• Charging stations for e-vehicles: more clarity on applicable VAT rules

Charging stations for e-vehicles: more clarity on applicable VAT rules

30 December 2021

Several VAT questions have so far remained unanswered concerning the installation of a charging station or the charging of electric vehicles.

In the Circular of 2021/C113, the VAT administration explains the VAT regime relating to the installation of electric vehicle charging stations, the charging of an electric vehicle and the right to deduct VAT.

Supply with installation of charging station

 

Supply with installation of charging station in Belgium

As regards the supply with installation of a charging station in Belgium, the general rule is that 21% VAT applies. Since the operation can be equated with the execution of a construction works, a reduced 6% VAT rate can be claimed under certain conditions (e.g., when installing in a private dwelling older than 10 years and provided that it relates to the actual home). In a B2B context, a reverse charge mechanism may also apply.

 

Right of VAT deduction

The right of VAT deduction for the supply with installation on the part of the employer for the supply with installation of such a charging station shall be determined according to

  1. his own VAT status (VAT taxable person with 100% right of VAT deduction, or mixed or fully exempt VAT taxable person); and
  2. the installation with the company itself or with the employee (even if the employer retains ownership).

In any case, the purchase or rental of a charging station is not considered a so-called car expense for which the maximum VAT deduction limit of 50% applies, regardless of whether the charging station is installed at the employer's or at the employee's premises.

The input VAT relating to the supply with installation of a charging station at the company's own premises, whose activities consist of carrying out transactions that give a full right of input VAT for which this charging station is also used, can therefore be fully deducted. VAT deduction limitations in function of the actual professional use apply to the installation of the charging station at the employee's home if the employee does not have to pay a fee for this. The professional use must then be determined according to one of the methods laid down for the vehicle itself. Of course, a possible withdrawal or revision must be taken into account if, for example, the employee moves house and the installation remains behind. In the event that the charging station is made available for a compensation (e.g. reduction of net salary, via cafeteria plan), VAT deduction will be possible provided that the compensation is determined on the basis of a normal value.

 

Charging electric vehicles via a charging station

In addition, the VAT administration also considers the VAT consequences of charging electric vehicles via a charging station in Belgium.

The general principle is that charging a battery is considered as a supply of goods and is considered as a so-called 'fuel cost'. This means that the VAT deduction must be limited to the actual professional use with a maximum of 50%. If the electricity consumption cannot be measured per vehicle, the deductible percentage will have to be determined in consultation with the VAT authorities.

The supply of such electricity in Belgium is subject to 21% VAT.

Furthermore, a distinction is made between (semi-)public charging stations and charging stations provided to employees.

 

Semi-public charging stations

At semi-public charging stations, battery charging will usually be done via a charging pass or charging subscription issued by an e-mobility service provider (also called 'eMP' or 'eMSP'). Such eMPs then enter into agreements with charge point operators ('CPO').

In the relationship between the EMP and the user, Belgian VAT will be due for charging the battery in Belgium (place of actual use and consumption). Whether or not Belgian VAT must be charged on the invoice, or whether a reverse charge is possible, depends on the location of the parties involved and their VAT status.  In the relationship between CPO and EMP, other VAT rules apply.

 

Charging stations made available to employees

When the employer provides a charging station at the employee's home, the electricity itself is charged to the employee by the energy supplier. The employer pays a fee to the employee for the part of the electricity bill that is used for charging the car.

If the employer uses the services of an eMP to read the electricity meters and prepare the documents, the VAT regime depends on the intervention made by the eMP.

If the eMP only processes the data and the fee is paid directly by the employer, this is a regular service between the eMP and the employer. If the employer is a VAT payer located in Belgium, Belgian VAT (21%) will apply, with or without application of the reverse charge mechanism (depending on the eMP's location). This same VAT regime applies when the eMP also intervenes in the payment of the remuneration in the name and on behalf of the employer. Its reimbursement by the employer of the actual fee to the eMP is considered an advanced cost not subject to VAT. The service provided by the eMP itself is not considered a car expense and is therefore not subject to the maximum 50% VAT deduction limitation.

The VAT treatment is different when the eMP acts in his own name and for his own account when paying the remuneration to the employee. The employee is then deemed to sell electricity to the eMP who in turn sells it to the employer. In the relationship between the eMP and the employer, Belgian VAT must be charged for the charging stations in Belgium.

Receiving this compensation for the supply of electricity does not, in principle, have any VAT consequences for the employee concerned, even if he or she is a VAT taxable person for certain other activities. Please note that the actual circumstances must always be taken into account.

For the employer, there are no specific VAT obligations in this regard either, except that no right of VAT deduction can be applied to the allowance for home charging of the electric car.

 

Contact

For questions on this subject, you can contact your usual BDO contact person or send an e-mail at [email protected] for the attention of one of our experts from the VAT team: