Advocate General also proposes the commission model for e-mobility providers – opinion of 25 April 2024, C-60/23

Facts C-60/23

The opinion concerns the German e-mobility provider Digital Charging Solutions GmbH (DCS), which in this case provides users of electric vehicles in Sweden with access to a network of charging points.

This network provides users with real-time information on prices, locations and availability of charging points, as well as functions for finding these charging points and route planning. The charging points are provided by operators with whom DCS has concluded contracts. DCS provides customers with a card and an authentication app, which registers the charging process with the charging point operator. The operator invoices DCS for the charging process. DCS then charges the user for the charging process.  DCS also charges a fixed fee for the network service, regardless of whether the user has purchased electricity during the period in question.

Advocate General's proposal on VAT treatment

The Advocate General first emphasises that the network service and the supply of electricity by DCS are two independent supplies that must be assessed separately for VAT purposes.

The network service as a supply of service is not covered in these proceedings, only the supply of electricity. There are three possible ways of categorising this for VAT purposes:

1. DCS does not supply electricity, but rather grants a credit, as in the ECJ case Autolease Holland.  The supply of electricity would then be made by the charging point operator to the customer.
2. This is a chain supply in which the operator of the charging point supplies electricity to DCS and DCS then supplies it to the customer. This is a 
3. commission transaction in which DCS buys and sells electricity in its own name but for the account of a third party, so that there is a feigned chain supply of electricity.

The electric mobility business model is not comparable to the petrol card business, among other things because, unlike other vehicles, electric vehicles cannot be charged at just any charging point, but users must move within the respective networks. Therefore, the granting of credit cannot be assumed here.

In a supply chain transaction, ownership of the delivery item is transferred, and the item can be disposed of in a chain. This is not the case here, as DCS neither guarantees the charging point operators the purchase of a certain amount of electricity nor makes a decision to purchase a certain amount of electricity. In fact, only the customer initiates the purchase process.

The commission model is best suited to this situation.  In this model, the e-mobility provider is treated as if it had received and supplied the electricity itself.  For this, two conditions must be met:  Firstly, the commission agent, i.e. the e-mobility provider, must be appointed by the principal, and secondly, there must be similarity of supply in both relationships. The DCS case fulfilled both these requirements. It is true that the respective card or application user does not expressly request DCS to purchase electricity for their account during each charging process. However, presenting the card or app at the charging point can be viewed as placing an order with the commission agent to purchase a certain amount of electricity. As far as similarity is concerned, some argue that the charging point operator only supplies electricity, while the e-mobility provider provides additional supplies with the network service, so that similarity is questionable. However, the Advocate General does not view this as problematic, as the network service is to be separated from the supply of electricity.

Another argument in favour of applying the commission model is that it is lex specialis to the general definition of supplies and should therefore be given priority if the conditions are met.

The referring court had to examine whether the two conditions of the commission model were applicable, i.e. the appointment and the similarity. If this was not the case, it would be a "normal" supply from the e-mobility provider to the user.

Implications

The Advocate General's opinion contradicts the VAT Committee's guidelines from the 118th meeting on 19 April 2021. The members were unanimous in their opinion that the e-mobility business model should be treated as a chain supply business. However, these guidelines are not binding, and the Advocate General did not consider them to be clear and comprehensive.

In fact, the arguments against a chain supply in the field of e-mobility are just as convincing as those for the fuel card, so that the commission model is also the most suitable model here.

 It does require a certain degree of mental flexibility, as here, unlike in a classic commission business, the principal is the person taking action at the charging point and representing the commission agent in its own business, so to speak. However, despite these unusual circumstances, the legal requirements of the commission business are met. Just like a chain supply, it leads to the desired result that the e-mobility provider can issue the users with collective invoices for defined periods, from which the users can then claim input VAT deduction.

It remains to be seen whether the ECJ will follow the opinion and, if so, whether it will impose further conditions on the commission business – the VAT Committee's conditions for the commission fuel card model were much more extensive and differentiated than those of the Advocate General for e-mobility. The two conditions set out by the Advocate General here, namely the appointment and similarity, are always likely to be met in practice and therefore unproblematic, meaning that there is less need for companies in the e-mobility sector to change than in the case of fuel cards.

Author

Nadia Schulte
+49 211 83 99 330