Opinion of the Advocate General — ECLI:EU:C:2022:875
Date: 2022-11-10
Language of the case: Polish
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Poland

Summary C-616/21 – 1 
Case C-616/21 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
5 October 2021 
Referring court: 
Naczelny Sąd Administracyjny (Supreme Administrative Court, 
Poland) 
Date of the decision to refer: 
16 April 2021 
Appellant: 
Dyrektor Krajowej Informacji Skarbowej (Director of National 
Fiscal Information, Poland) 
Respondent: 
Gmina L. (Municipality of L.) 
  
Subject matter of the main proceedings 
An appeal on a point of law against an advance tax ruling in which a municipality 
was deemed to be a taxable person for VAT purposes in connection with the 
implementation of a programme for the removal of asbestos from properties 
located within that municipality 
Subject matter and legal basis of the request 
Interpretation of Articles 2(1), 9(1) and 13(1) of Directive 2006/112/EC; question 
referred pursuant to Article 267 TFEU 
Question referred for a preliminary ruling 
Must the provisions of Council Directive 2006/112/EC of 28 November 2006 on 
the common system of value added tax (OJ 2006 L 347, p. 1, as amended), in 
EN 
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particular Articles 2(1), 9(1) and 13(1) of that directive, be interpreted as meaning 
that a municipality (a public authority) is to be regarded as a taxable person for 
VAT purposes in respect of the implementation of a programme for the removal 
of asbestos from properties located within that municipality which are owned by 
residents who do not incur any expense in that regard? Or is the implementation of 
such a programme included in the activities of the municipality as a public 
authority which are undertaken in order to fulfil its tasks of protecting the health 
and life of its residents and protecting the environment, in which connection the 
municipality is not regarded as a taxable person for VAT purposes? 
Provisions of European Union law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (OJ 2006 L 347, p. 1): Articles 2(1), 9(1) and 13(1), Article 28 
Provisions of national law relied on 
Ustawa z dnia 11 marca 2004 r. o podatku od towarów i usług (Law of 11 March 
2004 on Tax on Goods and Services, Dziennik Ustaw (Journal of Laws) of 2018, 
item 2174, as amended, ‘the Law on VAT’) 
Article 5. 1. The following shall be subject to tax on goods and services (‘VAT’): 
1) the supply of goods or services for consideration within the national territory; 
[…] 
Article 8. 2a. If a taxable person, acting in his own name but for the benefit of a 
third party, participates in the provision of services, it shall be assumed that 
taxable person himself received and provided those services. 
Article 15. 1. ‘Taxable person’ shall mean legal persons, unincorporated 
organisational units and natural persons which, independently, carry out economic 
activity as referred to in paragraph 2, regardless of the purpose or result of such 
activity. 
2. Economic activity is understood as all activities by producers, traders or 
service providers, including farmers and entities that extract natural resources as 
well as the activities of freelance professionals. Economic activity in particular 
includes transactions involving the use of goods or intangible assets on a 
continuing basis for the purpose of obtaining income. 
[…] 
6. Public authorities and the offices serving those authorities shall not be 
considered taxable persons within the scope of tasks imposed by separate legal 
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provisions for the performance of which they have been established, with the 
exception of activities carried out under civil-law contracts. 
[…] 
Article 19a. 5. Tax liability shall arise when: 
[…] 
2) all or part of subsidies, subventions and other similar amounts referred to in 
Article 29a(1) have been received; 
[…] 
Art. 29a. 1. The taxable amount, subject to paragraphs 2, 3 and 5, Articles 30a–
30c, Article 32, Article 119 and Article 120(4) and (5), shall be everything that 
constitutes consideration which the supplier of goods or services has received or is 
to receive on account of a sale from the purchaser, customer or a third party, 
including subsidies, subventions and other similar amounts received which have a 
direct effect on the price of the goods or services supplied by the taxable person. 
Ustawa z dnia 8 marca 1990 r. o samorządzie gminnym (Law of 8 March 1990 on 
Municipal Local Government, Dziennik Ustaw (Journal of Laws) of 2020, item 
713, as amended, ‘the LMLG’) 
Article 7. 1. The municipality’s own tasks shall include meeting the collective 
needs of the community. Own tasks shall, in particular, include matters relating to: 
1) spatial planning, property management, environmental protection, nature 
conservation and water management; 
[…] 
5) healthcare; 
[…]. 
Ustawa z dnia 27 kwietnia 2001 r. Prawo ochrony środowiska (Environmental 
Protection Law of 27 April 2001, Dziennik Ustaw (Journal of Laws) of 2020, item 
1219, as amended) 
Article 400. 2. Provincial funds for environmental protection and water 
management, hereinafter referred to as ‘provincial funds’, are local government 
legal persons within the meaning of Article 9(14) of the Law referred to in 
paragraph 1 [that is to say, Ustawa z dnia 27 sierpnia 2009 r. o finansach 
publicznych – the Law of 27 August 2009 on Public Finance, Dziennik Ustaw 
(Journal of Laws) of 2019, item 869, as amended]. 
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Article 400b. 2. The purpose of provincial funds shall be to fund 
environmental protection and water management within the scope set forth in 
Article 400a(1)(2), (1)(2a), (1)(5)–(1)(9a), (1)(11)–(1)(22) and (1)(42). 
2a. The purpose of the National Fund and of provincial funds shall also be to 
create conditions for the implementation of funding for environmental protection 
and water management, in particular by supporting and promoting activities aimed 
at such implementation as well as by cooperating with other entities, including 
local government units, entrepreneurs and entities established outside the Republic 
of Poland. 
Provisions on asbestos removal 
Ustawa z 19 czerwca 1997 r. o zakazie stosowania wyrobów zawierających azbest 
(Law of 19 June 1997 on Prohibition of the Use of Products Containing Asbestos, 
Dziennik Ustaw (Journal of Laws) of 2020, item 1680). 
Uchwała Rady Ministrów z 14 lipca 2009 r. w sprawie ustanowienia programu 
wieloletniego pod nazwą „Program Oczyszczania Kraju z Azbestu na lata 2009–
2032” (Resolution of the Council of Ministers of 14 July 2009 on Establishing a 
Multiannual Programme called ‘National Programme for the Removal of Asbestos 
for 2009–2032’, Monitor Polski (Polish Monitor) of 2009, No 50, item 735, and of 
2010, No 33, item 481), adopted pursuant to the Ustawa z dnia 6 grudnia 2006 r. o 
zasadach prowadzenia polityki rozwoju (Law of 6 December 2006 on the 
Principles of Development Policy, Dziennik Ustaw (Journal of Laws) of 2009, 
No 84, item 712). The resolution lists the tasks set by the European Union in a 
multiannual perspective, stipulating the objectives as well as the legislative, 
financial and organisational framework for the programme. It imposes an 
obligation on local government units to develop programmes for the removal of 
products containing asbestos. 
On 26 April 2019, the Rada Miasta L. (City Council of L.), acting pursuant to the 
Environmental Protection Law of 27 April 2001, adopted by way of Resolution 
227/VI/2019 the ‘Update of the Programme for the Removal of Asbestos in the 
City of L. for 2018–2032’. Its implementation was entrusted to the Prezydent 
Miasta L. (Mayor of the City of L.). Ordinance 62/9/2019 of the Mayor of the City 
of L. of 23 September 2019 laid down the implementation rules. Pursuant to the 
annex to the resolution of City Council of L., the activities related to asbestos 
removal include the removal of products and disposal of waste containing 
asbestos from the area of L. 
Succinct presentation of the facts 
1 Gmina L. (Municipality of L., ‘the applicant’ or ‘the Municipality’) is an active 
VAT taxable person which accounts for VAT on a centralised basis. At the same 
time, it is a local government unit that performs its own tasks listed in Article 7 of 
the LMLG as well as multiple tasks delegated by central government. 
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2 The implementation of the programme for the removal of asbestos-containing 
products is a statutory task of the municipality as set out in Article 7(1)(1) of the 
LMLG as well as being part the government’s ‘National Programme for the 
Removal of Asbestos for 2009–2032’ and is carried out under the Ordinance of 
the Mayor of the City of L. of 23 September 2019. 
3 Pursuant to that ordinance, the Municipality removes (collects) asbestos-
containing products from residential and farm buildings as well as asbestos-
containing waste within the area of L. Properties where economic activity is 
conducted are not eligible for the programme. The Municipality intends to finance 
the entire cost of asbestos removal from the buildings eligible for the programme.  
4 The implementation of the programme within the Municipality will be based on 
applications from residents who are interested in removing asbestos from their 
properties. Subsequently, pursuant to the provisions of the Ustawa z dnia 29 
stycznia 2004 r. Prawo zamówień publicznych (Public Procurement Law of 
29 January 2004, Dziennik Ustaw (Journal of Laws) of 2018, item 1986, as 
amended), the Municipality will select a contractor to remove the asbestos. 
Thereafter, the Municipality will enter into a contract with the selected contractor 
for the provision of services at the properties of those residents who have earlier 
submitted the relevant applications to the Municipal Office. After performing the 
services, the contractor selected in this manner will issue an invoice to the 
Municipality with VAT charged on the agreed remuneration. The entire 
remuneration, including VAT, will be paid by the Municipality from its own 
funds. Then the Municipality will apply for the reimbursement of all or part of the 
expenses incurred for that purpose in the form of a subsidy from the Provincial 
Fund for Environmental Protection and Water Management in L. The subsidy may 
range from 40 to 100% of the expenses incurred depending on whether the 
requirements set by the Fund are met. The residents will not bear any costs on this 
account, nor will the Municipality enter into any contracts with them for the 
provision of services for the removal of asbestos from their properties.  
5 On 7 January 2020, the Municipality applied to the Dyrektor Krajowej Informacji 
Skarbowej (Director of National Fiscal Information) for an advance tax ruling 
concerning the following issues: 
- When implementing the programme, will the Municipality be acting as the 
authority referred to in Article 15(6) of the Law on VAT? 
- Will the receipt of a subsidy from the Provincial Fund for Environmental 
Protection and Water Management in L. result in a tax liability on the part of the 
Municipality under Article 19a(5)(2) of the Law on VAT, read in conjunction 
with Article 6 of the Law on VAT? 
- Does the Municipality have the right to deduct input VAT on the basis of the 
invoices issued by the contractor selected under the Public Procurement Law and 
documenting the removal of asbestos-containing products from the buildings 
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owned by natural persons and residents’ associations eligible for the programme 
for the removal of asbestos in L.? 
The essential arguments of the parties in the main proceedings 
6 The Municipality stated that in the case at issue, it is acting as the public authority 
referred to in Article 15(6) of the Law on VAT. As a local government unit, it 
performs its own tasks arising from Article 7(1)(1) of the LMLG and the 
aforementioned government programmes. It finances the removal of asbestos for 
the benefit of residents – members of the local community, for whom this service 
is free of charge with no fees, contributions or payments being collected on that 
account. 
7 Therefore, in the Municipality’s view, it will not be a VAT taxable person in that 
regard and thus will not be entitled to deduct the input VAT included in the 
invoices issued to it by the selected contractor. The Municipality also pointed out 
that, in the presented situation, there is no danger of distortion of competition as 
referred to in Article 13 of Directive 2006/112/EC, since the Municipality does 
not implement the programme using its own resources and staff. Instead, it must 
select a contractor pursuant to the provisions of the Public Procurement Law, 
which in fact strengthens competition. 
8 The Municipality also argued that even if it were found that it does not act as a 
public authority when implementing the asbestos removal programme, then, given 
that the activities performed for the benefit of residents or residents’ associations 
from whose properties asbestos is to be removed are free of charge, it cannot be 
assumed that the subsidy received from the Provincial Fund for Environmental 
Protection and Water Management in L., which covers all or part of the costs, is a 
subsidy to the price of a specific service. Indeed, in view of the fact that the 
service provided by the public authority to the residents as part of its public task 
of removing asbestos within the Municipality is free of charge, no such price is 
present. 
9 In the advance tax ruling dated 13 March 2020, the Director of National Fiscal 
Information found the Municipality’s position to be incorrect. The authority that 
issued the advance tax ruling stated that the programme described by the 
Municipality should be classified as an activity subject to tax on goods and 
services (VAT), since it consists in the resale of asbestos removal services 
purchased from the selected contractor to the residents of the Municipality. 
According to the authority, the Municipality will purchase those services from the 
contractor selected under the Public Procurement Law in its own name, but for the 
benefit of third parties. Thus, pursuant to Article 8(2a) of the Law on VAT, it will 
become a supplier of services even if it does not enter into contracts with 
residents. The recipients of those services will not include all the residents of the 
Municipality, but only those who submit the relevant applications for the removal 
of asbestos from their properties. In the view of the authority that issued the 
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advance tax ruling, it is irrelevant that all residents will indirectly benefit from the 
effects of the programme. 
10 The authority stressed that the contractor will be selected by the Municipality (not 
by the residents), the Municipality will enter into a contract with the contractor, it 
will receive invoices and will pay the contractor’s remuneration from its own 
funds. The Municipality will therefore actively participate in the provision of 
services. There will be specific services provided by the Municipality to 
individual property owners who have submitted an application, and a subsidy 
from the Provincial Fund for Environmental Protection and Water Management in 
L. will be used to cover the costs of those specific services. 
11 In the view of the Director of National Fiscal Information, the fact that the 
Municipality performs its own tasks does not mean that it cannot act as an 
entrepreneur in that regard and supply services within the meaning of the Law on 
VAT. 
12 In the light of the above, the authority determined that the Municipality has the 
status of a VAT taxable person who engages in the performance of activities 
subject to VAT. The authority considered that a tax liability emerges in that 
regard, which also includes the subsidy granted by the Provincial Fund for 
Environmental Protection and Water Management in L., and involves the right to 
deduct input VAT from the invoices issued by the contractor. 
Succinct presentation of procedure in the main proceedings 
13 By its judgment of 21 July 2020, the Wojewódzki Sąd Administracyjny w 
Lublinie (Provincial Administrative Court in Lublin, Poland) set aside the advance 
tax ruling of the Director of National Fiscal Information of 13 March 2020 that 
was appealed against by the Municipality, holding that a municipality which 
receives a subsidy for the removal of asbestos from the properties of individual 
residents and does not receive any remuneration for that service from the residents 
does not act as a VAT taxable person when carrying out that project. 
14 According to the court of first instance, in removing asbestos from the area of the 
Municipality, including from residents’ properties, the applicant does not carry out 
an economic project that could be considered a private-law transaction. The 
Municipality does not approach an unspecified group of prospective customers 
with an offer to provide services consisting in the removal of asbestos (asbestos-
containing products and waste) as an entrepreneur operating under free market 
conditions.  
15 Under the circumstances in question, the Municipality fulfils its public-law 
obligation to remove asbestos from its area, since it is a substance dangerous to 
human life and health as well as to the natural environment. In the situation at 
issue, both basic criteria for identifying a public authority which operates outside 
the VAT system are met. First, the entity in question is a public authority. Second, 
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it is precisely in the capacity of a public authority that the entity in question 
implements locally the programme for removing asbestos from its residents’ 
properties as part of a nationwide and EU-wide undertaking in which public 
authorities have become involved in order to speed up its implementation and also 
to ensure the highest possible safety standards. 
16 Consequently, in the view of the court of first instance, in the circumstances 
described in the application for the advance tax ruling, the Municipality is not a 
supplier of services and is thus not a VAT taxable person either. The Municipality 
does not offer services consisting in the removal of asbestos from the properties of 
interested customers in a manner typical of business transactions. All the 
Municipality’s activities in that regard are associated exclusively with the public 
authority’s performance of its public tasks under Article 7(1)(1) and 7(1)(5) of the 
LMLG, which are directly aimed at protecting the health and lives of its residents 
as well as the natural environment in the area administered by the Municipality. 
17 In its appeal on a point of law against the above judgment to the Naczelny Sąd 
Administracyjny (Supreme Administrative Court, Poland), the Director of 
National Fiscal Information stated that the Provincial Administrative Court in 
Lublin had incorrectly interpreted the applicable law by concluding that the 
subsidy received by the Municipality does not constitute a subsidy to the price of 
the asbestos removal service, and is thus not subject to VAT. He disagreed with 
the view of the court of first instance that in this case, the Municipality is not 
acting as a supplier of services engaging in an economic transaction but rather as a 
public authority. He also reiterated the position taken in the advance tax ruling 
that the Municipality’s activities constitute a supply of services for consideration 
and are thus subject to VAT. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
18 The classification of the Municipality’s VAT status with respect to the 
transactions it engages in depends on the Court’s answer to the question referred 
for a preliminary ruling. The Supreme Administrative Court primarily seeks to 
clarify whether activities undertaken by local authorities in their capacity as public 
authorities within the meaning of Article 13(1) of Directive 2006/112/EC include 
the aforementioned activities financed entirely from public funds (municipal 
funds, subsequently reimbursed in whole or in part by way of a subsidy from the 
Provincial Fund for Environmental Protection and Water Management in L.), 
undertaken by the Municipality in connection with the implementation of the 
programme for the removal of asbestos from the residents’ private properties 
located within the area of the Municipality. 
19 It follows from the extensive case-law of the Court of Justice of the European 
Union, and earlier of the European Court of Justice, which was developed against 
the background of Article 4(5) of the Sixth Council Directive 77/388/EEC of 
17 May 1977 on the harmonisation of the laws of the Member States relating to 
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turnover taxes – Common system of value added tax: uniform basis of assessment 
(77/338/EEC), that the basic condition for a public body not being considered a 
VAT taxable person is the simultaneous fulfilment of two criteria (see, for 
instance, the judgment of 17 October 1989, Comune di Carpaneto Piacentino and 
Others, 231/87 and 129/88, EU:C:1989:381). First, the activities must be carried 
out by a body governed by public law. Second, they must be carried out by that 
body acting as a public authority. The Court also expressed the view that in order 
for an activity to be considered to be carried out by a body governed by public law 
and acting as such, it must be carried out under the special legal regime applicable 
exclusively to bodies governed by public law and must not be carried out under 
the same legal conditions as those that apply to private entities (see, for instance, 
the judgments in the following cases: of 12 September 2000, Commission v 
Ireland, C-358/97, EU:C:2000:425; of 12 September 2000, Commission v United 
Kingdom, C-359/97, EU:C:2000:426; of 12 September 2000, Commission v 
France, C-276/97, EU:C:2000:424; of 14 December 2000, Fazenda Pública, 
C-446/98, EU:C:2000:691; and of 20 June 2002, Commission v Germany, 
C-287/00, EU:C:2002:388). The Court also pointed out that the exemption 
provided for in the first subparagraph of Article 13(1) of Directive 2006/112/EC 
covers principally activities engaged in by bodies governed by public law acting 
as public authorities, which, while fully economic in nature, are closely linked to 
the exercise of rights and powers of public authority (judgment of 16 September 
2008, Isle of Wight Council and Others, C-288/07, EU:C:2008:505). 
20 There is no doubt that under national law, the Municipality is a local authority 
with legal personality which, with respect to part of its activities, enjoys the status 
of a taxable person for the purposes of tax on goods and services. 
21 In the present case, doubts arise as to whether the second criterion referred to 
above is met, that is to say, whether the Municipality, in taking steps to implement 
the aforementioned programme for the removal of asbestos from the residents’ 
properties, may be regarded as acting as a public authority within the scope of its 
powers under public law or, in providing services to the residents in that regard, it 
engages in economic activity under the same legal conditions as those that apply 
to private entities. 
22 It should be noted that in a modern state, the activities of public authorities in the 
sphere of public law are not limited exclusively to the use of their sovereign 
powers and their ability to enforce them. Undoubtedly, making laws and issuing 
individual administrative documents (decisions) are typical examples of the 
activities of bodies acting as public authorities and exercising their powers under 
public law. However, apart from such activities, those bodies, while performing 
public tasks, also engage in activities other than those arising from their sovereign 
powers – inter alia, social and organisational activities, which require the use of 
private-law instruments. In the case at issue, the local implementation by the 
Municipality of the nationwide programme for the removal of asbestos from 
residents’ properties is not carried out in its sovereign capacity. The question 
arises whether, in such a case, those activities may also be regarded as being 
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carried out by such bodies in their capacity as public authorities to which 
Article 13(1) of Directive 2006/112/EC applies. 
23 The case-law of the Court of Justice emphasises that it follows from Article 2(1) 
of Directive 2006/112/EC that all activities of an economic nature are in principle 
subject to taxation. Pursuant to that provision, the supply of services for 
consideration, including those provided by bodies governed by public law, is 
subject to VAT under general rules. The possibility of classifying a supply of 
services as a transaction for consideration requires only that there be a direct link 
between that supply and the consideration actually received by the taxable person. 
Such a direct link is established if there is a legal relationship between the 
provider of the service and the recipient pursuant to which there is reciprocal 
performance, the remuneration received by the provider of the service constituting 
the actual consideration for the service supplied to the recipient (see, for instance, 
the judgments of 26 September 2013, Serebryannay vek, C-283/12, 
EU:C:2013:599; of 29 October 2015, Saudaçor, C-174/14, EU:C:2015:733; and 
of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, 
C-520/14, EU:C:2016:334). 
24 In the case at issue, reciprocal performance occurs between the contractor selected 
by the Municipality to remove asbestos and the Municipality paying the 
remuneration for that service. Given that the residents do not bear the costs of 
asbestos removal, it is difficult to assume that such reciprocal performance occurs 
between the Municipality and the residents from whose properties asbestos is 
removed, or between the contractor and the residents. 
25 In that connection, the question arises whether activities such as those described 
above may be regarded as the Municipality’s economic activities within the 
meaning of Article 2(1)(c) of Directive 2006/112, read in conjunction with 
Article 28 of that directive, in a situation where the Municipality, in its own name 
but for the benefit of its residents, participates in the supply of services whose 
direct supplier is an entrepreneur selected by the Municipality under the Public 
Procurement Law, and the residents are the beneficiaries (consumers), even 
though the residents do not bear any costs of those services and the Municipality 
does not undertake to supply those services to them. 
26 Or, in view of the fact that those services are supplied free of charge to the 
residents, should it be considered that the activities undertaken by the 
Municipality for the residents as part of the implementation of the programme for 
the removal of asbestos constitute activities of a public authority that are not of a 
sovereign but rather of a social and organisational nature, undertaken 
predominantly in the public interest in accordance with Article 7(1)(1) and (5) of 
the LMLG, with respect to which the Municipality should not be regarded as a 
VAT taxable person pursuant to Article 13(1) of Directive 2006/112? In such a 
case, it should be assumed that at the moment of purchasing the services from the 
contractor, the Municipality acts as their consumer, which may be supported by 
the fact that the contractor’s remuneration and the VAT charged on it will be paid 
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entirely from public funds, and hence reciprocal performance will occur between 
those entities.