On 8 October 2021, the Minister of Finance, Funds and Regional Policy issued general interpretation no. PT1.8101.1.2021 regarding the VAT taxation of residential property rental for residential purposes, in a situation where the property is rented by its owner to an entity conducting business activity, which in turn rents the property to other entities (for residential or other purposes).
Pursuant to the general rule expressed in Article 43 Section 1 Item 36 of the VAT Act, services consisting in leasing or letting of residential real estate or parts of real estate for own account, exclusively for residential purposes or to social rental agencies, are exempt from VAT.
The Minister of Finance addressed the issue of whether an entity that is not a direct user of residential real estate leasing services for residential purposes, in particular in the situations described above, may apply the exemption or must apply the 23% VAT rate.
The general interpretation holds that the exemption provided for in Article 43 Section 1 Item 36 of the VAT Act does not apply in the situation described above. The condition provided for in this provision is fulfilled only at the moment of renting real estate in Poland to a natural person for residential purposes. Thus the entity acting as an intermediary in the renting of property cannot benefit from the said exemption.
This position differs from the current individual interpretations issued by the tax authorities. The practice of using the exemption will therefore have to change.