Municipal waste management and VAT

In July 2013, the municipal waste management system was rebuilt. The loud amendment to the law on maintaining cleanliness and order in municipalities replaced the obligation to sign municipal waste collection contracts with enterprises that have a relevant permit with the obligation to pay a fee to the municipality. It was the communes that were made responsible for maintaining cleanliness and order and ensuring the necessary conditions for this. However, there was some confusion - are the fees charged by municipalities for services related to municipal waste management subject to VAT?

Waste management - task of the commune?

The obligation to manage municipal waste results from the Act of September 13, 1996 on maintaining cleanliness and order in municipalities. Article 3 of the Act states that maintaining cleanliness and order in communes is one of the obligatory tasks of the commune. Additionally, art. 6c imposes an obligation on them to organize the collection of municipal waste from property owners where the residents live.

Therefore, municipalities charge their residents fees for waste management.

Art. 6h. Property owners, referred to in article 1. 6 c, are required to pay to the municipality in which they are located their real estate, a fee for the management of municipal waste.

Therefore, are the services related to waste management collected by municipalities subject to VAT?

Waste management services and VAT

Tax on goods and services tax are subject to, inter alia, delivery of goods against payment and provision of services against payment within the territory of the country. Active VAT taxpayers are obliged to tax services provided for remuneration. Is the commune an active VAT payer?

The commune as an active VAT taxpayer

In accordance with the Value Added Tax Act, taxpayers are legal persons, organizational units without legal personality and natural persons who independently conduct business activity, regardless of the purpose or result of such activity. Therefore, this definition also includes a commune. However, there is one "but".

Article 15 (6) of the VAT Act states that:

Public authorities and offices servicing these bodies are not considered to be a taxpayer in the scope of tasks imposed by separate provisions of law, for the implementation of which they were established, with the exception of activities performed on the basis of concluded civil law contracts.

Thus, the commune applies for trade as an active VAT payer, but only in the scope of activities performed on the basis of civil law contracts, e.g. rental or lease.

Waste management by the commune and VAT

As has been established, a commune may act as an active VAT taxpayer, and therefore it may be obliged to tax the output VAT on the services it provides. However, does this apply to waste management services? Well no. The regulations, which have been in force since July 2013, have imposed a statutory obligation on municipalities to collect fees from residents for waste management. Thus, a commune, collecting fees as a public authority, to which it is obliged by special provisions of the Act on maintaining cleanliness and order in communes, does not tax them with VAT. Therefore, the fee for municipal waste management is not subject to tax on goods and services, which is confirmed by the Directors of the Tax Chambers in the individual interpretations issued on this subject:

• Director of the Tax Chamber in Łódź in the individual ruling of 27 June 2013, No.IPTPP1 / 443-360 / 13-4 / AK,
• Director of the Tax Chamber in Bydgoszcz in the individual ruling of May 24, 2013, no. ITPP2 / 443-201 / 13 / AK.