- VAT on the sale of a photovoltaic farm
- Ground lease rent for wind farm construction increases the initial value of a fixed asset
- VAT on charging electric vehicles by foreign entities in Poland
- Does an entity providing an electric vehicle charging application purchase and sell electricity?
- Is a cogeneration unit (used to produce electricity and heat) subject to real estate tax?
- Statement of the Ministry of Finance regarding the taxation of photovoltaic farms in 2025
1. VAT on the sale of a photovoltaic farm
A photovoltaic farm itself does not constitute an organized part of an enterprise. Consequently, its sale is subject to VAT taxation.
This position was presented by the Director of the National Tax Information Office (hereinafter: “Director of NTIO”) in an individual tax ruling dated April 4, 2024, reference number: 0114-KDIP1-1.4012.115.2024.1.AWY. In the factual situation presented, the Applicant indicated that they are in the process of constructing a photovoltaic farm, which they intend to sell upon completion. The planned sale will also include rights arising from the land lease agreement and the electricity sale agreement, as well as decisions issued concerning the farm.
Considering Article 2(27e) of the VAT Act and case law, including the judgment of the Supreme Administrative Court of September 13, 2023, reference number I FSK 710/19, the Applicant stated that the subject of the sale does not meet the conditions to be recognized as an organized part of an enterprise (hereinafter: “OPE”) due to the lack of separation:
- organizational – the farm is merely a fixed asset under construction for the Applicant, and its components are not separated in the books;
- functional – the subject of the planned sale would require the buyer to engage resources and human capital to operate independently in the market;
- financial – the Applicant has not assigned a separate budget, accounts, or employees to the described investment, whose costs could be attributed to it.
As a result, the planned sale is not eligible for the exemption provided in Article 6(1) of the VAT Act.
Link to the tax ruling: https://eureka.mf.gov.pl/informacje/podglad/582604
2. Ground lease rent for wind farm construction increases the initial value of a fixed asset
The rent paid for the lease of land on which a photovoltaic power plant is being built constitutes the cost of producing a fixed asset. Therefore, it should be included in its initial value. From the moment the photovoltaic power plant is put into use, it constitutes an indirect tax-deductible cost (hereinafter: “TDC”) at the moment it is incurred.
This position was confirmed by the Director of NTIO in an individual tax ruling dated April 11, 2024 (reference number: 0114-KDIP2-1.4010.101.2024.1.DK).
The lease fee is a necessary cost for the construction and further operation of the photovoltaic farm standing on it. This cost would not have arisen if the applicant had not pursued the investment described in the request for an individual tax ruling. Therefore, it cannot be classified as general management or operating costs and thus excluded from the initial value of the farm.
Link to the interpretation: https://eureka.mf.gov.pl/informacje/podglad/583696
3. VAT on charging electric vehicles by foreign entities in Poland
According to the Director of the National Tax Information Office (hereinafter: “Director of NTIO”), the sale of electricity to foreign entities, who resell it to their clients, takes place at the vehicle charging point located in Poland, rather than at the place of the purchaser’s headquarters outside the Republic of Poland.
The issue in the individual interpretation dated August 28, 2023 (reference number: 0112-KDIL1-3.4012.324.2023.1.MR) was to determine whether Article 22(1)(5) of the VAT Act applies in the above situation, according to which the place of VAT taxation for the supply of electricity is where the entity purchasing the electricity for resale has its business headquarters. However, this provision indicates that it must be the sale of electricity within the power grid system. In the factual situation, the Applicant indicated that, on the one hand, they manage charging stations located in Poland that belong to other entities. On the other hand, they are a provider of charging services, including to foreign partners, who further provide these services to their own customers. In this function, they allow them to charge vehicles at stations they do not own. The Applicant stated that, therefore, they purchase electricity from station owners and resell it to foreign partners.
The Applicant also argued that the restriction in Polish regulations is inconsistent with the original wording of Council Directive 2006/112/EC of November 28, 2006, on the common system of value-added tax. Furthermore, they challenged the wording of the VAT Directive in Polish, pointing out, among other things, obvious linguistic errors and differences between the Polish wording and literal translations from German, French, and English.
According to the Applicant, since they are selling electricity to foreign partners who resell it to final consumers, despite the charging taking place in Poland, the supply should be considered in the country of each partner’s headquarters. However, the Director of NTIO disagreed with this position – a stance that could be seen as derivative of the CJEU judgment (C-282/22).
Link to the tax ruling: https://eureka.mf.gov.pl/informacje/podglad/559108
4. Does an entity providing an electric vehicle charging application purchase and sell electricity?
The Supreme Administrative Court of Sweden referred a preliminary question to the Court of Justice of the European Union (hereinafter: “CJEU”) (case C-60/23) regarding whether a company providing an application that allows access to electric vehicle charging points (but is not their operator) is making a sale of electricity.
The case concerned transactions between three entities:
- A provider of an application with information on a network of charging stations and access to this network, issuing consolidated invoices to users for network use and purchased energy on a monthly basis,
- Operators of charging points,
- Users of the application who charge their vehicles at the operators’ points, deciding on the amount and frequency of charging.
The General Advocate of the CJEU, Tamara Ćapet, presented an analysis and proposed a characterization of these relationships for VAT purposes and a direction for the decision in her opinion dated April 25, 2024. In her view, the above-described transaction model best reflects the purchasing commission agent model from Article 14(2)(c) of the VAT Directive. Two conditions are met:
- there is an order, in the execution of which the agent-application provider makes a supply of energy on behalf of the principal-user, although such an instruction need not be explicit,
- the supply of energy purchased by the agent and the supply of energy sold or transferred to the principal are identical, regardless of the fact that a separate invoice is issued for the use of the application.
In such a situation, the user effectively purchases electricity from the charging point operator, and the application provider is merely an intermediary. However, we are still awaiting the final judgment from the CJEU in this case.
Link to the full opinion: https://eur-lex.europa.eu/legal-content/pl/TXT/?uri=CELEX:62023CC0060
5. Is a cogeneration unit (used to produce electricity and heat) subject to real estate tax?
A cogeneration unit, as a device that allows the production of both electricity and heat in a single technological process by burning gas, does not constitute a building structure and, consequently, is not subject to real estate tax – this was the ruling of the Provincial Administrative Court in Bydgoszcz in its judgment of May 15, 2024, reference number I SA/Bd 148/24.
The judgment indicated that, according to Article 1a(1)(2) of the Act of January 12, 1991, on Local Taxes and Fees, the tax law classifies two categories of objects as structures:
- construction objects as defined by construction law, which are not buildings or small architectural objects, along with installations ensuring the usability of the object according to its intended purpose, erected using construction products;
- construction devices related to a building object as defined by construction law, which ensure the usability of the object according to its intended purpose.
A cogeneration unit cannot be classified into any of these categories because:
- “when a construction device is mounted on a foundation as a separate technical part of the components forming a utility whole, only the foundations are subject to taxation,”
- it is not the unit that enables the use of foundations or the power network according to their intended purpose, but rather the opposite.
Therefore, under the current wording of the regulations concerning real estate tax, a cogeneration unit is not subject to real estate tax.
Link to the judgment: https://orzeczenia.nsa.gov.pl/doc/53AAF31E3B
6. Statement of the Ministry of Finance regarding the taxation of photovoltaic farms in 2025
In connection with the publication of the draft law amending the provisions on real estate tax, media reports have emerged regarding additional taxation of photovoltaic farms. In response to these reports, the Ministry of Finance has issued a statement clarifying that it is not working on introducing a new tax on photovoltaics and that the planned changes to the real estate tax will not lead to an increase in the taxation of photovoltaic farms under this levy.
According to the information published on the Ministry of Finance’s website, following public consultations on the proposed changes to the real estate tax (about which we wrote in more detail on our blog), the work on the draft law amending the Local Taxes and Fees Act is currently being finalized. Although the revised draft has not yet been disclosed, and the statement from the Ministry of Finance suggests that taxpayers will not face a higher tax burden, it will still be advisable to verify whether the assurances of the Ministry of Finance are reflected in the final draft of the law.
