Olga Palczewska-Wielińska, Monika Junyszek

It is common for long-term projects to be split into milestones and related payments. Such billing is often applied to finance various ventures, mainly construction or energy projects and complex “turnkey” supplies. For VAT purposes, the first thing to do is to is determine if the supply is a supply of goods or services under the VAT Act. Long-term projects very often involve interrelated supplies of goods and services that form part of one composite supply.

The article discusses how to recognise the chargeable event when the main supply is that of services. The VAT Act does not offer any express solution how to recognise the chargeable event for projects billed according to the progress of the work where the transaction should be treated as a supply of goods. Upon analysis, the case practice of tax authorities shows that there is no universal solution and the matter should be dealt with on a case-by-case basis.