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VAT on the charging of electric vehicles

The percentage of electric vehicles in road traffic is increasing - and with it the number of charging stations. Up to now, it has been disputed how the service rendered is to be classified for VAT purposes. In its current ruling, the European Court of Justice (ECJ) has finally decided that the charging of electric vehicles has to be treated as a supply.

In the case under review, a company provided the following other services in addition to supplying electricity for charging e-vehicles:

  • provision of charging devices (including the connection of the vehicle's operating system to the charger).

  • transferring electricity with appropriately adapted parameters to the battery of the electric vehicle

  • providing the necessary technical support

  • provision of IT applications (platform, app) via which users can reserve a specific connection and view the history of sales and payments.

Service or supply?

For these described services, the company charged a uniform price depending on the loading time. However, the question arose as to whether, in view of the complex service provided by the company, this was a service or a supply for VAT purposes. This distinction is important because it entails different legal consequences.

According to EU law, electricity is equivalent to tangible property for VAT purposes. According to the ECJ, when electricity is transmitted to the battery of an electric vehicle, this is a supply. The electricity transmitted is consumed by the user of the charger to power his electric vehicle.

With regard to the other services, the ECJ came to the following view:

  • The technical assistance makes it possible to transmit the electricity needed for charging under optimal conditions. It therefore constitutes an ancillary service to the supply.

  • Similarly, the provision of IT applications, which, for example, enable the user to reserve a connection in advance, is to be classified as an ancillary service to the supply and thus to be treated for VAT purposes in exactly the same way as the supply itself.

Conclusion: The ECJ ruling clarifies that the supply of electricity in the context of a charging process for electromobility is a supply that can consist of several different services at the charging points in question. The supply of electricity is the main service, even if subordinate other services are provided in the process. The calculation of the price on the basis of the charging time does not lead to a qualification as other service.

In the future further VAT issues will have to be clarified, e.g. with regard to tax rate, payment of the tax or place of performance, especially if several companies (such as electricity producers, grid operators, operators of charging stations, providers of software solutions and services (apps) and others) are involved in the performance.

Do you still have questions about the VAT assessment of e-charging? Our experts Irene Grass and Martin Schmidt will be happy to support you.

Foto: Unsplash | Ralf Hutter

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