Inspection of electrical installations and the VAT rate

Service-Tax

Companies providing installation and maintenance services for electrical installations encounter situations in which these services will be provided in residential and non-residential buildings, may result in the need to apply different VAT rates. So when should the standard VAT rate of 23% be applied, and when the reduced rate of 8%? Overview of electrical installations and the VAT rate - check it out!

8% VAT for construction works covered by the SPM

Pursuant to Art. 41 sec. 12 of the VAT Act, the legislator made it possible to apply the 8% VAT rate for works such as:

  1. delivery,

  2. renovation,

  3. modernization,

  4. thermomodernization,

  5. reconstruction

- buildings or parts thereof included in the construction covered by the social housing program.

What is included in the construction industry covered by the social housing program

The construction industry covered by the social housing program includes:

  1. residential buildings or their parts, with the exception of commercial premises,

  2. residential premises in non-residential buildings

- classified in the Polish Classification of Construction Objects in section 12,

and

  1. objects classified in the Polish Classification of Construction Objects in class ex 1264 - only buildings of health care institutions providing accommodation services with medical and nursing care, especially for elderly and disabled people.

Exclusions from construction covered by the social housing program

Pursuant to Art. 41 sec.12b of the VAT Act, the 8% VAT rate for the supply, renovation, modernization, thermo-modernization or reconstruction of buildings included in the social housing program will not apply to:

  1. single-family residential buildings with a usable floor area of ​​more than 300 m2;
  2. residential premises with a usable area of ​​more than 150 m2.

If the building area exceeds the above limit, the 8% VAT rate applies only to the part of the tax base corresponding to the share of the usable area qualifying for construction covered by the social housing program in the total usable area.

Inspection of electrical installations and the VAT rate of 23%

Pursuant to § 3 point 1 of the Regulation of the Minister of Finance of December 23, 2013 on goods and services for which the VAT rate is reduced, and the conditions for applying reduced rates - the 8% VAT rate applies to construction works (excluding commercial premises) covered by the social housing program, namely:

  1. maintenance works related to the construction industry covered by the social housing program,

  2. maintenance works related to:

  1. residential buildings, referred to in article 1. 2 point 12 of the VAT Act, or parts thereof,
    with the exception of commercial premises,

  2. residential premises in non-residential buildings classified in the Polish Classification of Construction Objects in section 12,

- to the extent that the works mentioned are not covered by this rate pursuant to another point of the regulation.

In addition, maintenance works are understood as works aimed at maintaining the technical efficiency of building elements or parts thereof other than renovation.

On the other hand, the activities consisting in the inspection and measurement of electrical installations consist in periodic inspection of the condition of the installation and constitute a separate service that does not fall within the scope of renovation, modernization, thermomodernization, reconstruction and they are not maintenance works, therefore, for this type of services, the basic rate should be applied, i.e. 23%, regardless of the objects in which they are performed.

This is confirmed by the Director of the Tax Chamber in Katowice in the individual interpretation of August 12, 2012. with reference number IBPP2 / 443-450 / 12 / KO

Inspection of electrical installations and the VAT rate of 8%

In economic practice, there are also situations in which the 8% VAT rate will apply to the activities of inspections or measurements of electrical installations.

For example, the entrepreneur performs electrical installation maintenance services consisting of minor repairs, replacement of fuses, control connectors, protective terminals, electrical sockets in apartments, tightening, cleaning, painting and supplementing the markings of wires, cables and fuse boards, i.e. maintaining the above-mentioned installations in good technical condition enabling their safe operation.

In addition, as part of the comprehensive maintenance service, the entrepreneur will carry out inspections, measurements and control of electrical installations and fire protection, and the service will be provided in buildings covered by the social housing program.

Therefore, the entire service will be subject to 8% VAT because the service provided will be of a complex nature, i.e. it will consist of two or more services closely related to each other and forming one whole.

When the inspection and measurement of the electrical installation will constitute an integral part of the entire maintenance service, the given service should be treated as a uniform service. On the other hand, splitting the performed comprehensive service into two separate services will be inconsistent with generally accepted economic practice.

Confirmation of the above is the judgment of the European Court of Justice, ref. No. C-349/96.

This is also confirmed by the position of the Director of the Tax Chamber in Katowice in the individual interpretation
of August 12, 2012 with reference number IBPP2 / 443-450 / 12 / KO