VAT exemption denied for sale of divided plot with building permit

Tax interpretation regarding the lack of VAT exemption for the sale of an undeveloped plot of land that will be created by dividing a main plot, as the plot will have a building permit at the time of sale, making it a “building land” and thus not eligible for the VAT exemption.

The main plot of land (9,960 m2) will be divided, and a 2,999 m2 portion will be sold to improve the development conditions of a neighboring property. At the time of sale, the divided plot will have a building permit, making it a “building land” and not eligible for the VAT exemption for undeveloped land.

The company that owns the main plot has incurred expenses related to the plot, such as agricultural tax and surveying fees, and the plot is recorded in the company’s fixed assets. Since the plot is part of the company’s business assets and not for private use, the sale will be subject to 23% VAT and not eligible for the VAT exemption.

The sale does not qualify for the VAT exemption under Article 43(1)(9) for the delivery of undeveloped land, as the plot will have a building permit at the time of sale. The sale also does not qualify for the VAT exemption under Article 43(1)(2) for the delivery of goods used solely for VAT-exempt activities, as the plot was not used solely for such activities and the company had the right to deduct input VAT.

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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