NNDKP CELF Alert No. 2/2023 – CJEU decided that the recharging of the electric vehicle is a supply of goods (electricity)

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21.04.2023 – CJEU decided that the recharging of the electric vehicle is a supply of goods (electricity) 

The Romanian version of this newsletter is available here.

On 20 April 2023, the CJEU decided that the recharging of the electric vehicle is a supply of goods (electricity) and not a supply of services for VAT purposes (case C-282/22 P. in W.)

The dispute in which the CJEU was asked to rule was whether the transaction which P. in W. intends to carry out consisting of:

a)  access to charging equipment, including the integration of a charger into the vehicle’s operating system,

b)  the routing of electricity with parameters duly adapted to the battery of this vehicle,

c)  the necessary technical assistance, and

d)  making available an IT application allowing customers to book a given connector and to consult the history of transactions and payments made,

is a supply of goods or of services for VAT purposes.

The CJEU decided that the transaction is a single and complex supply of goods, the main operation being the transfer of electricity, while the other services represent the means of benefiting under the best conditions from the electricity charged.

In this respect, the CJEU argued that:

o  The supply of electricity to the battery of an electric vehicle implies the use of appropriate charging equipment. Hence, granting access to such equipment is a must for the supply of electricity. The access to the equipment cannot therefore be the main supply.

o  The technical assistance which may be needed by the users is not an end, but a means of benefiting under the best conditions from the electricity charging the electric vehicle. Thus, the technical assistance is ancillary to the supply of electricity.

o  The software enabling the users to book a connector, consult the history of transactions and buy credits for the purpose of paying for recharges has as sole purpose to improve the experience of the user when charging the vehicle and, therefore, such supply is ancillary as well.

Also, the CJEU found that Directive 2014/94/EU on the deployment of alternative fuels infrastructure (transposed into the Romanian legislation via Law no. 34/2017) which views the recharging of electric vehicles as a service is not relevant for VAT purposes.

On this basis, we find as irrelevant for VAT purposes the provision under the Electricity and Natural Gas Law no. 123/2012 stating that the activity of selling electricity purchased from an electricity supplier and used by an operator of a battery recharging point/station that equips electric vehicles and plug-in electric hybrids does not constitute the supply of electricity.

The CJEU confirms the VAT Committee guidelines further to Working Paper no. 969/2019, according to which the recharging of the battery is the main element of the transaction carried out and the set of additional services supplied has the sole purpose of facilitating the access for electric vehicles to the charging point to have their battery recharged.

As this was not applicable in the case at hand, the CJEU did not discuss the VAT treatment in case several operators intervene on the supply chain, e.g. the recharging being provided by company A (often called Charge Point Operator (CPO)) via the IT platform of company B (often called Mobility Provider (eMP)) which has the commercial relationship with the user. Specifically, the question is whether B is a buyer-reseller of electricity or a service provider (facilitating the recharging of electric vehicles). We expect that the CJEU clarifies this question in the decision in case C-60/23 Digital Charging Solutions.

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