedings, partial payments, or chain payment failures complicate the picture.
