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Will input VAT be adjusted if it relates to goods subsequently contributed to a company in-kind? |
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Source: Tax newsletter - January 2007, Strategia Horwath Sp. z o.o.
Pursuant to art. 86 sec. 1 of the VAT Act, input tax can be deducted to the extent that goods and services are used in taxable
activities. The principle of neutrality implicit in this provision
should be interpreted broadly to include also input VAT suffered on the purchase of goods and services destined for use in a taxable
business, following the logic of the Supreme Administrative Court’s
judgment dated 21 October 2005 (case no. I FSK 179/2005).
The essential consideration in applying this principle of neutrality
for VAT is therefore not so much whether purchased goods are actually
put to use in a taxable business, but rather the intention to do so at
the time they are acquired, as confirmed by several ECJ judgments.
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Therefore, if goods are acquired for the purpose of a taxable business but eventually contributed to a company as an in-kind
contribution, this should not involve correction of previously deducted input VAT.
Although this Supreme Administrative Court judgment relates to the legal regime prevailing before 1 May 2004, i.e. relating to
the “old” VAT Act, it remains valid in the present legal environment. |
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