ECJ C-60/23 (Digital Charging Solutions) – AG Opinion – VAT Treatment of Electricity Supply for EV Charging

On April 25, 2024, the ECJ issued the AG Opinion in the case C-60/23 (Digital Charging Solutions).

Context: Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Articles 14, 15 and 24 – Recharging points for electric vehicles – Provision of devices for recharging electric vehicles, supply of the necessary electricity, and provision of technical support and IT services – Classification as a ‘supply of goods’ or a ‘supply of services’ – Article 14(1), Article 14(2)(c) and Article 28 – Nature and role of the device provider in that supply

Relevant articles in the EU VAT Directive 2006/112/EC

Articles 14, 15, 24 and 28 of the EU VAT Directive 2006/112/EC.

Article 14
1. ‘Supply of goods’ shall mean the transfer of the right to dispose of tangible property as owner.

Article 15
1. Electricity, gas, heat or cooling energy and the like shall be treated as tangible property.
2. Member States may regard the following as tangible property:
(a) certain interests in immovable property;
(b) rights in rem giving the holder thereof a right of use over immovable property;
(c) shares or interests equivalent to shares giving the holder thereof de jure or de facto rights of ownership or possession over immovable property or part thereof.

Article 24
1. ‘Supply of services’ shall mean any transaction which does not constitute a supply of goods.

Article 28
Where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and supplied those services himself.

Facts & background

DCS has its place of business in Germany with no fixed establishment in Sweden. That company supplies EV users in Sweden with access to a network of charging points. Via that network, users receive real-time information on prices, location and availability of charging points, in addition, to functions for locating charging points and route planning.
The charging points on the network are not operated by DCS but by charge-point operators (CPOs) with which DCS has entered into contracts. DCS provides EV users with a card and an application for authentication to enable them to charge their vehicles at the charging points (‘card/app users’). When the card or application is used, the charging session is registered with a CPO, which then invoices DCS for that session. Invoicing takes place on a monthly basis at the end of each calendar month and payment must be made within 30 days.
On the basis of the invoices received from the CPOs, DCS bills the card/app users, first for the quantity of electricity supplied on a monthly basis, and second for access to the network and adjacent services. The price for the electricity supplied varies depending on the quantity charged, but a fixed fee is levied for access and the service provided, which is charged regardless of whether the user actually purchased electricity during the relevant period or not. It is not possible only to purchase electricity from the company without at the same time paying for access to the network.
On 14 April 2021, DCS applied to the Skatterättsnämnden (Revenue Law Commission, Sweden) for a tax ruling. On 8 April 2022, that government agency issued a ruling stating that the supply made by DCS constituted a complex transaction principally characterised by the delivery of electricity to users and that the place of delivery was to be regarded as being in Sweden.
The Skatteverket (Swedish Tax Agency) brought an action before the Högsta förvaltningsdomstolen (Supreme Administrative Court), the referring court, requesting confirmation of that tax ruling. DCS also appealed to that court, requesting that the tax ruling be amended. That company argued before the national court that there were two separate supplies, namely a supply of electricity and a supply of services (the facilitation of access to the network of charging points), so that the only part of the supply that should be taxed in Sweden is the part consisting of the supply of electricity.
As is apparent from the request for a preliminary ruling, the Skatterättsnämnden (Revenue Law Commission) is divided. On the one hand, the majority takes the view that CPOs supply electricity to DCS, which in turn supplies it to the users. This is therefore a chain of operations in which CPOs are not contractually bound to those users.
On the other hand, a minority within the Skatterättsnämnden (Revenue Law Commission) takes the view that DCS provides users with a service consisting, in particular, of the provision of a network of charging points and subsequent invoicing, which implies that it grants them some form of credit for the purchase of electricity. (4) This approach takes particular account of the fact that users are free to choose among conditions such as the quality, quantity, time of purchase and manner of use of the electricity.

Questions

Question 1: Does a supply consisting of charging an electric vehicle in a charging station to the user of the vehicle constitute a supply of a good under Articles 14(1) and 15(1) of the VAT Directive?

Question 2: If the answer to question 1 is yes, then such a delivery must be considered to exist at all stages of a transaction chain that includes an intermediate company where the transaction chain is accompanied by agreements at each stage, but only the user of the vehicle has circumstances such as quantity, time and place for charging and how the electricity will be used?

AG Opinion

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

must be interpreted as meaning that the recharging of an electric vehicle at a network of charging points to which a user has access by means of a subscription concluded with a company other than the charging-point operator implies that the electricity consumed is delivered from that operator to that user, and the company offering access to those charging points acts, in that supply, as a commissionaire within the meaning of Article 14(2)(c) of that directive.

Alternatively, if the two conditions of Article 14(2)(c) of Directive 2006/112 are not met, it should be considered that the supply of electricity to the user is deemed to be made by the company which provides access to a network of charging points to users within the meaning of Article 14(1) of that directive.

Summary

Article 15 of the VAT Directive states that electricity is considered a good for VAT purposes
The supply of electricity to a vehicle’s battery, along with access to charging devices and technical support, is considered a supply of goods under the VAT Directive
The analysis focuses on how the VAT Directive applies to each stage of the transaction involved in charging an EV using a card or app
DCS performs two different supplies: a supply of services (providing access to charging points) and a supply of goods (electricity)
Separate invoices for services and goods indicate distinct and independent transactions for VAT purposes
Access to the network is considered autonomous from the supply of electricity, leading to different VAT treatment for each aspect of the transaction.

Source