Vehicle Charging Sessions
The EU VAT Committee has unanimously decided that charging the battery should be considered as the main element of the supply, since the sole purpose of the additional charging services is to facilitate the access of electric cars to the charging station for the purpose of charging the battery of the electric car.
These recharging services are therefore considered to be ancillary to the supply of electricity for VAT purposes, so that the entire supply must be regarded as a supply of goods (Guideline taken following the 113th VAT Committee of 03.06.2019 – document A – taxud.c.1(2019)6589787 – 972).
The Belgian VAT administration has also explicitly accepted this principle in its Circular 2021/C/113 “on the installation of recharging stations for electric vehicles and supplies and services related to those charging stations”.
This means that the VAT rules relating to the supply of electricity through networks must be followed:
Rule on which VAT is due (localization place of service) – Articles 38 and 39 of Directive 2006/112/EC:
“Article 38
1. In the case of the supply of gas through a natural gas system situated within the territory of the Community or any network connected to such a system, the supply of electricity, or the supply of heat or cooling energy through heating or cooling networks to a taxable dealer, the place of supply shall be deemed to be the place where that taxable dealer has established his business or has a fixed establishment for which the goods are supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides.
2. For the purposes of paragraph 1, ‘taxable dealer’ shall mean a taxable person whose principal activity in respect of purchases of gas, electricity, heat or cooling energy is reselling those products and whose own consumption of those products is negligible.
Article 39
In the case of the supply of gas through a natural gas system situated within the territory of the Community or any network connected to such a system, the supply of electricity or the supply of heat or cooling energy through heating or cooling networks, where such a supply is not covered by Article 38, the place of supply shall be deemed to be the place where the customer effectively uses and consumes the goods.
Where all or part of the gas, electricity or heat or cooling energy is not effectively consumed by the customer, those non-consumed goods shall be deemed to have been used and consumed at the place where the customer has established his business or has a fixed establishment for which the goods are supplied. In the absence of such a place of business or fixed establishment, the customer shall be deemed to have used and consumed the goods at the place where he has his permanent address or usually resides.”
Rule on how this VAT must be paid (VAT Payment rules) – Article 195 Directive 2006/112/EC:
“Article 195
VAT shall be payable by any person who is identified for VAT purposes in the Member State in which the tax is due and to whom goods are supplied in the circumstances specified in Articles 38 or 39, if the supplies are carried out by a taxable person not established within that Member State.”
Application of the rules to purchases of charging sessions by Last Mile Solutions (Threeforce BV):
In short, this means that if Last Mile Solutions (Threeforce BV) purchases charging sessions with any associated service components from a VAT taxable person, with the aim for Last Mile Solutions to reinvoice them as such, the place of supply of the charging session for VAT purposes is:
- the Member State in which Last Mile Solutions (Threeforce BV) is established (i.e. the Netherlands), since it is a taxable person whose main activity in the purchase of electricity (recharging sessions) is the resale of those goods and whose own consumption of those goods is negligible.
If the VAT-taxable supplier is not established in the Netherlands or if this supplier does not have a fixed establishment for VAT purposes in the Netherlands that intervenes in this sale, Last Mile Solutions (Threeforce BV) must pay the VAT via its Dutch VAT return via a so-called reverse charge. This invoice must therefore contain the words “reverse-charge”. If the VAT-taxable supplier is established in the Netherlands or if this supplier has a fixed establishment for VAT purposes in the Netherlands that intervenes in this sale, Dutch VAT must be charged via this invoice.
If Last Mile Solutions (Threeforce BV) generates its own purchase invoice via self-billing, the invoice must include “Self-billing”. The modalities of this self-billing must be laid down in a prior agreement between Last Mile Solutions (Threeforce BV) and its supplier (e.g. for the arrangement of acceptance of these invoices as the correct outgoing invoice of the supplier and for the correlation of the numbering of these documents with the reporting of them in the accounts of this supplier).
For suppliers subject to VAT in Belgium, this turnover must be included in grid 47 of their periodic VAT return.
Capacity of the supplier for sales of charging sessions to Last Mile Solutions (Threeforce BV):
The rules described above apply if the supplier of the charging sessions to Last Mile Solutions (Threeforce BV) is a VAT taxable person.
If the supplier is not deemed to be a VAT taxable person, no VAT can be due on the sale.
However, the status of taxable person for VAT purposes may give rise to misunderstandings on the part of participants in the above mentioned economic transactions. Some participants in the aforementioned economic transactions may mistakenly believe that they do not have the status of VAT taxable person for the reason that, for example, they do not yet submit periodic VAT returns, or do not yet have a VAT identification number. However, having a VAT number or filing VAT returns is not what defines the status of VAT taxable person. On the contrary, it is a possible consequence of the fact that one is actually a VAT taxable person.
Whereas VAT taxable persons who have a valid VAT identification number and who also submit periodic VAT returns, the VAT principles mentioned in the previous title will not normally give rise to further problems, this situation is different for those who do not yet have a valid VAT identification number or who, although they do not have one, do not submit periodic returns. Their situation is discussed below.
Who is a VAT taxable person?
Article 2 Directive 2006/112/EC provides:
‘Article 2
1. The following transactions shall be subject to VAT:
(a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such; ….
It has already been clarified above that charging sessions are considered as supplies of goods for VAT purposes. Moreover, as discussed, the sale of it to Last Mile Solutions (Threeforce BV) is taxable in the Netherlands.
The remaining question is whether the sale is done by “a taxable person acting as such for consideration.” For consideration means that it is not provided free of charge, but in return for consideration, which is normally always a sum of money when sold to Last Mile Solutions (Threeforce BV).
Articles 9 and 10 of Directive 006/112/EC define what a VAT taxable person is.
‘Article 9
‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.
2. In addition to the persons referred to in paragraph 1, any person who, on an occasional basis, supplies a new means of transport, which is dispatched or transported to the customer by the vendor or the customer, or on behalf of the vendor or the customer, to a destination outside the territory of a Member State but within the territory of the Community, shall be regarded as a taxable person.
Article 10
The condition in Article 9(1) that the economic activity be conducted ‘independently’ shall exclude employed and other persons from VAT in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.”
This definition has been implemented in Belgian VAT legislation in Article 4 of the VAT Code:
“Article 4 § 1. A taxable person is any person who, in the course of an economic activity, regularly and independently, whether or not for profit, principally or ancillary, carries out supplies of goods or services as defined in this Code, irrespective of the place where the economic activity is carried out.
The condition referred to in the first paragraph that the economic activity must be carried out independently excludes employed and other persons from taxation in so far as they have entered into a contract of employment with their employer or have any other legal ties giving rise to a relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.”
This definition is very broad and therefore also includes:
- a) taxable persons subject to the VAT scheme for small enterprises
- b) so-called exempt VAT taxable persons who regularly supply goods or services for consideration but for which a VAT exemption (without the right to deduct VAT) applies (this concerns, among other things, a series of medical and paramedical service providers, a series of socio-cultural activities, certain real estate transactions, insurance transactions and most financial services, etc.).
- c) taxable persons subject to the flat-rate agricultural scheme
- d) public authorities and bodies governed by public law insofar as the sale of the charging sessions is deemed to be an extension of activities for which they are to be regarded as VAT taxable persons or if it is not an extension of their activities as a taxable person for VAT purposes, there may nevertheless be a significant distortion of competition (the latter is issue of facts in which the VAT authorities in Belgium, for example, often looks at whether the turnover from a specific activity, for which there is an issue for distortion of competition, exceeds EUR 25,000 on an annual basis).
The above-mentioned economic operators are therefore indeed taxable persons for the sale of charging sessions and invoices must therefore be drawn up for them (whether or not by means of self-billing). If these suppliers are not established in the Netherlands, the amount of the purchases made by Last Mile Solutions (Threeforce BV) is indeed payable by reverse charge of Dutch VAT.
If these suppliers are established in Belgium, they must, in principle, report by means of a document e604A or e604B that they carry out transactions which, although not subject to VAT in Belgium, are indeed taxable transactions that do not fall under the Belgian exemption scheme Article 44 of the VAT Code, or (for reasons of non-taxable in Belgium) are also not subject to the Belgian VAT scheme for small enterprises. We strongly advise these suppliers to contact their local competent VAT management team to determine, on the basis of their specific circumstances, whether they are required to submit periodic VAT returns, if applicable.