Taxation of real estate rentals
The rental of real estate is taxed at a rate of 23%.
Rental of real estate for housing purposes is exempt from VAT. The VAT exemption does not apply to accommodation services provided by hotels, motels and other hotel facilities (PKWiU 55), where taxation is 8% VAT.
Is the rental of real estate to other business entities exempt from VAT?
The purpose of the rental is important.
ATTENTION!! Only rental of real estate for residential purposes is exempt from VAT.
The exemption from VAT will apply in the case of renting a building / premises to a company that makes it available to its employees free of charge, because the ultimate purpose of renting a building / premises is to meet the housing needs of the tenant's employees.
The exemption from VAT will not apply in the case of renting a building / premises to a company that conducts business activity in it or as a part of its activities sublets the rented building / premises.
Media re-invoice as a separate service
Media re-invoicing, i.e. electricity and heat, water, gas, sewage disposal takes place when the landlord receives an invoice for the media and then resells it to the tenant without increasing the sales value by its own margin.
For VAT purposes, ancillary benefits in relation to the main service performed take the VAT rate in accordance with the main service. An ancillary benefit is not an end in itself but is intended to help you complete your main benefit.
VAT rate for media re-invoicing
The media were considered as ancillary services until the individual interpretation of the director of the KIS from July 17, 2019. 0112-KDIL1-2.4012.238.2019.2.TK, which after the judgment of the CJEU of 16 April 2015. regarding C-42 / 14 regarding the possibility of re-invoicing media, took the position that:
the media accompanying the property rental service is separate benefits, if the tenant has the option of choosing how to use them by deciding how much to use. Therefore, the basis for the taxation of utilities on the refractory will be the same as the one indicated on the invoice from the original delivery - appropriate for the given utilities.
ATTENTION!! Garbage collection fees continue to be an ancillary benefit and should be treated as a calculating element of the rental service, assuming the VAT rate consistent with the main service, i.e. taxed at the rate applicable to the rental service. The costs of exporting waste and maintaining cleanliness are in fact permanent consumption. The landlord and tenant cannot choose the provider of these services.
The moment when the tax obligation arises
In the case of media re-invoicing, the tax obligation arises as soon as the re-invoice is issued, no later than on the date of its payment.
The moment when tax income arises
- Media settlement period specified in the contract
Tax revenue for re-invoiced media arises on the last day of the tax period, but this period does not have to be the same as for rent, when media re-invoicing is delayed in relation to the tax periods set for the rent (e.g. if the media invoice includes 2 months, and rent 1 month).
- Media settlement period not specified in the contract
The tax income for re-invoiced media arises when the re-invoice is issued, no later than the receipt of payment, regardless of the period to which the re-invoice relates. Re-invoicing is an independent activity.
The moment when the tax cost arises
Re-invoiced utilities are direct costs, therefore they should be charged for tax costs in the period in which revenues from re-invoicing utilities were recorded.