The issue of renting residential premises (e.g. for employees) seems to be such a common issue that it would seem that it should no longer raise any tax doubts. Nevertheless, the interpretation of the provisions determining the appropriate VAT rate or exemption has changed over the years, and as a result, in economic practice, there are still disputes with tax authorities in this regard.
At the outset, it should be noted that in accordance with Article 43 sec. 1 point 36 of the Polish VAT Act, services in the field of renting or leasing residential real estate or part of real estate, on one’s own account, exclusively for housing purposes or for the benefit of social rental agencies, referred to in Article 22a sec. 1 of the Polish Act of 26 October 1995 on social forms of housing development, are exempt from tax.
This regulation determines that in order to benefit from the above-mentioned exemption, the following conditions must be met, i.e. the rented property:
- it must be residential;
- is self-employed;
- it pursues a residential purpose or is made for the benefit of social rental agencies.
The issues of the possibility of applying the exemption for the lease of residential premises were significantly regulated by the general ruling of the Ministry of Finance of 18 October 2021 (file ref. no. PT1.8101.1.2021), which indicated that the service of renting or leasing real estate (or part thereof) of a residential nature (e.g. a dwelling), provided by an active VAT taxpayer to a business entity (other than a social rental agency) that uses the rented property for the purposes of its business activity, e.g. subleases the property to other entities for residential purposes, is subject to taxation at the standard VAT rate.
In that decision, referring m.in to the judgments of the Supreme Administrative Court of 9 March 2013 (file reference number I FSK 1012/12) and of 8 May 2018 (file reference number I FSK 1182/16), it was indicated that the above-mentioned exemption does not apply in the case of a lease between a VAT taxpayer and a business entity, as the condition concerning the fulfilment of the residential purpose of the purchaser of the service (business entity) is not met.
Thus, from the moment of publication of the above-mentioned general ruling, there is no doubt that even if the Company, when renting a residential unit, makes it available to employees, contractors or associates who live in it (pursue a residential purpose), such a lease, for the benefit of this Company, will not benefit from the VAT exemption under Article 43 sec. 1 point 36 of the Polish VAT Act. In this case, the basic rate will be applied.
Alternatively, in such situations, the issue of taxation of such services at the rate of 8% of the VAT applicable to accommodation services (short-term rental) can be analysed.
Nevertheless, in order to be able to take advantage of the reduced rate compared to the basic rate for rental services, it is crucial to meet several important conditions, such as:
- length of lease – the rate of 8% may be applied when dealing with a short-term lease, i.e. the period of making the dwelling available must be specified in time intervals of a maximum of one week;
- additional services – it is assumed in interpretations that this type of lease is similar to a hotel service, i.e. it is related to additional services that are not available in long-term rentals;
- Lack of permanent tenants – importantly, the most important distinction is the fact that in short-term rentals, tenants change, which is diametrically different from long-term rentals, where there is a long-term identity of tenants.
For example, it is worth noting the Binding Rate Information of the Director of the National Tax Information of 11 February 2026 (file ref. no. 0112-KDSL2-1.440.544.2025.4.SG), where it is indicated that:
„(…) conducts business activity consisting in the remunerated short-term provision of residential premises in the city (…) and other locations in Poland.
The services are provided mainly to companies that send their employees to these premises in order to provide them with accommodation while working outside their place of residence.”
In the above-mentioned decision, the authority concluded that short-term rental of apartments for the benefit of companies making these residential premises available to employees allows for the application of the 8% VAT rate.
A similar view was made in the individual interpretations of the Director of the National Tax Information dated the following:
- 18 May 2018 (file ref. no. 0112-KDIL1-2.4012.170.2018.1.NF);
- 17 March 2017 (file ref. no. 3063-ILPP1-1.4512.19.2017.3.MJ).
To sum up, in our opinion, the issue of renting residential premises directly to business entities still raises doubts and interpretation problems. In principle, from the moment of publication of the general ruling indicated in the article, it is assumed that even if business entities renting a residential premises make it available to employees, contractors or associates who live in it (pursue a residential purpose), such a rental will not benefit from the VAT exemption under Article 43(1)(36) of the VAT Act. In such cases, the basic rate will generally apply – unless the conditions for a reduced rate specific to short-term rentals are met.
