VAT Deduction on Investment Expenses: Supreme Administrative Court Ruling on Aleksandrów Łódzki Case

• The case involved the Municipality of Aleksandrów Łódzki seeking a tax interpretation regarding VAT on goods and services.
• The Municipality began an investment project for the thermal modernization of residential resources, including residential and commercial premises.
• The Municipality funds these investments with its own resources and external financing, documented by VAT invoices.
• The Municipality owns 100 percent of a company that rents out these premises and pays VAT on commercial rentals but treats residential rentals as VAT-exempt.
• The Municipality questioned if it could deduct part of the VAT based on sales proportion for expenses on buildings provided to the company for rental services.
• The Municipality believed it was entitled to this deduction.
• The Director of KIS disagreed, stating the buildings do not serve the Municipality’s taxable activities and the company is not equivalent to the Municipality for tax purposes.

Source: mddp.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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