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VAT rate for lease of accommodation


Determination of a correct VAT rate while letting residential premises may give rise to certain difficulties for taxpayers; depending on the nature and the purpose of such rent, it may be subject to 8% VAT or exempt from it.

Pursuant to art. 43 sec. 1 par 36) of VAT Act, exempt from the tax are services involving lease or rent of residential properties or parts of real properties on one’s own account, solely for residential purposes (therefore services classified under 68.20.11 PKWiU [Polish classification of products and services] as rent and services involving management of own or leased residential properties). Therefore the assumptions for applying the exemption are as follows:

  • providing a service on one’s own account,
  • residential nature of the real property,
  • residential purpose of the rent or lease.

At the same time, the aforesaid exemption pursuant to art. 43 sec. 20 of the VAT Act will not be applicable for the services stated in item 163 of Annex 3 to VAT Act, related with accommodation, marked with PKWiU 55 (for example 55.20.19 – other services of tourist accommodation facilities and short-stay accommodation without [customer] service) which are subject to 8% VAT.

From individual interpretations on a correct VAT rate it follows that the purpose of the service will be essential in determining whether the services provided by the taxpayer meet the requirements for exemption or will be subject to 8% VAT. However, as it was pointed by the Head of the Tax Chamber in Warsaw, in the individual interpretation of 30 November 2015 r. (file ref. IPPP3/4512-812/15-4/RD), the purpose is accomplished by using the premises by the lessee (a person directly participating in provision of the service). A taxpayer could use the VAT exemption if the rent agreement includes provisions from which it clearly follows that it relates to residential premises and such premises may be used by the lessee only for residential purposes. Nonetheless, a purpose that is different from residential one will be for example a short stay for business or tourist purposes. Therefore, if the premises are let on one’s own account for residential purposes in relation with the interest of persons living there, such rent will be exempt from VAT. Satisfaction of housing needs should be ruled out if a given person in principle has a place to live, but concerning the fulfilled business tasks or a tourist trip, he/she merely needs accommodation outside their usual place of residence. A residential purpose is not related to a temporary stay, but  permanent interest of the lessee of premises.  

Therefore, in practice, if a taxpayer lets rooms against charge in their residential building, e.g. to their business partners while they are on a business trip related with their mutual business undertakings, such an activity in principle should be subject to 8% VAT. However, if the same premises are let to employees who together with their families will be relocated from other parts of the country to the city where the employer’s plant is localized, it may be justified to state that as a result of the concluded agreement, their housing needs will be satisfied and the lease should be exempt from VAT.  

If there are any doubts as to the classification of the service provided under PKWiU 2008, affecting correct application of VAT rate, a taxpayer may make an inquiry at Ośrodek Klasyfikacji i Nomenklatur Urzędu Statystycznego [Centre of Classification and Nomenclatures of the Statistical Office] in Łódź, which provides information on application of classification standards.