Ruling: No Right to Deduct VAT on Invoices for Expenses Related to Sewage Treatment Plant Construction

• The text discusses a letter from the Director of the National Tax Information regarding the deduction of VAT from invoices related to the construction of domestic sewage treatment plants.
• The letter confirms that the taxpayer’s position regarding the tax consequences of the described future event is correct.
• The request for an individual interpretation of the VAT law was submitted by the municipality, which is a registered VAT taxpayer.
• The municipality has signed an agreement with the Marshal’s Office for assistance in implementing a project related to water and sewage management.
• The project will be financed by the European Agricultural Fund for Rural Development.
• The construction of domestic sewage treatment plants is not mandatory and will be carried out only for residents who have expressed their willingness to participate.
• The municipality will bear all the costs of the project and will receive a refund for 100% of the gross costs incurred.
• The municipality is not entitled to deduct VAT from invoices related to the construction of domestic sewage treatment plants.
• The received grant is not subject to VAT as it does not affect the price of the services provided.
• The grant is intended to cover the costs of the investment and is not related to the sale of goods or services.
• The municipality refers to a court ruling stating that grants for municipal water and sewage projects are not subject to VAT.
• The right to deduct VAT is granted to active VAT taxpayers when the purchased goods or services are used for taxable activities.
• The municipality’s position regarding the deduction of VAT is correct.

Source: sip.lex.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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