Charging of electric vehicles and VAT
In its judgment C-60/23 (Digital Charging Solutions) of 17th October, 2024, the Court of Justice of the European Union once again ruled on the issue of the VAT treatment of electric vehicle charging operations. This case was previously dealt with in Case C-282/22 of 20th April, 2023.
Judgment C-60/23: framing of the fact
The case examined by the judges of the European Court of Justice concerned a dispute between a company established under German law (Digital Charging Solutions GmbH, hereinafter also referred to as ‘Company’ or ‘Intermediary Company’) and the Swedish tax authorities.
The Company, which does not have a fixed place of business in Sweden, provides users of electric vehicles on Swedish territory with access via a computer application to a network of charging stations operated by various operators. The application allows the user to obtain information about the price and availability of the various charging stations included in the network. The application also offers the user a function for searching and locating the charging station and for route planning.
The charging stations included in the network are therefore not operated directly by the Company, but by operators who have concluded agreements with the Company, with the ultimate aim of enabling users of electric vehicles to recharge them. In addition to the application, users are provided with a card: when the card is used, the recharge is registered by the operator, who then bills Digital Charging Solutions GmbH for the amount due for the energy supplied.
In turn (and separately), the Company charges users a monthly (variable) fee for the energy used and a (fixed) fee for network access services (an amount that is independent of the purchase of energy).
Electric vehicles charging is a supply of goods
By its first question, the Court asks whether the supply of electricity for the recharging of an electric vehicle to a charging station belonging to a public network of stations, constitutes a supply of goods within the meaning of Art. 14, par. 1, of Directive 2006/112, read in conjunction with Art. 15, par. 1, thereof.
In that judgment, the Court of Justice reiterates once again that the transaction consisting in the supply of electricity for the purpose of recharging the battery of an electric vehicle constitutes a supply of goods, since that transaction confers on the user of the charging station the right to consume, for the purposes of the propulsion of his vehicle, the electricity transferred, which, for the purposes of Art. 15, par. 1, of Directive 2006/112, is treated as tangible property.
Therefore, Art. 14, par. 1, of Directive 2006/112, read in conjunction with Art. 15, par. 1, of Directive 2006/112, must be interpreted as meaning that the supply of electricity, for the purposes of recharging an electric vehicle at a charging station belonging to a public network of such stations, constitutes a supply of goods within the meaning of the first of those provisions.
The definition covers the recharging operation irrespective of the intervention of the Interposed Company.
Two separate transactions and VAT treatment
In the second question, a further aspect is examined. The Court seeks to ascertain whether Art. 14 of Directive 2006/112, read in conjunction with Art. 15, par. 1, thereof, must be interpreted as meaning that the recharging of an electric vehicle at a network of public recharging stations, to which the user has access by means of a subscription concluded with a company other than the operator of that network, implies that the electricity consumed is transferred, first, by the operator to the company offering access to the network and, second, by the company to the user, even if the latter chooses the quantity, time and place of recharging and the method of using the electricity.
In essence, is it possible to continue to classify the transaction as a supply of goods at all stages of the chain of transactions carried out through the Intermediary Company? In fact, the energy is first sold by the operator to the Intermediary Company, and then by the latter to the user. Considering that the user has the possibility of choosing the quantity, time and place of recharging, the question arises as to whether the Company does not sell the energy as a ‘good’ to them but grants them a credit for the purchase of electricity.
In that regard, the Courts recall that the transfer of the power to dispose of tangible property as owner, within the meaning of Art. 14, par. 1, of Directive 2006/112, does not require that the party to whom the tangible property is transferred physically holds it, nor that that property be physically transmitted to it and/or physically received by it. Thus, the same item (including electricity) may be the subject of successive supplies even though it is transferred directly from the first seller to the second buyer.
Without prejudice to the assessments which it is for the referring Court to make, the Court considers that the VAT rules applicable to commission contracts (Art. 14, par. 2, c), of the Directive) could apply in this case. Those rules establish a legal fiction that, where a taxable person acting in his own name and on behalf of another person intervenes in a supply of goods, the commission agent is also deemed to have received and supplied the goods in question. These rules require, on the one hand, the existence of a mandate for the supply of the goods, and on the other hand, that there is an identity between the supply of goods acquired by the company and those sold.
Thus, the relationships under consideration may also be characterised as purchase commission contracts concluded between the users of charging stations, in their capacity as principals, and the company in its capacity as commission agent, under which those users give the latter a mandate to purchase, from charging station operators, in their own name but on their behalf, electricity intended to be sold to them for the recharging requirements of their electric vehicles.
It follows that the first condition for the application of Art. 14, par. 2, c), of Directive 2006/112 appears to be fulfilled.
As regards the second condition for the application of that provision, it also appears to be fulfilled, since the supplies of goods deemed to have been acquired by the contractor and the supplies of goods sold or disposed of by the contractor are identical.
The EU Court’s conclusions
Ultimately, according to the Court, if the Interposed Company acts in its own name and on behalf of the users, in return for the recharging carried out by the latter, the electricity is deemed to be supplied first by the operators to the company and then by the company to the users, even if it is the latter who choose the quantity, time and place of the recharging.
The provisions of Art. 14 of Directive 2006/112, read in conjunction with Art. 15, par. 1, thereof, are thus supplemented.
Further Considerations
From the case examined and from which the ruling of the Court of Justice of the European Union stems, some further considerations can be made with regard to the application of VAT on the transactions of which it is composed.
In fact, the case analysed is actually composed of two different transactions. The first involves a supply of goods (in this case electricity) by a Swedish economic entity to a German entity. The second, refers to the supply of such goods by a subject under German law (interposed) to a series of end users, natural persons.
Broadening the scope of our reasoning and assuming that the participants in such transactions may also be located in States other than those mentioned, a potential problem arises for the intermediary in relation to VAT obligations connected with the supply of goods and/or services to final consumers not located in its own country of establishment.
In Italy, with its answer to Interpretation No. 27 of 13th January 2023, the Italian Revenue Agency clarified that the supply of electricity (recharging of an electric vehicle) to a final customer qualifies, for VAT purposes, as a territorially relevant supply of electricity pursuant to Art. 7bis, par. 3, letter b) of Presidential Decree No. 633 of 1972.
Also from the end customer’s side, the electric vehicle recharging operation must be qualified as a supply of electricity and, consequently, as a supply of goods from a VAT perspective.
Consequently, in accordance with the interpretation expressed by the VAT Committee, the operator who purchases electricity in order to resell it to the driver of the electric vehicle must be considered, from a VAT point of view, a reseller, in accordance with the provisions of Art. 38 of the VAT Directive, transposed into domestic law in Art. 7, par. 2, point (a) of Presidential Decree No. 633 of 1972.
Normative references
- European Court – Case No 60/23 of 17th October, 2024
- European Court – Case No 282/22 of 20th April, 2023
- Agenzia delle Entrate – Interpello n. 27 of 13/01/2023