CJEU: charging electric cars is a supply of goods, not services

The CJEU has ruled that charging electric cars is a supply of goods, not services. 

The case involved a company which wanted to provide electric vehicle charging stations for a fee. As part of its business, the company planned to provide charging equipment, ensure electricity flow to vehicle batteries, technical support, and wanted to share a platform on which the interested users could book a connector and see the transaction and payment history.  

In this context, the company applied to the Head of the National Revenue Information Service (NRIS) for an individual advance tax ruling. The company claimed that the electric car charging and the access to the infrastructure was a composite supply of services. The revenue authority disagreed with the company and found its position to be incorrect. As a consequence, the case went first to the Provincial Administrative Court (PAC), which resolved in favour of the company, and then to the Supreme Administrative Court (SAC) which decided to request a preliminary ruling from the CJEU because of the significance of this matter for the national and the Community market. 

The Court has upheld the NRIS’s position. In the grounds of the ruling, the Court has explained that the flow of electricity to the electric vehicle’s battery, which is the main supply, is a supply of goods. The access to the charging device being a minimal service is irrelevant as it is inextricably linked to the supply of electricity. The same goes true for the technical support and the IT application which may be available to interested users, but they are not in themselves the objectives of the supply, but merely ancillary services to the supply of electricity. Crucial is the main supply (supply of electricity) and it is this supply which determines the taxation rules of the entire transaction. Ancillary services (access to equipment, technical support) should be taxed according to the rules applicable to the main supply. 

Therefore, the CJEU has conclusively resolved that the VAT Directive should be interpreted in a way that treats one comprehensive supply consisting of: 

as a composite supply of goods. 

The CJEU's judgment matters not only to domestic operators of electric vehicle charging stations but also to foreign enterprises because of, among other things, the identification of the place of supply, the tax point and the invoicing date. As a consequence, some operators of charge stations may need to amend their tax returns and pay VAT plus interest. The judgment should also be read in view of excise and energy laws.

If you are interested in how this judgment may affect your tax liabilities, please contact us.