Complementary use of land does not affect VAT exemption
The supplementary designation specified in the Local Spatial Development Plan (MPZP) does not modify the basic designation of land in the context of the possibility to apply the VAT exemption provided for in respect of the supply of undeveloped real estate, the WSA indicated in a recent judgment following an individual interpretation by the Regional Administrative Court (DKIS).
The purpose of the request for an individual interpretation was to confirm that the supply of land for which the LSDP provides as the main designation a park with a prohibition on development will be subject to the VAT exemption provided for in Article 43(1)(9) of the VAT Act, i.e. as a supply of land that is not a building site. The WSA held that the aforementioned exemption was not applicable as the area on which the real estate is located is, in accordance with the main purpose of the LSDP, subject to a prohibition on development, however, the supplementary purpose indicated in the LSDP allows for the construction of strictly specified facilities, e.g. sports fields or playgrounds.
The WSA disagreed with the DKIS, holding that the possibility of building development provided for in the LSDP as an ancillary use does not mean that the area should be deemed to be a construction area and therefore the supply of the real property in question may be exempt from VAT.
The issue in question is important, as it may lead to a complete change in the principles and manner of taxation of the supply of undeveloped real estate. We are already familiar with similar judgments of administrative courts in this respect, so we are waiting for the tax authorities to follow this position as well, concludes Anna Konieczna-Nowak of Thedy & Partners.