On April 16, 2021, the Supreme Administrative Court (Naczelny Sąd Administracyjny) issued a decision to refer to the Court of Justice of the European Union a question for a preliminary ruling on VAT taxation of subsidies obtained by a local government unit for the implementation of a project in the field of renewable energy sources (RES).
The Court will decide whether, when implementing a project where a municipality undertakes to develop and install renewable energy systems on private property and to transfer ownership of these systems to landlords after a certain period of time, the municipality is acting as a VAT payer. The Supreme Administrative Court also asked whether in such a situation the VAT tax base should take into account the co-financing received by the commune from European funds for the implementation of projects related to renewable energy sources.
The ruling of the CJEU in this case will certainly be of key importance from the perspective of local government units implementing projects in the field of renewable energy, in which residents participate, financed from European funds. The issue of VAT taxation of subsidies in this type of projects still raises a lot of doubts among taxpayers.
Moreover, as we have already informed, the Supreme Administrative Court decided to issue a resolution composed of 7 judges, which would resolve the same issue. However, there is a high probability that the Supreme Administrative Court will withhold the resolution until the CJEU issues its judgment.
Source PwC
