CJEU Advocate General: card provider in the EV chain performs a supply of goods

What does this mean for your organisation?

In previous cases, such as Auto Lease Holland and Vega International, the CJEU addressed the VAT treatment related to the use of fuel cards. In essence, the CJEU concluded in those cases that the transaction between the card provider and the card user should be considered a service, namely credit provision. The supply of goods (fuel) was deemed to take place directly between the energy supplier and the card user. These judgments led to practical issues and non-deductible VAT for fuel card providers.

Although fuel card providers in the Netherlands could rely on a favorable decision from the State Secretary (which allowed VAT deduction under certain conditions), there is no such decision in the Netherlands for the charging of electric vehicles. It is now a question whether the CJEU will consider the reasoning from the Auto Lease Holland and Vega International cases applicable to the charging of electric vehicles.

The opinion of the Advocate General potentially leads to a favorable outcome for entrepreneurs providing such cards in the EV chain. By concluding that these entrepreneurs perform a supply of goods through the commissionaire fiction, there is no credit provision service and the right to deduct VAT is ensured. The Advocate General seems to be inspired by the EU VAT Committee, which previously reached a similar conclusion.

Background

Digital Charging Solutions (defendant), a company based in Germany without a fixed establishment in Sweden, provides users of electric vehicles with access to a network of charging points in Sweden. Digital Charging Solutions is not responsible for the management of the charging points itself, but has entered into contracts with operators (so-called Charge Point Operators - CPOs). Users receive a card and an authentication application, which allow them to charge their electric vehicles. The charging sessions are recorded and billed to Digital Charging Solutions by the CPO. Subsequently, users receive a monthly invoice from Digital Charging Solutions, with a fixed amount for the service and the charging sessions, regardless of the actual electricity consumption.

The tax authority argues that the performance of Digital Charging Solutions to the users should be considered a supply of electricity, with network access being ancillary. However, Digital Charging Solutions believes that the supply of electricity and the network services (i.e., facilitating access to the network of charging points) are two separate supplies. Therefore, Digital Charging Solutions argues that only the part of the supply relating to electricity is taxable in Sweden.

Conclusion of Advocate General Ćapeta

In his opinion, the Advocate General examined three possible options to classify the transactions in the present case:

1. the credit provision model;
2. the purchase-sale model; and
3. the commissionaire model.

Credit provision model

The credit provision model is based on the case law of the CJEU in the Auto Lease Holland and Vega International cases, which concerned the VAT treatment of transactions related to the use of fuel cards. According to this model, the transaction between the card provider and the card user is considered a service in the form of credit provision, and the supply of goods (fuel) is deemed to take place directly between the energy supplier and the card user. The Advocate General rejected this model for the present case, as the business model for charging EVs differs from that of refueling and the cards or apps for charging EVs are not payment instruments.

Purchase-sale model

The purchase-sale model is based on Article 14(1) of the VAT Directive, which defines a supply of goods as the transfer or transfer of the power to dispose of tangible property as an owner. According to this model, the transactions in question are considered successive sales within a single, horizontal chain of supplies. DCS purchases electricity from the CPO and resells it to the card or app user. The A-G has also looked at this model and, according to the A-G, it is less obvious that this model applies in the present case because it does not correspond to the economic and commercial reality of the transactions and because it is problematic to determine the transfer or transfer of the power to dispose of electricity as an owner.

Commissionaire model

The commissionaire model is based on Article 14(2)(c) of the VAT Directive, which states that a person acting in the name and on behalf of another person in the supply of a good is deemed to have received and supplied that good itself. According to this model, the transaction in the present case is described as a transaction involving a commissionaire acting as an intermediary between the CPO and the card or app user. In the purchase commissionaire model, the card or app user is the principal and DCS is the commissionaire. The Advocate General has proposed this model as the best option for the present case because it better aligns with the contractual arrangements and the role of the parties involved. For the application of this model, there must be a mandate for the commissionaire to act on behalf of the principal in the supply of the goods, and the goods deliveries taken by the commissionaire must be identical to those sold or transferred to the principal. The Advocate General concluded that these conditions were met in the circumstances of the present case. Of course, in other cases, it will also be necessary to examine whether these conditions are met.

Continuation

The above is only the Advocate General's conclusion. This does not necessarily mean that the Court of Justice will agree. However, if the Court of Justice follows the Advocate General's considerations, this could be a favorable outcome for entrepreneurs who provide such cards in the EV chain, as it aligns with current market practice.