Water and Sewage Services: VAT Taxation, Deduction, and Proportional Calculation for Municipalities

• Providing water supply and sewage disposal services is a taxable economic activity subject to VAT
• Utilizing infrastructure for water supply and sewage disposal for internal recipients is not subject to VAT
• Municipalities have the right to deduct part of the VAT from invoices related to water supply and sewage infrastructure investments
• The deduction key should be calculated based on the proportion of water supplied to external recipients in the total water supplied
• Municipalities can use a more representative method for calculating proportions based on the water supplied/sewage disposed to external recipients in the total amount
• This method best reflects the municipality’s activities and purchases made.

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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