VAT in EV Charging: clarification from European Court of Justice ???
Niels Wenting
Tax Lawyer | Indirect Tax | Consumer Business | Private Clients | Automotive | EV charging
On October 17, 2024, the EU Court of Justice (ECJ) issued a pivotal ruling regarding the VAT treatment of electric vehicle (EV) charging transactions in the Digital Charging Solutions case (C-60/23). This decision provides clarity on how these transactions should be classified and handled within the EU VAT framework.
?? Background of the Case
Digital Charging Solutions GmbH (DCS), a Germany-based e-mobility service provider (e-MSP), offers EV users access to a network of charging points across countries like Sweden. When users charge their vehicles, DCS acts as an intermediary between the Charging Point Operators (CPOs) and the users, facilitating the transaction through charging cards and apps.
The Swedish tax authorities questioned whether the charging activity should be treated as a supply of goods or a service for VAT purposes. They also inquired whether DCS or the CPO should be considered the provider of the supply to the end user.
? Electricity is a Tangible Good
The ECJ determined that EV charging constitutes a supply of tangible goods—specifically, the delivery of electricity—rather than a service.
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?? Application of the Commissionaire Model
A significant aspect of the ruling is the application of the commissionaire model. Looking at the intermediary role DCS plays as e-MSP, the ECJ concludes DCS is deemed to purchase electricity from the Charging Point Operator (CPO) and to resell it to the EV user. Consequently, DCS is responsible for invoicing the user for the electricity supplied.
?? Implications
This ruling offers enhanced legal certainty for businesses involved in the EV charging ecosystem. By confirming that e-MSPs can act as intermediaries using the commissionaire model, it prevents unnecessary administrative burdens that would arise if CPOs were required to invoice each EV user directly. This streamlined process is particularly beneficial in international contexts, where supply chains can be more complex.
?? Recommendation
While the ruling provides clarity, there are nuances in this judgment not covered here. Businesses in the EV charging supply chain should review their business model, pricing structure, and contractual arrangements to ensure alignment with this ruling.