1. Significant change in approach of the Supreme Administrative Court towards windfarm taxation

2. Sale of guarantees of origin issued for electricity produced from renewable resources is a services provision

3. Exclusive economic zone should be considered as country’s territory

1. Significant change in approach of the Supreme Administrative Court towards windfarm taxation

In February and March the Supreme Administrative Court passed two positive judgments concerning taxation of windfarms in 2017. In the Court’s opinion the key issue is whether the amended regulations resulting in the taxation of the whole windfarm in 2017 required approval of the European Commission.

It should be remembered that in the judgement of seven judges of 22 October 2018, file no. II FSK 2983/17, the Supreme Administrative Court ruled that in 2017 all elements of a windfarm (foundation, column and technical elements) were subject to real estate tax. Although the judgment of seven judges does not oblige other courts to rule in the same way in similar cases, it seemed that RET on windfarms in 2017 is sealed.

However, based on the judgement of 26 February 2019, file no. II FSK 3098/17 and the judgement of 13 March 2019, file no. II FSK 2962/17 the Supreme Administrative Court returned the case to the voivodship administrative courts for re-examination and obliged these courts to analyze thoroughly whether the introduction of changes in 2017 required the notification of the European Commission. In practice, it means that the voivodship administrative courts will have to examine whether the amended provisions, taking into account their compliance with EU law, could be applied in 2017.

2. Sale of guarantees of origin issued for electricity produced from renewable resources is a service provision

On March 8, 2019 the Director of the National Fiscal Information issued the tax ruling (file no. 0114-KIDP1-2.4012.20.2019.1.KT) in terms of sale of guarantees of origin issued for electricity produced from renewable resources, determination of the place where the service is provided, tax point and tax rate.

Ruling was issued for an entity which produces and sells energy from renewable resources. The applicant sells also guarantees of origin of electricity generated from renewable energy sources. Guarantees of origin do not create any property rights. They are only evidences for a final acquirer that the energy introduced into the distribution system comes from renewable sources. Guarantees of origin are issued in an electronic form by the Energy Regulatory Office and sold only via the Polish Power Exchange. They are transferred only when relevant entry in the Register of Guarantees of Origin is made. However if the guarantees are sold to the final acquirer, they expire and are deleted from the Register.

The tax authority claimed that:

• sale of guarantees of origin issued for electricity produced from renewable resources is a service provision because the applicant sells it for a given price on the basis of an agreement concluded with a contractor;
• if the buyer of the guarantees of origin is a taxpayer, the place of supply of the services shall be the place where the taxpayer has its seat or a fixed establishment;
• tax obligation for the service arises on the date of service performance, i.e. when an entry in the Guarantees of Origin Register on the transfer of the guarantee to the buyer is made;
• sale of guarantees of origin is subject to standard 23% VAT rate.

3. Exclusive economic zone should be considered as country’s territory

The Director of the National Fiscal Information in the tax ruling issued on February 28, 2019 (file no. 0114-KDIP1-2.4012.41.2019.1.WH) agreed with the applicant on the subject of understanding the exclusive economic zone as country’s territory for some activities.

Applicant being Polish limited liability company, registered for VAT purposes in Poland builds an offshore windfarm placed within the territory of Polish exclusive economic zone. The main doubt raised by the applicant was whether on the territory of exclusive economic zone the standard rules for VAT calculations apply, especially the right to deduct input tax, due to the fact that the applicant is the legal successor of other limited liability company. This company bought certain services on their own behalf but for the accountant of special purpose vehicles.

The Director of the National Fiscal Information stressed that a similar case has been previously resolved by the Tribunal of Justice of the European Union (file no. C-111/05 Aktiebolaget NN). As the Tribunal stated, for the purposes of providing services directly connected to the activities to which member states have sovereign right, the exclusive economic zone should be treated as a part of a given country’s territory. It means that in the scope of activities related to the construction and use of wind farms, the exercise of jurisdiction takes place on the basis of the provisions being in force in national law, and thus in the scope of this activity, the exclusive economic zone should be considered as a part of the territory of the Republic of Poland. Therefore the applicant as the legal successor of other company has the right to deduct input tax according to the Polish VAT provisions.