Rental of Utility Rooms Serving Residential Needs Exempt from VAT
In the individual interpretation of 23 April 2024, 0112-KDIL1-2.4012.16.2024.2.DS, the Director of the National Revenue Information (KIS) assessed the possibility of applying a VAT exemption for the rental of rooms such as storage units, compartments, and cellars by a cooperative. According to the description in the application for interpretation, these rooms are used by residents of residential buildings managed by the cooperative mainly for storing bicycles, strollers, preserves, etc.
The taxpayer argued that such an exemption did not apply, a position with which the interpretative authority disagreed. The Director of KIS found that Article 43(1)(36) of the VAT Act was applicable, which exempts from VAT the services of renting or leasing real estate or parts thereof for residential purposes, provided it is on one’s own account and exclusively for residential purposes.
Due to the lack of a legal definition of residential premises in the VAT Act, the Director of KIS referred to the provisions of the Act on the Ownership of Premises. According to this Act, a residential unit is a room or a set of rooms separated by permanent walls within a building, intended for the permanent residence of people, which, together with auxiliary rooms, serve to meet their residential needs. According to this Act, rooms may be considered part of the premises, even if they do not directly adjoin it or are located on the property outside the building where the unit is separated, particularly including cellars, attics, and storage compartments.
The Director of KIS also referenced the Regulation of the Minister of Infrastructure of 12 April 2002 regarding the technical conditions that buildings and their location should meet, which defines a utility room as a room located outside an apartment or commercial unit, serving, among other things, for the storage of items or food products by building users.
Furthermore, the interpretative authority pointed to the content of the explanations contained in the annex to the Regulation of the Council of Ministers of 30 December 1999 on the Polish Classification of Construction Objects, under which the residential part of a residential building includes living rooms, auxiliary rooms, cellars, and common areas (e.g., stroller rooms and drying rooms).
As a result, the Director of KIS concluded that additional rooms such as storage units and cellars should not be classified as commercial units, as they constitute utility rooms of a residential unit serving residential needs, intended for the storage of materials, items, fuel, or food products by the residents.
This interpretation confirms the existing approach of the Director of KIS, according to which the rental of such utility rooms is exempt from VAT (cf. individual interpretation of 16 August 2022, 0112-KDIL1-14.4012.305.2022.1.MB and of 23 October 2020, 0114-KDIP1-1.4012.557.2020.2.EW).
Given the current practice of the Director of KIS in such matters, it may be worth considering submitting one’s own application for an individual interpretation confirming the possibility of applying the exemption.