The European Court of Justice (ECJ) delivered its ruling in the case of Wojskowa Agencja Mieszkaniowa w Warszawie on 16 April 2015. The case concerned the inclusion of disbursements in the taxable amount for computing value added tax. The case was referred to the ECJ on 27 January 2014 and the Court was asked for a preliminary ruling on the following questions:

1. Whether Art. 14(1), Art.15(1), and Art. 24(1) of the EU VAT Directive 2006/112/EC should be interpreted to mean that there are taxable supplies made by a landlord of electricity, heat, water and refuse disposal services to the tenant directly using the services, where they are supplied by specialist third persons and one of the parties to the agreement for the supply of goods and services is the landlord, who simply passes on the costs thereof to the tenant using them.

2. If the answer to 1. is yes, do the costs of the electricity, heat, water and refuse disposal used by the tenant increase the taxable amount of the rent as referred to in Art.73 of the Directive, or do they represent supplies separate from the rental service?

Art. 14 (1) of the VAT Directive provides that a transfer of goods means the transfer of the right to dispose of tangible property as the owner; and Art. 15(1) provides that electricity, gas, heat, refrigeration and the like are treated as tangible property. Art. 24 (1) provides that a supply of services is any supply that is not a supply of goods.

Art. 73 of the Directive provides that the taxable amount should include everything that constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.

The ECJ ruled as follows on 16 April 2015:

1. The relevant articles of the Directive must be interpreted as meaning that in the context of letting immovable property the provision of electricity, heating, water and refuse collection provided by third party supplies for the tenant directly using them are supplied by the landlord where he has concluded agreements for the provision of the supplies and passes on the costs to the tenant.

2. The Directive must be interpreted to mean that the letting of immovable property and the provision of water electricity, heating and refuse collection relating to the letting must in principle be regarded as several distinct and independent supplies that need to be assessed separately for VAT purposes unless the elements of the transaction are so closely linked that they form a single indivisible supply that could only be split in an artificial manner.

The national Court dealing with the case must take account of all the circumstances in making the necessary assessments, particularly the content of the letting agreement.