CJEU: VAT on E-mobility business models

The Court of Justice of the European Union (CJEU) has recently decided in a case regarding the charging of electric vehicles. The case holds significant implications for a wide range of service providers within the automotive sector. As the industry evolves, understanding the CJEU's judgment is important for businesses to navigate the complexities of VAT compliance and to adapt their business models accordingly.

The case involves Digital Charging Solutions (“the Company”), an E-mobility Service Provider (EMSP) based in Germany, which provides electric vehicle users (EV users) in Sweden with access to a network of charging points. In addition to the network access, the service includes real-time information on prices and availability, and search and route planning functionalities. The Company does not own the charging points but has contracts with the Charge Point Operators (CPO) who manage these points. EV users are provided with a card and an app for authentication and are billed monthly, but separately, for electricity consumption and network access. The user is charged a fixed fee for the network services, regardless of electricity purchase.

The legal dispute arose when Digital Charging Solutions applied for an advance ruling to Skatterättsnämnden concerning the nature of the supply, i.e., whether the supply should be treated as a complex supply or two separate supplies, and the place of delivery for VAT purposes.

With reference to its previous judgment in Dyrektor Krajowej (C-282/22), the CJEU ruled that the supply of electricity for charging electric vehicles at public charging points qualifies as a supply of goods.

The CJEU further clarified that the circumstances in this case differ from those in the cases Auto Lease Holland (C-185/01) and Vega International (C-235/18). In those cases, the CJEU found that the supply of petrol cards and fuel management contracts, under the circumstances in the case, constituted an exempt financial service. However, in this case, the CJEU found that there is no credit mechanism.

Furthermore, the CJEU clarified that even if an intermediary company (like the Company) is involved, and EV users control the quantity, time, and place of charging, the electricity is still supplied first by the CPO to the intermediary, and then from the intermediary to the EV user. This interpretation holds as long as the intermediary acts in its own name but on behalf of the CPO or the EV user under a commission contract.

Under the circumstances provided by the referring court, the CJEU held that Digital Charging Solutions acts under a commission contract. Since article 14.2 (c) of the VAT directive (transfer of goods pursuant a commission contract) is lex specialis the general provision in article 14.1 of the VAT directive, an assessment must be made against the first mentioned provision.

Lastly, the CJEU touched upon the question whether the provision of network access should be treated as a separate supply or complex supply. In this regard, the CJEU concluded that, considering the economic reality, it would be artificial to view the supply of electricity and network access as one complex supply. The CJEU emphasized the pricing model between the Company and the EV users, arguing that due to the fact that the EV users pays a fixed fee regardless of the electricity consumption demonstrates separate supplies.

The CJEU judgment provides clarity that e-charging in the classic three-party relationship, involving a CPO, a EMSP and EV users, is to be treated as a reseller model under the above-mentioned requirements. In some respects, the CJEU’s judgement deviates from previous positions held by the VAT Committee and the Swedish Tax Agency, in particular regarding additional services provided by the EMSP. The implications of those differences need to be considered going forward. Although there are some uncertainties, it is positive that the CJEU provides clarification that when applying a delivery model such as DCS the supplies are not deemed to qualify as VAT exempt credit granting. 

Please feel free to contact us for a discussion about the implications of the case for your business.

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European Court of Justice C-60/23

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