On 10th July 2015 Poland's Supreme Administrative Court announced its decision, pursuant to current VAT regulations, on the issue of re-invoicing costs of utilities. The ruling emphasises the fact that, in principal, utilities are to be treated as a service that is separate from the service of renting a property and thus will have to be taxed separately.
The Supreme Administrative Court pointed towards, among others, the following items:
- The basic criterion for identifying services as separate is the economic factor, not contractual stipulations;
- In relation to utilities the use of which can be measured (utilities measured as water consumption, power and heat consumption, sewage disposal), it is the consumption criterion that is to decide whether the given utility service should be considered as separate - and not the tenant's freedom (or lack thereof) to choose a service provider;
- The said utility services of water, power and heat consumption as well as sewage disposal ought to be considered services that are separate from the renting service itself – given that the tenant does indeed have the liberty of choosing a suitable form of such services by deciding on the consumption size;
- Waste disposal must be considered separately from the rent service itself – provided that the tenant is free to choose a service provider; since there is no such possibility (in the current legal status only local self-governments, communes, are authorised to provide such services), the renting service and garbage disposal service are to be taxed jointly, based on the VAT rate applicable to renting services.
Identifying waste disposal as part of the rental agreement (rather than a separate service) would be incorrect due to the legal arrangement of the terms of communal waste collection from property owners. It seems possible that the discussed notion may be the subject of further dispute with tax authorities.