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Admissibility of NP (not applicable) rate application to real estate related services.


On December 1, 2020 the Head of the National Revenue Information Service (hereinafter: the KIS Head) issued a private tax ruling ref. no. 0112-KDIL1-3.4012.393.2020.2.JK concerning the place of supply and taxation of services with VAT.

The facts of the case as presented in the application concerned a sole registered as an active VAT and VAT-EU taxpayer . The services were provided by the Applicant in the territory of the European Union for a Polish contractor and involved primarily assembling cinema chairs. Quite importantly, the dismantling of the cinema chairs with respect of which the services were provided was very complicated and involved the necessity to install new platforms to which chairs were fixed, so the provider considered it correct to use the NP rate on the invoice as appropriate for real estate-related services.

The KIS Head did not agree with that standpoint arguing that it was necessary to demonstrate a close association between the service and the real estate in the case in question. In the facts of the case as presented by the Applicant, the dismantling of the chairs, although difficult, was not impossible and did not involve significant damage to or alteration of the property. Moreover, the disassembly of the chairs did not preclude their reassembly and use elsewhere. The above circumstances proved to be decisive in the case in question and precluded the application of the NP rate, and consequently determined the application of the general principles, i.e. at the place where a taxpayer being a recipient of services has its business premisses or a permanent place of business – i.e. in Poland.

Despite an attempt to regulate the issue of taxation of real-estate-related services, in reality, taxpayers are still facing numerous doubts, as evidenced by the ruling in question. The introduction of the concept of services connected with real estate in an EU regulation, defined as having a sufficiently direct connection with the real estate at issue, as well as the enumeration of examples of such services does not always prove sufficient to unambiguously determine the place of taxation of a given service. The term itself is quite vague and business practice shows that such services, often complex and problematic, can be difficult to qualify. Undoubtedly, tax rulings issued in similar states of affairs may be helpful for a proper determination of the place of taxation of the services. However, each case is slightly different and requires a separate verification of the connection between the given service and real estate, taking specifically into account all the features and effects of the service provided.


Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.

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