In most cases, VAT is directly related to the place where services are provided, or goods are sold. However, some of the economic activities fall in the grey zone. A vivid example is Poland’s real estate services and warehousing, a case explained by the Court of Justice of the European Union.
The Polish VAT act fails to describe the taxation of real estate services in detail. Therefore, providers of different types of such services cannot be sure about the VAT application based on the client’s location or property.
In the case of RR Donnelley Global Turnkey Solutions Poland Sp. z o.o., the Court had to provide an explanation about whether all warehousing services, including logistic services, loading, issuing goods and other related services, can be treated as real estate services. If all related services are considered real estate services, they should be subject to VAT at the location where the client is established or, based on the Polish VAT law on real estate services, where the property is situated.
According to the Court’s decision, warehousing and related services can only be subject to real estate services and charged VAT at the location of the property if the warehousing is the main activity of the real estate (when real estate is the subject of the service). In other cases, warehousing services should be taxed according to the general rules, e.g. in the origin country of the recipient. For warehousing to become a real estate service, it is also essential that the customer has the proper rights to enter and use all or part of the real estate.
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