If you conduct business independently, member state cannot deprive you of the VAT taxpayer status. Flat-rate scheme for farmers does not change this.

(Dyrektor Izby Skarbowej w L. (Perte du statut d’agriculteur forfaitaire), C-697/20, judgment, 24.03.2022)

The Polish VAT provisions and practices regulate in a specific way the status of the taxpayer in case of agricultural activity.

If natural persons run a jointly owned agricultural holding, then the VAT taxpayer is one of these persons with regard to the activity of the whole holding – the one who submitted the VAT registration form.

At the same time, the other person cannot have the status of a flat-rate farmer (or, generally, another VAT taxpayer).

In the case at hand, a married couple of farmers conducted agricultural activity (poultry houses). Part of those houses was used by the first spouse, who was registered for VAT. The other part was used by the second spouse, who benefited from an exemption (flat-rate scheme for farmers).

The tax office considered that the first spouse should pay VAT on all the farm income.

The Court has not agreed with such an approach. It considered that:

• A person engaged in an agricultural economic activity has the status of a taxpayer if the activity is carried out independently (he acts in his own name, on his own behalf, under his own responsibility, bearing economic risk associated with his activity).
• The farming activities in this case are run separately from an economic, financial, and organizational standpoint, so the spouses manage their resources separately. These are relevant circumstances. The fact that the farm is under marital community of property is not alone relevant.
• Flat-rate farmer scheme does not change this conclusion.
• As a result, member state cannot exclude a natural person from being a VAT taxpayer in this situation.
• In some circumstances (regarding administrative burden) member state may exclude one of the spouses from flat-rate scheme for farmers.