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Renewable electricity sales prices offered by auction in the context of VAT


by Piotr Mrowiec

2 February 2016

Unclear provisions of the Polish Renewable Energy Sources Act

The currently applicable Renewable Energy Sources Act (RES Act) has introduced a new system of support for electricity producers. According to that system, the power generated from renewable energy sources is to be sold at auctions organised for this purpose by the Polish Energy Regulatory Office (ERO) in accordance with the rules established by the President of ERO.

Every producer interested in participating in the auction must meet a number of conditions and requirements. An important condition for taking part in the auction is setting a correct price for the sale of electricity produced from renewable energy sources. The pricing must be in Polish zloty (with an accuracy of PLN 0.01) per 1 MWh of the energy that the auction participant undertakes to sell.

According to the currently applicable provisions of the RES Act, producers taking part in the auction cannot offer renewable electricity for a sales price higher than the so-called reference price (that is, the maximum price in PLN for 1 MWh of renewable electricity that producers may sell by auction in a calendar year). A regulation issued by the Minister of the Economy on the 2016 reference price for electricity generated from renewable energy sources came into force on 01/01/2016. The regulation sets in detail the reference prices for electricity produced by different types of renewable energy installations. Therefore, you should remember that there is no single and uniform reference price, but that such a price is established separately for different renewable energy installations and depends on e.g. the installation output and the raw materials used. In addition, when establishing the electricity sales price, each producer of renewable electricity should take into account the total amount of state aid received, including without limitation, tax and fee reliefs and exemptions on account of the generation of electricity from renewable energy sources in a renewable energy installation, or investment aid, regardless of its form, intended for construction or upgrade of a renewable energy installation.

However, the current provisions of the RES Act do not stipulate whether the electricity sales price offered by a given auction participant should include VAT. A certain clue to this issue may be found in Article 93(2)(1) of the RES Act. This Article stipulates that an entity that produces renewable electricity in a renewable energy installation with a total electricity output of no less than 500 kW in order to sell that electricity is obliged to document – on a monthly basis – the sales of renewable electricity generated in the renewable energy installation, and the documentation should specify the quantity, expressed in MWh, and the sale price (with an accuracy of up to 1 MWh) for the electricity as proposed in the bid, less the applicable VAT.

In addition, according to the Prices for Goods and Services Act, the price includes VAT if the sale of certain goods (or services) is taxable with VAT based on separate provisions.

Will VAT have to be paid?

VAT is charged in accordance with the VAT Act of 11 March 2004 ("VAT Act") and the secondary legislation made under the VAT Act.

A VAT taxable person is every person conducting a business activity within the meaning of Article 15 (2) of the VAT Act, i.e. activity of producers, traders and service suppliers, including mining and agricultural activities, and activities of professionals, also when a transaction has been effected once in circumstances indicating an intention to perform it repeatedly. Therefore, entities producing energy and selling that energy to energy enterprises are taxable persons in terms of the VAT Act.

The sale of electricity to an energy corporate group is a supply of goods within the meaning of the VAT Act, and, consequently, is taxable with VAT. The VAT on the supply of energy becomes chargeable at a well-defined point in time, i.e. at the time of issuing the invoice, however no later than upon the expiry of the invoice due date. Neither the VAT Act nor the relevant regulations qualify the supply of electricity to a reduced VAT rate. Therefore, the VAT rate applicable to the sale of electricity is 23%.

Are there any VAT exemptions?

The VAT Act exempts the supply of electricity from VAT in some cases. This refers in particular to supplies made by small enterprises and natural persons. Article 113 (1) reads, "Exempt from tax are taxable persons whose total taxable sales did not exceed PLN 150,000 in the previous tax year. The sales do not include VAT." This means that exemption from VAT may be enjoyed by those taxable persons whose total sales (not only the sales of energy) are lower than PLN 150,000.


Following the assumption of a reasonable legislator it seems that, at the bidding stage of the auction, the price for electricity might include VAT. However, such conclusion does not come explicitly from the RES Act.
Such an interpretation would imply that the net prices of energy supplied by small enterprises whose total sales (not only the sales of energy) did not exceed PLN 150,000 in the previous tax year would be higher that the net prices of energy supplied by entities that do not enjoy exemptions. However, this does not mean that an eligible entity always benefits from choosing the exemption. By using the exemption, the enterprise refrains from the right to deduct VAT on purchases it makes.


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Piotr Mrowiec

Attorney at law (Poland)

Associate Partner

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