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Executive summary

A 17 October 2024 decision by the Court of Justice of the European Union (CJEU), ruling that an international provider of electric vehicle (EV) charging stations is considered part of the electricity supply chain, should enable the provider to deduct value-added tax (VAT).

The Digital Charging Solutions case concerns the supply chain in which the owner of a network of charging stations (card provider) enables its customers to charge their EVs at charging stations domestically and abroad. The charge point operators invoice the card provider, who in turn invoices its customers. In short, the CJEU concludes that the card provider can be qualified as a commissionaire, purchasing in its own name but for the account of the card holder. For VAT purposes, this means that the electricity is deemed to have been supplied to the card provider and by the card provider, based on the commission agent rules (i.e., commissionaire fiction). In other words, the card provider is considered, for VAT purposes, to be part of the supply chain of electricity, rather than a provider of credit, and therefore able to deduct VAT.

Facts

Digital Charging Solutions GmbH (DCS), based in Germany, provides access to a network of charging points for EVs in Sweden. DCS has contracts with the operators of these charging points and invoices users monthly for the electricity supplied and access to the network, including additional services such as information provision and search and route planning functions. Users cannot purchase electricity without also paying for network access and services.

CJEU judgement

First, the CJEU ruled that the supply of electricity for charging an EV at a charging point constitutes a "supply of goods."

The CJEU then addresses the situation in which the recipient of the electricity has subscribed to a service from a company other than the network operator. In such a situation, the consumed electricity is deemed to be first supplied by the network operator to the company offering access to that network. Subsequently, the consumed electricity is deemed to be supplied to the user by the company offering access to that network. The fact that the user chooses the quantity, the time and place of purchase, as well as the manner in which the electricity is used, is irrelevant.

What this means for businesses

It will be important for businesses with a business model that closely resembles the one at issue in this case to (re)assess the VAT consequences of their model. This is particularly true in situations where it has previously been assumed that they, as card providers, are not part of the electricity supply chain. Based on the judgment in this case, the relevant companies may be considered to be involved in the supply chain. This is especially relevant because the decision deviates from earlier CJEU judgments involving the provision of petrol rather than electricity (e.g., Auto Lease Holland case). In this regard, it is important to note that specific place-of-supply rules apply to electricity.

This Indirect Tax Alert provides general information with no pretense of completeness, and it is not to be considered tax advice.