VAT implications of charging electric vehicles through a third party (opinion of the CJEU Advocate General)
The opinion in question was issued on April 25, 2024 in Case C-60/23 Skatteverket v. Digital Charging Solutions GmbH (DSC).
DSC is in the business of providing electric vehicle users with access to a network of charging points operated by operators with whom DSC has entered into separate agreements. DCS provides EV users with a card and an authentication application to charge their vehicles at these points. Based on invoices received from the said operators, DCS invoices users monthly for the amount of electricity supplied to them. DCS also charges its customers a monthly fixed fee for access to the application, regardless of whether the user actually purchased electricity during the period.
The Swedish tax authority considered that the service performed by DCS constitutes a composite transaction involving the supply of electricity to users, and consequently taxable in Sweden. In contrast, according to DCS, there are two separate supplies in this case, i.e. the supply of electricity and the provision of services (facilitating access to a network of charging points).
The Swedish court hearing the case became doubtful about the qualification of the aforementioned transaction and referred questions to the CJEU for a preliminary ruling. In one of the questions, based on the assumption that a supply to a user of an electric vehicle consisting of charging the vehicle at a charging point constitutes a supply of goods, the Swedish court sought to confirm that such a supply takes place at all stages of the transaction chain involving the intermediary company.
The Advocate General noted that according to the EU VAT Committee’s April 19, 2021 guidelines, in the case of a transaction chain involving electric vehicle charging stations and intermediary businesses between the stations and vehicle users (so-called “mobility suppliers”), there are two separate supplies of goods referred to in Article 14(1) of the VAT Directive, i.e. one between the charging station and the mobility supplier, and the other between that supplier and the vehicle user.
Nevertheless, in the Advocate General’s opinion, the correct VAT qualification of the transaction model in question should be based on the construction of a commission under Article 14(2)(c) of the VAT Directive, given that in the facts at hand the following conditions are met: there is a commission in performance of which the agent (DCS) makes a supply of goods for the account of the principal (vehicle user), and furthermore the object of the transaction (electricity) purchased by the agent (DCS), which is then resold to the end user, is identical in nature.
It should be noted that despite the Advocate General’s use of the construct of a commission rather than a “typical” supply under Article 14 of the VAT Directive, the VAT consequences for both models would, in principle, be analogous. Indeed, from a VAT perspective, commission transactions involving goods are a subtype of supply of goods.
Nonetheless, the CJEU’s ruling may help to clarify issues related to the VAT qualification of transactions occurring in the rapidly developing EV charging market. To date, the CJEU has ruled only once in this regard (i.e., in its April 20, 2023 ruling in Case C-282/22, it held that charging an electric vehicle in a model without an intermediary constitutes a supply of goods and not a supply of services).