The general interpretation concerns the possibility of applying the exemption from Art. 43 sec. 1 point 36 of the VAT Act in the case of renting or leasing real estate to an entity conducting business activity, which then makes this real estate available to other entities. In market practice, this situation most often concerns the provision of housing premises by the economic entity to its employees.
According to the General Interpretation , the VAT exemption cannot be applied because the entity conducting business activity through renting from the property owner does not pursue the purpose of housing, but the purpose related to the conducted business activity . On the other hand, the condition of the purpose of renting / leasing real estate solely for residential purposes is met only at the stage of making the real estate available to natural persons and only this activity may be exempt from VAT.
The issued general interpretation presents a different position than the individual interpretations issued in recent years, where the tax authorities allowed the application of the VAT exemption when renting residential premises to entrepreneurs who made the premises available for housing purposes to their employees. Now this practice will have to change and the rental of apartments to entrepreneurs will, in principle, be subject to 23% VAT.
Source MDDP
