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Green energy initiatives: Indirect tax implications of electric vehicle charging

Indirect tax implications of EV charging

Continued business investment in green energy incentives in the power and utilities sector, we outline areas of concern causing indirect tax implications.

Claire Angell

Partner, Head of Energy Tax

KPMG in the UK


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We are seeing businesses in the power and utilities sector increasingly invest in and diversify to green energy initiatives – for example, the charging of electric vehicles.

But with stagnant VAT legislation and under-developed VAT case law in relation to new technologies, complexities and uncertainties arise as to how to treat these supplies for indirect tax purposes throughout the supply chain – for electric vehicle charging, this is true from the utilities provider, all the way through to the end consumer.

Such complexities and uncertainties include:

  • The nature of the supply throughout the transaction chain (i.e. a supply of electricity, or a supply of ‘charging services’);
  • The potential application of the domestic reverse charge throughout the supply chain, until the supply to the end customer, and the practical difficulties arising as a result (e.g. systems’ setup and capabilities);
  • The VAT treatment applicable to the supply to the end customer (e.g. is it possible to apply VAT at the reduced rate of 5%?); and
  • The interaction with the Climate Change Levy, understanding whether this is due (which would be a sticking cost), and ensuring that this is correctly accounted for, both in terms of value and the responsible party in the chain.

The issues identified present significant challenges, and there is a need for clarity, particularly as unwinding any incorrect or challenged VAT treatment could be a lengthy and complicated process, giving rise to further difficulties, e.g. reputational damage and/or a competitive disadvantage.

Furthermore, it is clear that these challenges have a wider impact, affecting the charge point operators, utilities companies and retailers who have installed charging points in their carparks (or who may consider doing so in future).


In light of the above, KPMG is establishing a Working Group for businesses involved in the activity of charging electric vehicles in various different capacities – e.g. charge point operators, utilities companies, and businesses who have installed charging points in their carparks (or who may consider doing so in future).

The Working Group will discuss the position with HMRC. If you would like further information and to join the KPMG Working Group please contact Clare Roche.

The objective of setting up this Working Group is to bring together a wider group of impacted (or potentially impacted) businesses to:

  • Identify and understand all of the potential issues across the supply chain;
  • Develop proposed resolutions to these issues; and
  • Ultimately, engagement with HMRC to seek agreement on these points.

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