The legal situation regarding the VAT treatment of e-charging has long been controversial. This is illustrated by the fact that the EU Commission's VAT Committee has addressed this issue in two working papers. Two recent ECJ rulings have allegedly clarified the question of VAT classification. 

Nevertheless, uncertainties remain. This poses VAT risks for charging point operators (CPOs) and e-mobility operators (EMPs). Incorrect billing may result in additional payments and tax consequences.

How does e-charging work in practice?

The charging process (simplified) generally proceeds as follows:

• The electricity supplier feeds electricity to the charging station.

• The charging point operator (CPO) offers additional services in addition to the actual charging service (e.g., remote reservation, information about available terminals, etc.). 

• The e-mobility operator (EMP) acts on its own behalf vis-à-vis the end customer. It concludes a contract with the end customer and passes on the service components received from the CPO to the end customer (with additional services if applicable). 

• The end customer refuels the electric vehicle with electricity at the charging station.

See VAT Newsletter 33/2021: Update on the VAT treatment of recharging electric vehicles (e-charging)

Lack of legally binding classification of e-charging 

Neither national VAT law nor EU law contains provisions on the VAT treatment of e-charging. Only the European Commission's VAT Committee has recognized the widespread legal uncertainty in practice and addressed the VAT treatment of e-charging. However, it should be noted that the VAT Committee cannot make legally binding decisions.

In 2019, France asked  the EU Commission's VAT Committee for an opinion on the VAT treatment of charging electric vehicles (known as e-charging). In 2021, the VAT Committee then determined that in a typical charging process for electric vehicles (and provided that this is specified in the contractual agreements), the CPO first supplies electricity to the EMP. The EMP then supplies the electricity to the end customer.

In the calendar years 2023 and 2024, the ECJ had to deal with the classification of e-charging under VAT law in two preliminary ruling proceedings.

See VAT Newsletter 33/2021: Update on the VAT treatment of recharging electric vehicles (e-charging)
VAT Newsletter 27/2019: VAT Committee reviews VAT related questions in cases of e-charging

ECJ: E-charging in a two-party relationship 

In its judgment of April 20, 2023 (Case C-282/22 – Dyrektor Krajowej Informacji Skarbowej), the ECJ classified e-charging for the first time in terms of VAT law in a two-party relationship.

The ECJ found that the case in question involved a combination of transactions consisting of the supply of electricity for charging electric vehicles and the provision of various services. This constitutes a single supply for VAT purposes. The ECJ classified this single supply as a supply of goods, basing its decision on the perspective of the average user of charging points. The transmission of electricity constitutes the characteristic and dominant component of the single and complex service. This is because, during the charging process, the user of the charging device is authorized to consume the transmitted electricity, which is treated as a tangible item under Article 15 para 1 of the VAT Directive, for the purpose of powering their vehicle.

By contrast, granting access to this device merely constitutes a minimal service that is necessarily linked to the supply of electricity. Any technical support also serves only as a means for the user to be able to use the electricity required to power the electric vehicle under optimal conditions. This also applies to the provision of IT applications that enable the user concerned to reserve a connection, view consumption patterns, and purchase credit for paying for recharges. In the opinion of the ECJ, all of the services listed therefore constitute ancillary services that share the VAT treatment of the main service (in this case, the supply of electricity).

See VAT Newsletter 20/2023: ECJ: VAT treatment of the charging of electric vehicles (e-charging)

ECJ: E-charging in a three-party relationship 

In its Judgment of October 17, 2024 (Case C-60/23 – Digital Charging Solutions GmbH), the ECJ once again addressed the issue of e-charging, this time in a three-party relationship.

The ECJ classifies the charging process as a supply and affirms the existence of a supply chain. In the opinion of the ECJ, the two conditions for a commission transaction under Article 14 para 2 lit. c of the VAT Directive are “apparently fulfilled”:  

• The plaintiff acts in its own name but on behalf of the user under a commission contract within the meaning of Article 14 para 2 lit. c of the VAT Directive. 

• The actual supply of electricity by the plaintiff to the user is no different from the supply of electricity by the charging station operator to the plaintiff.

The ECJ distinguishes the present case from cases involving fuel card transactions in great detail (see ECJ in Vega International – C-235/18 and Auto Lease Holland – C-185/01). The case law on fuel card transactions is not transferable because it concerns different facts. In particular, in the present case, the plaintiff does not assume the function of a creditor (see Case C-185/01 – Auto Lease Holland) or the organization of group-wide fuel supply by means of fuel cards (see Case C-235/18 – Vega International).

See VAT Newsletter 41/2024: E-Charging: ECJ confirms reseller model and raises new questions for e-mobility providers (EMP)

What are the consequences of the ECJ judgments?

The ECJ judgments provide long-awaited clarity that e-charging in the classic three-party relationship is to be treated as a supply chain under the above conditions. In this constellation, the principles of the ECJ in the Auto Lease Holland and Vega International cases do not apply. However, assuming a supply chain, this raises highly practical questions for e-mobility providers:

• Am I a reseller? (Reverse charge)

• Where is the charging station located? (VAT registration)

• Do the service elements in this specific case constitute an independent service?

• If so: B2C case or B2B case? (place of supply, reverse charge)

• Is this an electronically supplied service in a B2C case? (evidence required) 

The complex follow-up questions entail certain risks in practice, but these can be minimized in many cases through clever contract drafting.