Menace of fuel cards should not frighten electric vehicle chargers

Charging an electric vehicle at a network of charging points to which the user has access on the basis of a subscription contracted with a company other than the operator of the charging point means that the electricity consumed is supplied to users by that operator and the company offering access to those charging points makes a supply of goods (electricity). This is how, for VAT purposes, the process of charging electric cars is understood by the Advocate General in Case C-60/23 Digital Charging Solutions. If confirmed by the Court, will this end the doubts and discrepancies in the tax qualification of charging?

The business models currently used in connection with the charging of electric vehicles and the refuelling of combustion vehicles using deferred payment through fuel cards are not identical. However, in connection with the preliminary question in this case, concerns have arisen as to whether, when the charging chain of an electric vehicle involves a card provider (application provider), the user of the vehicle should not be considered to be purchasing the service. Referring to the Court’s judgment in Case C-235/18 Vega, relating to fuel cards, there would be arguments in favour of considering it as a financial service of a credit nature, exempt from VAT. Thus, numerous doubts about the accounting for VAT would extend to the electromobility market in addition to the fuel card market.

Supply of goods

In the meantime, the Court has already managed to set out its view on the qualification of ‘electric vehicle charging services’ as a supply of electricity, i.e. a commodity transaction for tax purposes, in its judgment in Case C-282/22 P. However, this judgment did not address the situation of the intermediary – the issuer of the charging card (application).

If the Court confirms the Advocate General’s position in the judgment, this will, on the one hand, lead to a uniform classification for VAT purposes of the various activities performed by the participants in the ‘electric vehicle charging service’. Thus, it will not matter if charging is defined as a service in industry regulations, e.g. in the AFIR. Furthermore, the intermediary providing access to the charging points will first purchase and then resell the goods to the vehicle user, thus deducting and charging VAT. Moreover, the right to deduct will also pass to the user. To justify this qualification, the Advocate General proposes two ways: to consider the intermediary as a ‘commissionaire’ of electricity, or to turn a blind eye to the fact that he cannot fully dispose of the energy used during charging. It should soon become clear which of these arguments will convince the Court.

The place where charging is provided

I also hope that the Court will take a close look at the Advocate General’s opinion and will also rule on the place of provision of electric vehicle charging. For the courts are currently divided as to whether the general rules (place of charging) or the rules specific to the supply of electricity (in the power system) apply. The Advocate General tends to favour the latter option, which means taxing supplies between intermediaries in their countries of residence and supplies to the user at the place of charging. This issue is also important as it will determine whether reverse charge or purely national VAT rates can be applied.