vPPA (virtual power purchases agreement) VAT treatment

MDDP obtained a tax ruling for the client confirming VAT consequences of one of the biggest vPPA contracts in Poland. vPPA is a financial contract between a renewable energy generators and large energy consumer that allows a buyer to hedge against potential future electricity price fluctuations and ensures a stable cost for the renewable energy.

 

Tax ruling confirmed:

• that vPPA contracts are treated as financial transactions regarding derivatives exempted from VAT,
• taxable amount should be limited to an amount being a result of a financial instrument (CfD), and should not include the whole value of energy subject to the contract.