Various parties, including an e-mobility service provider (EMSP), play a role in the charging of electric vehicles (EVs). The EMSP is the party that facilitates charging, for example, by means of a charging card, app or tag that gives drivers access to charging points from different providers. EMSPs often offer additional services, such as reserving charging points and providing information on the availability of charging stations.
For VAT purposes, it is important to determine whether the EMSP or the charging point owner supplies the electricity to the driver. The Court of Justice of the European Union (CJEU) issued a clarifying decision (Digital Charging Solutions) on this issue on 17 October 2024.
Digital Charging Solutions, a German company, supplies users of EVs in Sweden with access to a network of charging points and provides users with additional services. Digital Charging does not operate the charging points on the network; instead, operators with whom the company has concluded contracts to enable EV users to charge their vehicles take on this role. Users are provided with a card and an IT app for authentication. When the card or app is used, the charging session is registered with the charge point operator, which then invoices Digital Charging Solutions for the sessions.
According to the CJEU, the EMSP acts as a commission agent on the basis of contractual provisions, which means that the EMSP functions as an intermediary acting in its own name but on behalf of its client. For VAT purposes, this implies that the EMSP is considered both the buyer and supplier in a supply chain: the charge point operator supplies electricity to the EMSP, which then supplies it to the driver.
In this case, the court held that drivers instruct the EMSP to purchase electricity from charge point operators on behalf of the driver but in their own name for charging their vehicles. This creates a supply chain, in which the EMSP makes a VAT able supply to the driver.
According to the CJEU, the additional services of the EMSP, such as the reservation of charge points, are provided separately and independently of the supply of electricity. The fact that a separate fee is charged for this, even if there is no charging during a certain period, seems relevant. However, even if these services are ancillary to the supply of electricity and are therefore part of it, this does not necessarily preclude the application of the commission agent rule according to the CJEU.
The CJEU decision in the Digital Charging Solutions case deviates from its previous decisions on the VAT treatment of fuel cards. In two previous cases, the court held that a petrol station owner supplies fuel directly to the driver of a car. There is no supply to or by the fuel card issuer. In this case, the fuel card issuer carried out a financial transaction that is exempt from VAT, resulting in a restriction on the deductibility of VAT by the fuel card issuer.
According to the CJEU, the Digital Charging Solutions situation differs from the fuel card cases. The court emphasises that there is no financing agreement: Digital Charging Solutions receives a fixed fee, regardless of the user's consumption or the number of charging sessions. Unlike the fuel card situation, the fee is not based on a percentage of the electricity price.
The VAT Committee has published a guideline from which it is clear that, in certain cases, a fuel card issuer acts as a commission agent for VAT purposes. The Digital Charging Solutions decision reinforces this guideline. The CJEU decision is welcome in practice because it prevents a restriction on the deductibility of VAT for fuel card issuers and EMSPs as a result of VAT-exempt financial services provided by these parties. Each party in the chain can also invoice its own contracting party with VAT.
Businesses will have to assess whether they are acting as commission agents. Under the commission agent model, the e-mobility service provider provides a taxable service to the driver with whom it has an agreement. If the owner of the charge point were to supply electricity directly to the driver, they would have to invoice the driver. Correct invoicing is particularly important when the customer is a taxable person for VAT purposes that wishes to deduct the VAT on the invoice.
It is important to note that the CJEU’s decision is based on the specific facts of Digital Charging Solutions. Other situations may lead to different VAT consequences, for example, when the EMSP receives a fee based on the amount of electricity supplied to the driver. Companies should examine their situations based on the CJEU decision, especially if they work with fuel cards or multifunctional charging cards.
Madeleine Merkx
BDO in Netherlands
For VAT purposes, it is important to determine whether the EMSP or the charging point owner supplies the electricity to the driver. The Court of Justice of the European Union (CJEU) issued a clarifying decision (Digital Charging Solutions) on this issue on 17 October 2024.
Facts of the case
Digital Charging Solutions, a German company, supplies users of EVs in Sweden with access to a network of charging points and provides users with additional services. Digital Charging does not operate the charging points on the network; instead, operators with whom the company has concluded contracts to enable EV users to charge their vehicles take on this role. Users are provided with a card and an IT app for authentication. When the card or app is used, the charging session is registered with the charge point operator, which then invoices Digital Charging Solutions for the sessions.
E-mobility service provider acts as Commission agent
According to the CJEU, the EMSP acts as a commission agent on the basis of contractual provisions, which means that the EMSP functions as an intermediary acting in its own name but on behalf of its client. For VAT purposes, this implies that the EMSP is considered both the buyer and supplier in a supply chain: the charge point operator supplies electricity to the EMSP, which then supplies it to the driver.In this case, the court held that drivers instruct the EMSP to purchase electricity from charge point operators on behalf of the driver but in their own name for charging their vehicles. This creates a supply chain, in which the EMSP makes a VAT able supply to the driver.
According to the CJEU, the additional services of the EMSP, such as the reservation of charge points, are provided separately and independently of the supply of electricity. The fact that a separate fee is charged for this, even if there is no charging during a certain period, seems relevant. However, even if these services are ancillary to the supply of electricity and are therefore part of it, this does not necessarily preclude the application of the commission agent rule according to the CJEU.
Distinction from VAT treatment for fuel cards
The CJEU decision in the Digital Charging Solutions case deviates from its previous decisions on the VAT treatment of fuel cards. In two previous cases, the court held that a petrol station owner supplies fuel directly to the driver of a car. There is no supply to or by the fuel card issuer. In this case, the fuel card issuer carried out a financial transaction that is exempt from VAT, resulting in a restriction on the deductibility of VAT by the fuel card issuer.According to the CJEU, the Digital Charging Solutions situation differs from the fuel card cases. The court emphasises that there is no financing agreement: Digital Charging Solutions receives a fixed fee, regardless of the user's consumption or the number of charging sessions. Unlike the fuel card situation, the fee is not based on a percentage of the electricity price.
Practical consequences
The VAT Committee has published a guideline from which it is clear that, in certain cases, a fuel card issuer acts as a commission agent for VAT purposes. The Digital Charging Solutions decision reinforces this guideline. The CJEU decision is welcome in practice because it prevents a restriction on the deductibility of VAT for fuel card issuers and EMSPs as a result of VAT-exempt financial services provided by these parties. Each party in the chain can also invoice its own contracting party with VAT.Businesses will have to assess whether they are acting as commission agents. Under the commission agent model, the e-mobility service provider provides a taxable service to the driver with whom it has an agreement. If the owner of the charge point were to supply electricity directly to the driver, they would have to invoice the driver. Correct invoicing is particularly important when the customer is a taxable person for VAT purposes that wishes to deduct the VAT on the invoice.
It is important to note that the CJEU’s decision is based on the specific facts of Digital Charging Solutions. Other situations may lead to different VAT consequences, for example, when the EMSP receives a fee based on the amount of electricity supplied to the driver. Companies should examine their situations based on the CJEU decision, especially if they work with fuel cards or multifunctional charging cards.
Madeleine Merkx
BDO in Netherlands