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The actual performance of the construction and installations works in the light of CJEU judgement.


On 2 May 2019, the CJEU ruled in the case C-224/18 concerning the actual performance of the construction and installations works. The verdict, including a standpoint that is different from the current practice of the national courts and law-interpreting bodies is of considerable importance for the construction sector.

The issue concerned a long-time dispute between Budimex S.A and the Minister of Finance over an private tax ruling regarding the moment when the tax liability arises in the case of construction and construction installation works.

According to the position of the Minister of Finance expressed in a debatable interpretation of tax liability in respect of performance of services, such liability arises on the date a relevant invoice is issued or in the absence thereof, 30 days from the actual performance of the service. The Minister of Finance underlined that contractual terms on the basis of which the service is provided, including signing of the acceptance record, are irrelevant for defining the time of the supply of the services and, consequently, for the moment the tax liability arises. The company brought an appeal arguing that the formal requirement of validation of the work performed was expressly provided for in the terms  of the contract and as such was an integral part of every construction or installation service. Following a cassation complaint the SAC has applied to the CJEU for a preliminary ruling concerning the interpretation of the term ‘performance of services’.

The CJEU in its judgement indicates that in qualifying transaction as a taxable transaction VAT, the economic and commercial reality of a given field should be taken into account. In the issue in question, if the invoice is not issued or issued behind schedule, the construction service could be executed only in a moment of tangible completion, i.e. after all conditions are met, following the performance of all formalities indistinguishably related to the service and conclusive in ensuring its complete performance.

In other words, not the actual execution of construction services but the formal receipt expressed in the form of a signed hand-over report will be considered as a moment when the service was performed on condition that the receipt had been stated in a binding agreement between the parties, represents a material ending of the services and finally determines the amount of the consideration due.

This means that in the case of absence of an invoice for services concerning construction and installation services, the tax obligation arises only 30 days from the moment of signing the hand-over report and not after 30 days from the completion of the work.

The position of the Tribunal, less strict than the current position of the Polish tax office, should be assessed as beneficial for businesses operating in the construction industry. The time of receipt clearly specified in a hand-over report eliminates the risk of any irregularities concerning VAT settlements. The verdict gives also a possibility to reopen completed tax proceedings in which dimensional decisions were issued, concerning unfavourable decisions for taxpayers of the Polish tax office and administrative court.  


Ewa Pyrkosz, Tax Consultant, ATA Tax Sp. z o.o.

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