Differences in value added tax (VAT) are a critical barrier to cross-border trade in electricity and gas. This is the reason why the Energy Community Secretariat with the assistance of DG TAXUD, European Commission, initiated efforts to synchronise VAT regimes across the Contracting Parties. The basis for this work is the EU VAT Directive. Its full implementation is also a precondition for market coupling, starting with the first projects between Bulgaria and North Macedonia and 4 MMC with Serbia. A platform of VAT experts, primarily consisting of representatives of Ministries of Finance, was created to lead this process.
At the third meeting of this group on 29 October in Vienna, the participants presented the current status of harmonization of their national VAT regimes in the energy sector and agreed on a work plan. The biggest unresolved issues were identified, including the taxation regimes for the status of trading at power exchanges and market coupling, provision of balancing services and regional balancing, common capacity allocation procedure, inter-TSO compensation and access of eligible customers to a foreign supplier.
According to the work plan, consultants will propose the way forward on applying EU VAT best practices for core transactions in the electricity market at the next VAT workshop in March 2020. For specific transactions such as the sale of electricity at zero price / at negative prices / in kind payment, net metering for home installations and treatment of prosumers, relations in energy communities, flexibility services and emission trading and green certificates, the Secretariat will publish Policy Guidelines to assist the Contracting Parties.