On 20 April 2023, the Court of Justice of the European Union, in response to a preliminary ruling from the Supreme Administrative Court, delivered a judgment on the interpretation of the Council of EU Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006, L 347, p. 1), as amended by the Council of EU Directive 2009/162/EU of 22 December 2009. (OJ 2010, L 10, p. 14) (hereinafter “the Directive” or “the Directive 2006/112“).
The CJEU judgement is an answer for a significant legal doubt as to how charging electric cars should be classified for VAT purposes. According to the directive, the supply of goods means the transfer of the right to dispose of a thing as owner. In contrast, a supply of services is any transaction that does not constitute a supply of goods.
According to the Court’s established position, such a sale is a supply of goods and not a supply of services. Furthermore, the judgment emphasises that additional activities facilitating the use of the charging stations (such as provision of chargers, technical support, payment facilities) are subsidiary to the main activity, which is the supply of goods, which means electricity. By their nature, they do not change the classification of the benefit and the nature of the whole is determined by the main benefit.
Implications of the judgement for taxpayers
The CJEU’s ruling should unify the line of interpretation and case law towards the recognition of charging an electric car as a sale of goods.
The CJEU judgment harmonises the interpretation of Directive 2006/112. Until now, there was a twofold interpretation of the classification of charging electric cars. Entities considering car charging as a service will have to change their policy and correct previous settlements with foreign traders on the grounds that they did not report VAT on such transactions taking into account the place of supply of the service and not the place of supply of the goods. In addition, the treatment of car charging as a supply of goods affects the place of taxation, the moment of taxation, the VAT rate or the invoicing date.
Importantly, the court’s ruling can also create effects on excise and energy law, because in certain cases, the sale of electricity requires a licence to trade in electricity and triggers excise duty.