Gmina O is also a Polish Municipality (similar to a UK’s local authority). This dispute concerns the Municipality’s involvement in a project installing renewable energy source (‘RES’) systems. Residents could volunteer to have solar panels etc. installed. The Municipality enters into a civil law contract with the resident under which residents are required to pay up to 25% of the costs over a 5-year period during which the system remained owned by the municipality. Ownership then transfers. The Municipality receives 75% of the total eligible costs ultimately from an EU fund.
This reference included another question on taxable amount, essentially asking if the 75% subsidy should be included within it. The AG noted that given the view that there is no economic activity and, even if an economic activity is assumed, Article 13 applies so VAT is not due, it is not necessary to answer the question.
Source KPMG
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