Orzecznictwo Naczelnego Sądu Administracyjnego
Judicial decisions of the Supreme Administrative Court

Summary/Abstract: The handover of immovable property owned by a city with county rights or the State Treasury as a result of a province governor’s decision on designating the location for a public road constitutes a supply of goods pursuant to article 7(1) of the Value Added Tax Act. Hence, compensation paid to the city with county rights in connection with the granting of immovable property for the benefit of the province, provided for in decisions issued by the province governor, is subject to VAT. According to the Supreme Court, exclusion of the ownership transfer from VAT-liable transactions requires establishing that the transfer occurred as an exercise of powers of the imperium sphere, i.e. as an exercise of so-called imperious powers (i.e. state control that includes the possible use of coercive measures). The said transaction cannot, however, be recognized as falling within this sphere if a local self-government unit, de facto, acts in subordination to another public authority – in this case the province governor. With regard to the transaction in question, the city with county rights does not act as an administering entity. In fact, its position is subordinate to the public authority – it acts on the province governor’s orders and, following the issuance of the decision on designating the location for a public road, it hands over the immovable property. In actual transactions between two separate entities the provisions currently in force do not rule out the possibility that the same taxpayer bears responsibility for the record keeping and payment of VAT. The VAT invoice, which documents the handover of the immovable property by the city with county rights to the province, reflects an actual (real) business transaction. An implication of recognizing the transaction as a supply of goods is that it indicatesthe chargeable event, which occurs upon the receipt of full or partial payment, i.e. the total or partial amount of compensation for the transfer of immovable property ownership. Thus, compensation performs the function of remuneration for transferring the ownership of goods, making this kind of supply of goods a paid transaction. Furthermore, compensation as such is not subject to VAT. Instead, tax is levied on the supply of goods represented by the transfer of ownership in exchange for remuneration, which has taken the form of compensation. According to the Court, in order to exclude the ownership transfer from transactions subject to VAT, the transfer must occur as an exercise of powers of the imperium sphere, i.e. as an exercise of imperious powers or state control.

• Details
• Contents