Dodani tepla zdarma podleha DPH

The supply of free heat is subject to VAT

In its recent judgment C-207/23 (HERE), the Court of Justice of the European Union ("CJEU") dealt with VAT on free heat supplies.

A company produced biogas from biomass, which it then used for combined production of heat and power. It consumed part of the heat for its own business purposes and part of it was passed on free of charge to others for drying wood or heating fields. If these persons did not use the heat, it would presumably be released 'to the Lord God into the windows'. The tax authorities charged VAT on these supplies and, since no consideration was agreed between the parties, determined the taxable amount as the total cost incurred.

The CJEU fully upheld the tax administrator's procedure. Under the VAT Directive, any transfer of goods without consideration is taxable (heat is considered to be goods for VAT purposes). If the purchase price is not known (it is not, because the company produced the heat itself) and the price of similar goods cannot be ascertained, the taxable amount is the cost of the goods. The cost price includes not only direct production costs but also costs attributable indirectly, such as financing costs. The costs are included in the taxable amount whether or not they have been subject to input VAT. The CJEU did not take any ecological considerations into account in its decision.

The recently published Information of the GFD on the application of VAT on gratuitous supply of goods, which we informed you about HERE, is fully in line with the conclusions of the CJEU.

However, by taxing also the heat supplied in this way (which, if not used, would otherwise be emitted directly into the air), the judgment goes completely against the green policy that is being increasingly discussed at the same time.

We would be happy to discuss specific practical situations with you. If you have any questions, please contact the authors of the article or other members of the EY team with whom you work.

Authors:

Stanislav Kryl

Lenka Doležalová