Hannes Snellman Counsel to a Taxpayer in a Case Concerning the VAT Treatment of Coworking Services

Hannes Snellman acted as a counsel to a taxpayer before the Central Tax Board in a case aiming to resolve the VAT treatment of coworking services (KVL:2019/18).

The demand for coworking services has steadily increased during the past few years. This trend is enhanced particularly due to modern mobile ways of working and the booming startup scene in Finland. However, so far, there have been no clear authoritative guidelines as to whether the provision of coworking memberships is regarded as constituting “leasing of premises”, which in principle is not subject to VAT and does not allow the service provider to deduct the input VAT on purchases such as building of coworking premises, or a VAT-taxable supply of services with a right to deduct input VAT on purchases.

This new advance ruling stipulates that the provision of coworking memberships and several associated services is deemed to form a group of services that are so closely linked that they form, objectively, a single indivisible economic supply, which it would be artificial to split. Most of the described coworking memberships were deemed to constitute VAT-taxable supplies with a right to deduct input VAT on service provider’s purchases. One membership model was, however, found not to constitute a VAT-taxable supply, and hence it is associated with a more limited service provider’s VAT deduction right.

Our tax team comprised of Piia Ahonen, Paula Laakso, and Heikki Vesikansa. The advance ruling is not yet legally binding.