- The CJEU ruling addresses the taxability of public transport subsidies in Poland.
- The case involved a flat-rate compensation payment from a local authority to a company to cover losses from public transport services.
- The tax authorities considered this payment part of the VAT taxable amount, which the company disputed.
- The CJEU had to determine if the compensation was a subsidy directly linked to the price under Art. 73 of the VAT Directive.
- A subsidy is taxable only if directly linked to the price of a specific transaction, benefiting the recipient and influencing the service price.
- In this case, the compensation was not linked to a specific service recipient and did not affect ticket prices.
- The compensation was calculated as a flat rate, independent of actual service use, covering losses rather than subsidizing fares.
- The CJEU found the case facts not comparable to cases where subsidies were linked to the number of recipients or services provided.
- The CJEU ruled the lump-sum compensation was not part of the taxable base as it was not consideration for services provided.
- Art. 73 of the VAT Directive indicates that flat-rate compensation for public transport losses is not included in the taxable amount.
- The issue of subsidies is similar to the taxability of grants, with distinctions based on the grant recipient and purpose.
- Grants are taxable if the grantor receives a specific benefit; otherwise, they are non-taxable genuine grants.
- Subsidies can be relevant for input VAT deduction and may be considered when applying a turnover key.
Source: assets.kpmg.com
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.
