Looking back @2021 #24: Temporary reduction of VAT on Electricity and VAT incentives for Electric Cars

Highlights:

• Energy incl. electricity prices raised sharply in the fall of 2021. To offset increased prices, some European countries temporarily decreased the VAT rates on electricity 
• The use of Electric Cars is stimulated through reduced/zero VAT rates or VAT exemptions
• VAT assessment of the business model behind the recharging of e-cars requires clarification due the role of the intermediaries, private persons recharging their company car, etc

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EU developments

• Growing importance of the ECJ case C-235/18 (Vega International) on similar business models, also VAT treatment of charging electric vehicles
• VAT Expert Group meeting #30 on Nov 29, 2021: Discussion on Platform Economy, ECJ VEGA International
• VAT Committee Meeting 119^th meeting – WP 1020 – Commission – Case Vega International – Fuel cards
• European Union: Update on the VAT treatment of charging electric vehicles (e-charging)

Electricity – VAT Rates

• (Status Sept 29, 2021) European Union: Overview reduced VAT rates for water, electricity, gas
• Cyprus: Reduced VAT rates on electricity supply for households as of November 2021
• Czech Republic: Waiver of VAT on the supply of electricity and gas from 1 November to 31 December 2021
• Poland: 0% VAT on natural gas, electricity and heat
• Romania: Reduction of VAT on Heating Energy Intended for Domestic Use from 19 to 5% as of Jan 13, 2022
• Spain: Government approves the extension of the tax cuts for electricity and the super-reduced VAT rate of 4% for masks
• Ukraine Parliament Considering Reduced VAT Rate on Energy Carriers and Related Services
• Decreases are also considered in Estonia, Latvia, Lithuania

Electric Cars

• Azerbaijan
  • Azerbaijan Exemption for Electric Cars and Charging Stations as of 2022
  • Azerbaijan to exempt sale, import of electric cars from VAT in 2022
  • Eco-friendly cars in Azerbaijan will become 20% cheaper
• Armenia: Extension VAT exemption for electric vehicles until Jan 1, 2024
•  Belgium
  • Circular 2021/C/113 on the installation of charging stations for electric vehicles and supplies and services related to those charging stations
  • Electrification company car fleet – VAT considerations
• Denmark: Rental and operation of charging stations – price reduction
• Germany: Update on the VAT treatment of recharging electric vehicles
• Ukraine Import or supply of cars with electric motors: what about VAT?
• Netherlands
  • Deception with prices excluding VAT for electric cars
  • The Netherlands is the world’s leader in EV adoption thanks to its taxation policies and charging infrastructure
• Norway VAT exemption drives electric vehicle boom
• Pakistan slashes taxes on small, electric cars
• Poland: VAT deduction on the purchase and use of an electric car
• Rwanda exempts electric cars from VAT
• UK
  • HMRC has misfired on electric car VAT rules, opinion
  • HMRC Policy paper: Climate Change Levy – combined heat and power stations (CHPs) coronavirus (COVID-19) easement
• Ukraine
  • Import and sale of new cars on gas exempt
  • Import or supply of cars with electric motors: what about VAT?

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Check also the previous articles on ”Looking back @2021”

1. Brexit
2. E-Commerce VAT Directive launched in the EU per July 1, 2021
3. Next to the EU, 14 countries implemented VAT on E-Commerce, another 7 will implement in 2022
4. Saudi-Arabia is the first country in the Middle East launching E-Invoicing, UAE may follow
5. The concept of Fixed Establishments remains a major risk, and even why?
6. Intrastat: Major updates applicable as of Jan 1, 2022
7. Implementation/changes E-Invoicing & Real Time Reporting during 2021
8. ECJ cases decided in 2021 on ”Taxable Amount”

9. Increased focus on Fighting Climate Change – Carbon tax

10. 49 ECJ VAT Cases decided (incl. orders) in 2021
11. Split Payments
12. Poland and France to introduce optional taxation of Financial Services – Exemption may not longer be applied
13. Activities of the VAT Expert Group
14. ECJ cases decided in 2021 on ”Exemptions”
15. Pre-Filled VAT returns
16. SAF-T (or equivalent) regulations, some more countries will implement
17. Environmental Tax – Will Plastic Tax stop pollution?
18. VAT Grouping, a tool to avoid VAT leakage, optimize VAT receivables and simplify processes 
19. EU VAT Committee met twice and a proposal to transform it into comitology committee was discussed
20. ECJ cases decided in 2021 on ”Right to deduct VAT/Refund of VAT”
21. Global VAT rate changes, continuous monitoring needed
22. Global overview of future e-invoicing, e-filing, real time reporting, SAF-T – Will the Big Bang in Europe start as of 2022?
23. What happened in the Middle East?