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EXPERIENCE

December 2017
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KSP wins a VAT reverse charge case before the Province Administrative Court (WSA)

We represented a general contractor of office projects in a case concerning VAT reverse charge on construction services examined by a Province Administrative Court (WSA) of Krakow. On 1 December 2017, the Court shared our standpoint and admitted that no dictionary definition was to be used to accurately interpret the term “subcontractor” because it was defined in other disciplines of the law, in particular the construction law. Arrangements made between a party renting office premises and the owner of the office building in respect of fees for increased standard of the premises or the issues of financial participation of the owner in the costs of finishing the premises by the lessee did not result in a shift of the roles of those entities in the chain of transactions. They are not undertaken under a contract for construction works but under a lease agreement. The party which, as a result of such arrangements, was invoiced with the costs, did not become a project owner and the party acting hitherto as the project owner did not become a contractor. Consequently, the general contractor which issued invoices including VAT did not become a subcontractor, which would result in changing the method of taxation into a reverse charge.  

 

The Court thus opposed the standpoint presented in official explanations and interpretations of the Ministry of Development and Finance, issued to date. This judgment helps simplify the rules of VAT payment by general contractors. The judgment is not final.  

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