Free transfer of investments. Without VAT due, but with the right to deduct input tax

• The Supreme Administrative Court in Poland ruled that if a taxpayer provides free services to another entity that are indirectly related to VAT taxable activities, the taxpayer has the right to deduct input VAT.
• The case involved Pomorska Kolej Metropolitalna SA, a regional company that builds and provides railway infrastructure to transport companies in the Tricity area.
• The company argued that the free transfer of railway stops would increase passenger transport on its lines and generate VAT taxable revenue.
• The Director of the National Tax Information confirmed that the transfer of the stops would be VAT exempt, but the company would not be entitled to deduct input VAT.
• The Regional Administrative Court agreed with the Director, stating that there was no connection between the free transfer of the stops and the company’s taxable activities.
• The Supreme Administrative Court overturned the lower court’s decision, stating that the interpretation of the VAT law contained a logical error.
• The court ruled that the free transfer of the stops would not be subject to VAT and that the company could deduct input VAT.

Source: podatki.gazetaprawna.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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