Check first the taxation and then the deductibility
The construction of railway stops and their subsequent free-of-charge handover does not deprive the taxpayer of the right to deduct VAT from invoices for goods and services used in their construction, particularly if these stops will positively contribute to the development of the taxpayer's taxable activities, according to the judgment of the NSA of 28 September 2023 (case file No. I FSK 680/22).
In the case that ended up on the NSA court, the company is involved in investment and construction of railway infrastructure. It provides services subject to VAT. As part of its activities, it has built bus stops on PKP land, but these stops are also to increase the attractiveness of the taxpayer’s infrastructure. The taxpayer wants to transfer the built stops to the PKP for free.
In the opinion of the tax authorities, the company was not entitled to deduct VAT on expenses related to the construction of stops on PKP land and should correct its settlements. At the same time, the gratuitous transfer of bus stops is not subject to VAT, according to the authorities.
– When settling VAT, entrepreneurs should first determine whether the activity is taxable and then examine the question of the right to deduct. According to the NSA, in the case of gratuitous transfer of bus stops, we will not be dealing with an activity subject to VAT. At the same time, in the NSA’s opinion, the company had the right to deduct VAT on construction expenses and does not have to make adjustments on this account,” Natalia Zborowska, a consultant at Thedy & Partners, points to the NSA’s conclusions.