EU VAT: new ruling on EV charging – key insights for CPOs and eMSPs

On 17 October 2024, the Court of Justice of the European Union (CJEU) delivered a ruling in a case involving Digital Charging Solutions GmbH. The case addresses the EU VAT treatment of electric vehicle (EV) charging, specifically where an EV is charged at a point operated by a Charging Point Operator (CPO) using the network and services of an eMobility Service Provider (eMSP). 

Why is this important?

The ruling is important as it clarifies the EU VAT treatment of a typical EV charging value chain. The CJEU confirms that for EU VAT purposes there are two supplies of goods (electricity). First by the CPO to the eMSP, and then by the eMSP as a deemed seller to the EV user. The CJEU also confirms that the eMSPs platform services to the EV user (e.g. subscription, card and app to access the charging point network) are in principle separate services if provided for a fixed fee irrespective of the supply of electricity. Until date, the EU VAT treatment was subject to debate, as shown by the EU VAT Committee’s working papers 969 and 1012, which created uncertainty for the market.

Moreover, the ruling appears favorable for both CPOs and eMSPs. For CPOs, it may for example simplify VAT invoicing, as they can invoice the eMSPs rather than each EV user. For eMSPs, it clarifies that their role is not akin to that of an issuer of fuel cards granting credit, which could limit input VAT recovery entitlement, as the CJEU had previously ruled for traditional fuel cards in the EU VAT cases Auto Lease Holland and Vega International.

Recommended actions

We recommend that CPOs, eMSPs, and other automotive businesses involved in the EV charging value chain consider the following actions to understand the impact of this ruling on their operations:

• Benchmark business models: review whether your business models align with the typical EV charging value chain in this case or whether there are differences. In practice EV charging business models may vary, for example EV users may charge directly with a CPO or third party roaming platforms may be involved.
   
• Determine VAT invoicing and reporting requirements: identify who needs to invoice whom in the value chain, what the invoice content should be, whether invoicing can be facilitated via self-billing or third party billing, and with whom any e-invoicing or digital reporting requirements are.
   
• Assess other VAT requirements: consider whether special rules for (re)selling electricity and for selling eMSP platform services may trigger VAT registrations and VAT to be charged outside of your home country.
   
• Consider impact for other taxes and beyond tax: evaluate impact for other taxes, such as energy taxes and environmental taxes. Additionally assess commercial impact, ensuring that agreements and T&Cs properly address VAT positions and how these may deviate from civil law. Also assess any financial regulatory impact, such as PSD2 licensing or CESOP tax reporting, especially if you are an eMSP collecting and holding payments from EV users, which you will subsequently send to CPOs.

For further discussion on how EU VAT impacts your business, please contact Andy van Esdonk or your regular Bird & Bird contact.