The tax confirms that, in the case of rental of residential premises intended to ensure the residence of taxable persons, such services constitute a benefit benefiting from VAT exemption and therefore landlord they should issue invoices without VAT and the employer who rents apartments for his employees is not entitled to deduct input tax.
The company, which operates as a temporary work agency, employs persons who are directed to work in the warehouses of its customers. The workplaces are located in various locations in Poland, so the company provides employees with a place of residence, which is intended to help them decide to move to work.
Employees use residential premises free of charge or in part for a fee. In order to provide housing for employees, the company concludes lease agreements with landlords, who in most cases are not active VAT payers. The contract includes a record of the use of the rented apartment for the company's employees.
landlord, who issue invoices for rented premises, indicate as the subject of the service PKWiU 68.20.11.0 „Rent and management services of own or leased properties” without VAT, treating these services as exempt. In some cases, workers use housing temporarily – only on the days on which they provide work according to their schedule.
The applicant company is in this transaction tenant, which uses rented dwellings for housing purposes, and therefore the question of the correct application or non-deduction of the tax right remains on its side.
In such a situation, the company questioned whether it correctly classified rental services and whether the rental services in the situation under consideration benefited from this exemption.
As per content Article 43(1)(36) VAT Act 1 the rental or leasing of residential property or part of immovable property, on its own account, for residential purposes is exempt from tax. This provision provides for the following conditions to apply the exemption:
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- self-employed services,
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- the residential nature of the property,
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- residential lease and lease.
The interpretative body, examining the facts presented, indicated that the key issue for determining whether the service in question benefits from the exemption is the objective pursued by the person directly involved in the provision of the service.
It is important in this case that the residential property is not rented for business purposes, the residential purpose is to be ‘exclusive’.
The interpretative body referred to an NSA judgment in which the court found that the legislator did not exempt from taxation the lease or lease of immovable property ‘for the purpose of economic activity consisting in renting immovable property exclusively for residential purposes’ 2 .
The company as a legal person does not have its own housing needs, these needs arise on the side of people who ultimately use apartments. In the actual state of affairs, the residential purpose is pursued by the employees of the company. In the opinion of the interpretative body, this is the achievement of the residential objective referred to under Article 43(1)(36) VAT Act.
In conclusion, in an individual interpretation, 3 The Director of KIS considered that housing rental services benefit from the exemption referred to in the provision and therefore landlord they are correctly issuing VAT invoices without VAT and the applicant does not deduct input tax on the basis of Article 88(3a)(2) VAT Act.
The interpretation reading may lead to the conclusion that the evaluation of the CIS has been significantly affected by the transparency of the situation reflected in the information and documents provided.
The Authority indicated that both from the content of the invoices, contracts concluded with landlords, and the circumstances of the transaction clearly result in the achievement of housing goals in rented apartments.
The Authority did not assess the correctness of the qualification of the services concerned for the designated PKWiU grouping.
1 Act dated 11 March 2004 on tax on goods and services, Journal of Laws of 2018, item 2174 i.e. of 21 November 2018
2 NSA judgment dated 8 May 2018, reference no. I FSK 1182/16
3 Individual interpretation of the Director of National Tax Information dated 7 October 2019 reference no. 0111-KDIB1-3.4010.346.2019.2.PC, number 563346/I
Author: Leszek Dutkiewicz, partner Russell Bedford Poland. Associated with the company from 2011. Director of RBP office in Katowice. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services.
He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices. Author of a publication on tax, civil and international law issues. Lecturer in tax law training. He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.