The right to deduct VAT when transferring expenditure free of charge

The Supreme Administrative Court ruled that a regional railway company had the right to deduct VAT on purchases related to the construction and modernization of stops on land used by the national railway infrastructure operator.
The company provided the expenditure on these buildings free of charge, with the aim of increasing the attractiveness and efficiency of its railway lines.
The tax office argued that since the company knew in advance that the expenditure would be transferred free of charge, it did not have the right to deduct tax.
However, the Supreme Administrative Court rejected this argument, stating that the right to deduct VAT does not depend on the existence of a taxable activity.
In this case, the goods and services were used for the company’s business activities, and therefore the company had the right to deduct VAT.
This ruling is seen as a positive signal for taxpayers engaging in similar infrastructure projects.