VAT in the catering industry – an important Supreme Administrative Court resolution

8% or 5% VAT rate in catering?

On Monday 24 June this year the Supreme Administrative Court (NSA) passed an important resolution (ref. I FPS 1/24) related to the application of VAT rates in the catering industry. Although the resolution relates to the legal situation prior to 2020, i.e. prior to the so-called VAT matrix, it may be an important interpretative guideline and, of course, has a direct practical implication in relation to not expired  settlement periods. The case concerned the level of the VAT rate 8% (catering services) or 5% VAT .on meals offered ‘takeaway’ from 24 June 2016 to 30 June 2020 and

The resolution as such  should be assessed positively, as both taxpayers and the tax administration sometimes drew different conclusions from the ‘Polish case’ resolved by the CJEU (C-703/19).  .

The dispute arose from the case of a businessman who, following the above CJEU judgment, corrected his VAT settlements for the period from 1 September 2016 to 30 June 2020. He had previously applied an 8% VAT rate to takeaway sales.

NSA resolution important for the catering industry

In the resolution, the NSA stated that, in the factual and legal situation from 24 June 2016 to 30 June 2020, the supply of meals and dishes carried out by the taxpayer in systems such as, for example, ‘drive in’, ‘walk through’, ‘in-store’ and ‘food court’ (in the part in which the sale was carried out ‘takeaway’) should be taxed at a reduced rate of 5% pursuant to Article 41(2a) of the Value Added Tax Act (hereinafter: the VAT Act) in connection with item 28 of Annex 10 to the VAT Act.

VAT matrix and catering

The application of VAT rates in catering has changed significantly as a result of the entry into force of the so-called VAT matrix in 2020. Although the VAT matrix has tidied up many of the issues related to the application of VAT rates, this does not mean that we generally apply the 8% VAT rate in catering. It is true that, in accordance with Article 41(12f) of the VAT Act, the 8% VAT rate applies to the supply of goods and services classified according to the Polish Classification of Goods and Services in the food and beverage services grouping (PKWiU 56), but this provision contains a number of exclusions  and limitations.

The manner and extent to which catering services are offered should still be analysed with great care with a view to applying the correct VAT rate. Of course, if case of doubts, it is helpful to apply for a Binding Tax Rate Information (WiS).