EV charging is a chain supply of electricity

The CJEU has once again clarified how to qualify new electromobility-related transactions on the basis of rather general and somewhat old tax rules. Again it was confirmed that the supply of electricity for the purposes of charging an electric vehicle at a charging point forming part of a public network of such points constitutes a supply of goods. Interestingly, in case C-60/23 Digital Charging Solutions CJEU has not only made a general classification of the charging of electric vehicles, but also indicated the possibility of a specific classification as a commission sale. In Polish reality, does this mean a dispute about the moment when tax obligation arises?

Following the Court’s previous ruling on the charging of electric vehicles in the Polish case C-282/22 P., there should be no doubt that the performance that the user who charges his vehicle receives is a supply of goods, even though the electromobility regulations describe it as ‘electric vehicle charging services’. It is a complex supply, which mostly consists of the following elements:

• access to recharging devices for electric vehicles (including integration of the charger with the vehicle operating system);
• the supply of electricity, within duly adjusted parameters, to the batteries of that vehicle;
• the necessary technical support for the users concerned; and
• the provision of IT applications enabling the user concerned to reserve a connector, view his or her transaction history, and purchase credits which are then accumulated in an e-wallet and used to pay for recharging sessions.

Charging cards (applications)

But how we should qualify a situation when an EV user do not settle charging directly with a charger operator, but there is an intermediary engaged, who issues a card to provides an application allowing an access to a network of charging points, as well as searching for and finding charging points, information on prices and route planning? In such a situation, the EV user pay to the intermediary not for each charge separately, but, as in the present case, receives monthly invoices for the electricity consumed, access to the network of cooperating chargers and additional services. Is this sufficient to consider that the intermediary is nevertheless providing a service rather than supplying electricity?

The Court dispelled these doubts by briefly stating that whether the ‘electric vehicle charging service’ involves only the operator of the charging point or another entity, there is a supply of goods for VAT purposes. It also added that it is the users who initiate, at their discretion, the supply of electricity at the place, time and in the quantity of their choice. Digital Charging Solutions, seems to play the role of an intermediary in the supplies of electricity. At the same time, according to the Court, the intermediary’s role cannot be seen to have the characteristics of a user credit. Thus, the conclusions of the judgment in Case C-235/18 Vega will not apply here, and the intermediary will report a VATable supply of goods instead of exempted services.

Chain supply and commission structure

In interpreting the course of the ‘electric vehicle charging service’, the Court pointed out that first the operator of the charging point acquires the electricity, then sells it back to the intermediary and he to the users.

Interestingly, the Court saw through the commission structure here, recognising that users give this intermediary a mandate to purchase from the operators of the charging points, on its own behalf but for their account, electricity to be supplied to them for the purpose of charging their electric vehicles.

However, the judgment did not explicitly indicate what effect the recognition of a commission of sale of electricity would have on VAT settlements. From the point of view of Polish regulations, a doubt immediately arises as to whether, and at what stage of settlements, the provisions on the emergence of tax liability should be applied to:

• the surrender of goods by the principal to the commissionaire – when the tax obligation arises in connection with the receipt of all or part of the payment,
• the sale of electricity – where the tax obligation is linked to the issuance of an invoice (before the payment deadline).

It is important to bear in mind that each of these regulations also involves different deadlines for issuing an invoice and affects the elements that an invoice should contain.

One supply or a supply with ancillary services?

The Court also presented an interesting approach with regard to whether an intermediary’s ancillary services constitute a single supply with the supply of electricity or separate taxed services. Here, the Court considered as the main criterion the way the remuneration resulting from the contract with the user is calculated. This indicates that 2 situations may arise:

• when the remuneration for ancillary activities is calculated as a commission on the value of the energy consumed – this constitutes an ancillary service, an element of the comprehensive supply of goods (electricity),
• if, on the other hand, the remuneration for ancillary activities is fixed and charged irrespective of whether charging has taken place in a given period, they constitute separate services.

Unfortunately, the Court’s indication of two different classifications of an intermediary’s ancillary activities and leaving it to the national courts to decide on this means that there will still be uncertainties regarding the accounting of EV charging for different models. For example, it can be pointed out that separate taxation means not only a different moment of tax point and invoicing rules, but also the application of different place of supply. We can therefore expect further disputes in this area not only in the national courts, but possibly also once again in the EU courts.