New VAT Circular concerning charging facilities and charging of electric vehicles
The Belgian Tax Authorities published Circular 2021/C/113 concerning the installation of charging stations for electric vehicles and related supplies and services (hereafter: ‘new VAT Circular’). The new VAT Circular provides guidance on the VAT treatment of the supply and installation of a charging station, the charging of an electric vehicle, and the deductibility of input VAT. For the new VAT Circular, see here in NL / FR.
Social and legal context
The guidance of the new VAT Circular was much awaited after the recent adoption of the ‘Law concerning tax and social greening of mobility’ in November 2021. This Law deploys income tax incentives for the acquisition of electric vehicles to stimulate the phasing out of fossil fuels and the greening of the Belgian vehicle fleet, which is greatly impacted by company cars.
Good charging infrastructure is indispensable for stimulating the acquisition of electric vehicles. Therefore, the above referred Law also introduces income tax incentives for the installation of home charging stations and publicly accessible business charging stations. At the same time, the installation of charging stations and the charging of electric vehicles trigger several VAT questions, especially in the context of company cars. The new VAT Circular addresses most of these questions and describes the VAT implications of different scenarios.
Installation of charging stations
The installation of a charging station generally refers to the supply and installation of a charging station with one or more charging points for an electric vehicle. In this regard, the new VAT Circular provides that the installation of a charging station whereby the station is incorporated in the ground, generally qualifies as immovable work. While the installation of a charging point in a building does not qualify as immovable work, it qualifies for VAT purposes as a transaction assimilated with ‘immovable work’ since the charging point can be considered an element of the electric installation of a building. The installation of the charging station is generally subject to the standard VAT rate of 21% (e.g. installation at business premises, along public roads and parkings). In certain cases, however, the reduced VAT rate of 6% may apply (e.g. charging station installed in a private dwelling in use for more than 10 years).
As to the deductibility of input VAT, a distinction is made between charging stations installed at the business premises (i.e. business charging station) and those installed at the private dwelling of an employee (i.e. home charging station). A business charging station is considered to be part of the electric installation of the business and the right to deduct input VAT is determined according to the general rules (the VAT deduction limitation for car costs does not apply). A home charging station which is arranged by an employer for the employee, is not part of the electric installation of the business and the VAT deduction depends on the fact whether the charging station is made available to the employee for free (VAT deduction according to the business use of the car) or for consideration (100% VAT deduction, VAT is calculated on the normal value).
Charging of electric vehicles
The charging of an electric vehicle qualifies as a supply of a good (i.e. electricity) and is subject to the standard VAT rate of 21%. For VAT purposes, this supply is treated as “fuel costs”.
The charging typically involves also services rendered by an e-mobility service provider (‘eMP’) and charge point operator (‘CPO’). For VAT purposes, a distinction is made between charging at (semi-)public charging stations / business charging stations (VAT deduction according to the business use of the car with a maximum of 50%) and charging at a home charging station. In the latter case, the VAT implications depend on the contractual arrangements between the employer, employee and the eMP, each with their own VAT treatment as elaborated on further in the new VAT Circular.
How can KPMG help you?
The new VAT Circular provides useful guidance on the VAT aspects of charging stations and the charging of electric vehicles. Whether this guidance provides satisfactory answers to all real-life situations, is questionable and yet to be proven by practice. At this point, we advise you to assess the implications of both the income tax incentives and the new VAT Circular for existing or future car policies or flex reward plans. This assessment should involve the financial ramifications as well as the VAT (and excise) compliance aspects. If you have any questions in this regard, feel free to reach out to us. We are delighted to respond to your queries and can also support you with our multidisciplinary teams.