Implementation of Environmentally Friendly Investments by Municipalities and VAT Status

Abstract

The article deals with the judgment of the CJEU in case C-612/21 which answered an important question. Namely, under what circumstances can a public body be considered a taxable person for VAT. This case concerns a Polish municipality which organized the installation of renewable energy systems (RES) on its territory for its residents who own immovable property and who expressed a desire to be equipped with RES. The municipality was reimbursed with a subsidy of 75% of the subsidisable costs from the competent provincial authority. The CJEU ruled that in this specific case, the public body would not be carrying out economic activity and, therefore, should not be considered a taxable person for VAT.