In a most recent decision and following a request for a preliminary ruling from the Supreme Administrative Court in Poland, the European Court of Justice addressed the question of how the subsidy of a taxable person by a local authority acting in the public interest (here: the provision of public transport) is treated for VAT purposes. In the case at hand the court decided that such compensation has no direct effect on the price of the transport services provided, the purpose of that compensation being above all to cover the losses linked to that activity.
The Supreme Tax Court has held that officially authorised city sightseeing bus tours, including "hop on, hop offs”, are subject to the reduced rate of VAT for local transport.
