Pasivní nájem bytu nebo aktivní ubytovací služba

Passive apartment rental or active accommodation service

In its judgment 3Af 20/2021-43, the Municipal Court in Prague dismissed a claim by a company which had been denied the right to deduct input VAT on the grounds of abuse of rights.

The company acquired residential units which were rented to another company and sublet to the last company. The end-users were the employees of the last company (natural persons) to whom the taxable accommodation service was provided. All companies in the chain claimed input VAT. According to the tax authorities, the service was not in fact an accommodation service but a passive rental exempt from VAT without input tax deduction.

During the investigation, the tax administrator found that the property was approved as an apartment building with the use of units as "flats". The transfer of the flats to the end users was not subject to the local accommodation charge. The building was equipped with bells for the individual flats, which were rented on a long-term basis (typically for several months), including the fixtures and fittings. The users of the apartments were not provided with any additional services typical of accommodation services (e.g. cleaning, linen change, sanitary facilities). According to the tax administrator, a common reception is not sufficient to qualify as an active accommodation service. While the accommodation contract provided for a price per day and bed, it also provided for a monthly frequency of payment. The municipal court agreed with the tax administrator on this point.

The City Court also agreed that the conditions for abuse of rights as defined in Case C-255/02 Halifax were met. The conditions for taking the deduction were created by artificially claiming the accommodation service instead of renting it out and, according to the court, the evidence adduced showed that this was also the main intention of the parties involved.

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Authors:

Jevgenija Bajzíková

Lucia Balážová