Reduced VAT rate 8% concerning the services of admission to artistic, entertainment, sports, etc., also apply to auxiliary services accompanying the event if they were inextricably linked to it.
This is due to the interpretation of the Director of National Tax Information dated 23 April 2018, reference no. 0113-KDIPT1-1.4012.130.2018.2.JD.
Please assess what is the real purpose of benefits and whether individual benefits can be considered as ancillary to the main benefit. If a comprehensive service occurs, then ancillary services will be taxed at the same VAT rate as the main service.
The most important issue to be resolved was whether there was a comprehensive VAT service in this case. Each service should be taxed at the appropriate VAT rate, but the tax effects look different if different services are linked to the creation of a whole from an economic point of view view.
In this case, it is necessary to assess what is the real purpose of benefits and whether individual benefits can be considered as ancillary to the main benefit. If a comprehensive service occurs, then ancillary services will be taxed at the same VAT rate as the main service.
The applicant for interpretation shall organise ball or gala entertainment and arts events. Such an undertaking usually requires a whole range of benefits.
The Director of National Tax Information pointed out that: “In the case of complex services, the amount of tax applied will be determined by whether, under the circumstances, we are dealing with a comprehensive service, or with a number of individual services of individual services." He also stated that many different benefits should be considered one a comprehensive service if they “show a close link to each other that they create in an economic sense one the whole, the separation of which would have an artificial character.’ If, for example, an information point is located next to the concert hall, the provision of information constitutes an auxiliary service to the main service, i.e.
entry to the concert.
The Director of National Tax Information defined when the service could not be considered to be separate, but merely as ancillary: “Service should be considered as ancillary if it is not an end in itself, but a means to complete or use the essential service. A single service shall therefore be treated as an element of a comprehensive service if the purpose of providing the ancillary service is determined by the principal service and the main service cannot be performed or used without the ancillary service."
The use of the described structure (comprehensive service) may not only reduce the amount of VAT due to the tax authority, but also significantly simplify the accounts by harmonising the VAT rate.
Author:
Paweł Kula
From 2016 related to Russell Bedford Poland. Graduate of law studies, Tax Advisor No. 12969. He specializes in excise duty and transfer pricing documentation. Author of tax-related articles published on industry websites.