Parking space in the view of the Polish Act on VAT 


Parking space vs VAT due 

Parking space and garages are often the subject of economic trade (sales and rental) along with residential premises, which often leads to complications regarding the determination of correct VAT taxation in such transactions. Namely, it gives rise to the question whether parking space and a garage can use the same VAT rate as residential premises.  

  1. Disposal of residential premises along with parking space/ a garage.  

Pursuant to the current approach of the tax authorities and administrative courts, it needs to be verified whether the premises with the garage/parking space constitutes a uniform subject of trade e.g., the ownership to residential premises is connected with an exclusive right to use specific parking space covered by the land and mortgage register for the so-called joint real property.  

In the above-mentioned situation, sales of residential premises with parking space comprises one combined transaction and all its components are subject to the same VAT principles. That is why in the case of residential premises subject to the preferential VAT rate of 8%, the parking space or garage sold together with the premises shall be subject to taxation in an analogous way.   

  1. Rental of premises with parking space. 

In the case described above, in the view of the current practices of tax authorities, such provision of services should be considered separately. It means that rental of parking space cannot be used for the same VAT relief that is provided for rental of residential premises and, consequently, such services are subject to the 23% tax rate.   

Parking space vs charged VAT 

Many entrepreneurs rent office premises and some of them additionally rent parking space in the vicinity of the building where the office is located. The rental of parking space is documented with a VAT invoice. Here, we need to answer one question: Can the entrepreneur deduct VAT in full or partially, if their tangible assets include a passenger car used in a combined manner?  

As stipulated in Art. 86 section 1 of the Polish Act on VAT, if the expenditure documented with a VAT invoice is connected with conducted economic activity, the entrepreneur has the right to deduct VAT and, depending on the situation, apply a VAT deduction of 50% or 100%.   

50% VAT deduction 

All expenses related to the use of a commercial vehicle in a combined manner i.e., partially for professional and private use, is subject to a VAT deduction of 50% under the purchase invoice.   

Art. 86a section 2 of the Act on VAT includes expenses that are subject to restrictions, mainly with regard to costs connected with:  

  • purchase, import or manufacture of vehicles and purchase or import of components thereof 
  • use of vehicles under a rental, lease, leasing or other agreement of similar nature, in relation to the said agreement, other than use specified below 
  • purchase or import of motor fuel, diesel oil and LPG used to drive the said vehicles, repairs and maintenance services of the said vehicles or other goods and services connected with the exploitation or use of the said vehicles.  

It leaves no doubt that rental of parking space is connected with the use of a car. Another important issue is whether particular parking space can be assigned to a specific car.   

In their individual interpretation case file no. 0114-KDIP4.4012.124.2017.1.AKO of 13 June 2017, the Director of the Polish National Tax Information stated, among others, that:   

“In the case of deduction of the charged tax, it is crucial whether the garage space is assigned to a specific car. In such a situation, the expenses incurred in connection with the use of such space will be subject to the same principles as in deductions of charged tax applicable to the car in question. For instance – the restricted 50% deduction of the tax charged on the a/m expenses will apply, provided that the a/m expenses are related to the use of a car with restricted right of 50% deduction of the tax charged”. 

Which means that if the car is used for combined purposes, the taxpayer can use a 50% VAT deduction from the invoice for the rental of parking space but only provided that the specific parking space is assigned to a specific vehicle.   

100% VAT deduction 

Full deduction of 100% of VAT from an invoice for rental of parking space is possible when: 

  • the vehicle is used only for business purposes, 
  • the taxpayer is unable to specifically assign the parking space to a specific car.   

If the taxpayer intends to deduct 100% of VAT, they need to provide evidence that the vehicle is used solely for performance of taxed activities. It can be proven with the mileage log of the vehicle i.e., the so-called mileage allowance kept for VAT purposes. In such a situation, it is necessary to report the vehicle to the tax office by using the VAT-26 form by the 25th day of the month following the month in which the expense related to the vehicle or vehicles occurred, however not later than on the day of sending the JPK_V7 file for that month (Art. 86a section 12 of the Polish Act on VAT).  

The entrepreneur can deduct 100% of VAT from an invoice in case of parking space provided for customers or employees of the company. The possibility of 100% VAT deduction was confirmed by the Director of the Polish National Tax Information in their decision case file no. 0111-KDIB3-1.4012.109.2021.1.KO of 14 April 2021:  

“The petitioner shall have the full right to deduct VAT from the invoice documenting the rental fee for the parking space since, according to the Petitioner, the space in question is not assigned to a specific car and it can be used by the employees and partners of the Company as well as the Company’s customers. If no specific parking space is assigned to a specific car, Art. 86 section 1 of the act shall apply. However, Art. 86a of the Act on VAT will not apply in this situation due to the fact that the parking space is not related to the use of specific vehicles but results from general business operations.” 

If the specific car is not assigned to particular parking space, the space shall be considered as publicly available. In such a situation, the entrepreneur can deduct 100% of VAT from the invoice for rental of parking space and the taxpayer does not need to maintain a mileage allowance.  


Author: Patrycja Szczepańska, VAT Specialist at the MDDP Outsourcing Office in Katowice