VAT and facilitating supplies via EV charging stations

The CJEU has held that a supply by a company providing access to EV charging meters should be treated as a supply of electricity both to and by the intermediary: Skatteverket v Digital Charging Solutions GmbH (Case C-60/23). However, the separate fixed monthly charge to users for access to the network should be treated as a separate supply of services from the supply of electricity.

Background

Digital Charging Systems (DCS) is a German company with a place of business in Germany and no fixed establishment in Sweden. It provides its customers with access, via an app and card, to a network of electricity charging points in Sweden. The charging points are not operated by DCS but by separate charge-point operators (CPOs). When a customer uses a charging point with their app/card, the charging session is registered with the CPO which then invoices DCS for the session.

On the basis of invoices received, DCS then invoices users both for the amount of electricity supplied via the card/app and also a monthly fee for access to the app/card and network. The monthly fee is a fixed fee which is charged regardless whether any electricity is actually supplied in the period.

A supply of electricity is deemed to be a supply of goods by Article 15 of the Principal VAT Directive.

DCS sought a ruling from the Swedish tax authorities as to the correct VAT treatment of these arrangements. The Swedish tax authorities considered that the supply made by DCS consisted of a complex transaction principally characterised by the delivery of electricity to users and the place of that supply was in Sweden. DCS appealed that ruling arguing that only part of its supply was a supply of electricity and its separate supply of services (facilitation of access to the network) was a separate supply of services supplied where DCS was located (Germany).

When the matter came before the Swedish courts, a referral was made to the CJEU with questions concerning, first, whether supplies via EV charging points was to be treated as a supply of goods and, second, how the fact that the supply is made via an intermediary affects that question.

Decision of the CJEU

The CJEU noted that the transmission of electricity from an EV charging station to a car battery clearly constitutes a supply of goods for VAT purposes. The more difficult question was the impact of the triangular supply arrangements in this case involving an intermediary providing access to EV charging stations via a card and app.

On that issue, the CJEU rejected arguments that the situation was analogous to cases such as Auto Lease (C-185/01) (which concerned supplies through the use of fuel cards) involving a supply of financing. The Court noted that these cases involved monthly leasing payments which represented an advance on payments for actual consumption that were only established at the end of the year. That was very different to this scenario where DCS was both billed and billed consumers on a monthly basis.

Under the arrangements, DCS did not undertake to purchase independently any quantity of electricity. The amount of electricity, as well as the location and time of supply, was determined by the end user. DCS appeared to occupy the place of an intermediary. In those circumstances, the Court noted that it was necessary to consider whether the provisions of Article 14(2)(c) applied. This provides that "...each of the following shall be regarded as a supply of goods: (c) the transfer of goods pursuant to a contract under which commission is payable on purchase or sale". The application of this provision depends on the existence of two condition: (1) there has to be an agency arrangement where the commission agent acts on behalf of the principal; and (2) the supplies of goods/services acquired by the commission agent and those sold to the principal must be identical.

In this case, the CJEU considered that it appeared that the contractual arrangements between the EV charging station operators and DCS appeared to be consistent with a sales commission agreement within the scope of the first requirement. Equally, the CJEU noted that the supplies of electricity to and from DCS under the arrangements appeared to be identical. Accordingly, and subject to verification by the domestic courts, it appeared that the correct VAT analysis of the transactions would involve supplies of goods (electricity) from EV station operators to DCS and then from DCS to the end user.

Single supply?

Was there a single supply by DCS to the end user consisting of a supply of electricity both for the amounts on-charged and also the monthly account fee? In essence, this was relevant to the place of supply of DCS' services. If it was a single supply of electricity then the supply would be in Sweden. However, if the monthly fee was a separate supply of services, it would be made from Germany where DCS was established.

The CJEU has previously held that a complex transaction consisting of a supply of electricity to the battery of an EV and access to charging devices and necessary technical and IT support constitutes a single supply of goods for VAT purposes (see Supplies from EV charging stations).

However, in this case, the CJEU agreed with the AG that the provision to the customer of a card or app providing access to the network of charging points in consideration of the fixed monthly fee was a separate supply of services. In particular, the Court noted that the separate monthly fee was charged irrespective of any supply of electricity. In those circumstances, to regard those services as either ancillary to supplies of electricity or inseparable from such supplies would be to disregard the economic reality of the situation. The fee was charged irrespective of supplies of electricity, invoiced separately and was not dependent on the amount of electricity consumed.

Comment

The decision highlights some of the difficulties of applying the existing VAT system to supplies of electricity to EVs, especially when dealing with cross-border elements. Whilst the Court has held that the supply from an EV station should not be artificially split, the application of VAT to supplies via facilitators (such as the provider of the app in this case) gives rise to different issues. The Court has suggested an agency based approach where the supply of electricity remains essentially unaltered through the chain, but this may not be applicable to all arrangements. It is also notable that this approach is not the one suggested by the VAT Committee in its guidelines on EV charging devices (which suggest applying a consecutive supply of goods approach).

Nevertheless, the solution appears to involve DCS in this case in deemed supplies of goods (electricity) in Sweden, whilst making its separate supplies of services (facilitating access to the network) from Germany.