Services involving the provision of a multi-purpose hall to secondary schools fall under PKWiU code 93.11.10.0 ‘Services relating to the operation of sports facilities’, and these services are subject to VAT at a rate of 8 per cent.
Client's situation
Our client is a registered VAT payer and owns a sports facility comprising, amongst other things, courts for squash, badminton and table tennis, as well as a gym. As part of its business activities, the Client makes available to secondary schools, amongst others, a sports area referred to as a ‘multi-purpose hall’, which constitutes a separate part of the sports facility. The multi-purpose hall is designed for sports and recreational activities, in particular physical education lessons and other physical activities carried out as part of the secondary schools’ curriculum. The hall is made available on specific days and at specific times, in accordance with the timetable provided by the school.
Given the nature of the services provided, the client has raised doubts regarding the correct classification of the activities carried out under the PKWiU classification and the applicable rate of value added tax.
The issue
DMS TAX’s task was to prepare an application for a Binding Rate Ruling addressed to the Director of the National Tax Information Service, in which it would be confirmed that the services in question should be subject to VAT at a rate of 8 per cent
Our approach
On behalf of the Client, we submitted an application to the Director of the National Tax Information Service requesting a binding rate ruling to determine the correct PKWiU classification and the VAT rate for the services provided.
In the application, we indicated that the services provided by the Client under the concluded contracts concerning the provision of sports facilities, i.e. a multi-purpose hall for secondary schools, fall within PKWiU group 93.11.10.0 ‘Services related to the operation of sports facilities’. At the same time, we demonstrated that the services provided should be subject to VAT at a rate of 8 per cent.
Confirmation of DMS TAX’s arguments by the Director of the National Tax Information Service – a favourable Binding Rate Ruling
The Director of the National Tax Information Service fully endorsed the position we had set out. The authority confirmed that the services provided by the Client, consisting of making a multi-purpose hall available to secondary schools, fall within PKWiU group 93.11.10.0 ‘Services related to the operation of sports facilities’. At the same time, the Director of the National Tax Information Service confirmed that these services are subject to VAT at a rate of 8 per cent.
What this means
The Binding Rate Ruling obtained provided the Client with certainty regarding the correct accounting of VAT on services provided to secondary schools. Thanks to this ruling, the Client received confirmation that making sports facilities available under the described business model constitutes a service related to the operation of a sports facility, which is eligible for the preferential 8% VAT rate.