Refusal to Register a Tax Invoice

The registration of tax invoices is a key element of the VAT administration system. The Tax Code of Ukraine establishes a clear procedure for submitting and registering them in the Unified Register of Tax Invoices. Formally, the rules are quite clear. However, in practice taxpayers regularly encounter situations where tax authorities refuse to register tax invoices. In many cases such decisions are controversial or even based on subjective considerations. For this reason, a significant portion of tax disputes in courts concerns challenging decisions of the tax authorities refusing the registration of tax invoices.

How a refusal can be challenged

Tax legislation provides two ways to challenge such decisions:

1. Administrative procedure — filing a complaint with a higher authority of the State Tax Service.
2. Judicial procedure — applying to an administrative court.

A taxpayer may either use the administrative appeal mechanism or go directly to court. However, even winning a court case does not always mean that the violated right will actually be restored.

A practical case

A typical example concerns a situation that began back in 2017, when after concluding a commercial contract the seller issued a VAT tax invoice for the buyer. However, the tax authority refused to register it. As a result, the buyer was unable to claim the VAT credit.

The seller was forced to go to court with the following claims:

• to recognize the actions of the tax authority as unlawful;
• to oblige the tax authority to register the tax invoice.

Only in 2021 did the court rule in favor of the taxpayer and order the tax authority to register the invoice. At first glance, justice had been restored. However, even after the court ruling the tax authority failed to execute the decision for several years, despite enforcement proceedings being opened.

The tax invoice was finally registered only in 2024.

But the story did not end there. After the buyer included the VAT credit in its tax reporting, the tax authority conducted an audit and issued a tax notice requiring the company to make adjustments. The tax authority’s argument was that the deadline for using the VAT credit had been missed.

The 365-day deadline problem

Until 2020, taxpayers could exercise their right to a VAT credit within three years. Today this period is 365 days. This means that a VAT payer may include the amount of VAT in the tax credit only within one year from the moment the right arises. In the described situation a typical legal conflict emerged.

The tax authority:

1. unlawfully refused to register the tax invoice;
2. failed to execute the court decision for a long time.

Nevertheless, formally it was the taxpayer who ended up in a situation where the deadline for using the VAT credit had expired. At the same time, the Tax Code does not provide a mechanism for restoring this deadline, even if the delay occurred due to unlawful actions by the tax authority.

The core problem

In such disputes a situation arises where businesses effectively lose their right to a VAT credit due to the duration of administrative or judicial proceedings. This is especially relevant when:

• the refusal to register a tax invoice is challenged in court;
• the court proceedings last several years;
• the court decision is executed with significant delay.

As a result, even after winning the case, the company may fail to obtain the expected tax benefit.

Why the wording of claims matters

In tax disputes, not only the facts of the case matter, but also the precise wording of the claims submitted to the court. For example, if the claim requests that the tax invoice be registered as of its original date of issuance, and by the time the court decision is delivered the 365-day deadline has already expired, the buyer effectively loses the right to the VAT credit.

Therefore, in certain situations it may be more appropriate to formulate claims differently, for example:

• to oblige the tax authority to register the tax invoice from the date of execution of the court decision;
• to oblige the tax authority to accept the corresponding tax adjustments.

Such formulations may create additional legal opportunities to protect the taxpayer’s interests.

Conclusion

Disputes related to the registration of tax invoices remain one of the most common categories of tax conflicts. The problem lies not only in the refusals issued by tax authorities, but also in the legal consequences caused by lengthy dispute resolution procedures. In tax law, procedural details and litigation strategy often become decisive. They may determine whether a business will obtain a real result even after winning a court case.