Supply of energies at capped prices: clarification of VAT treatment
Compensation for the supply of electricity and gas at capped prices constitutes a consideration received from a third party, on which the electricity or gas suppliers must pay VAT. The Ministry of Finance expressed this opinion following the amendment to the government decree on compensation provided for the supply of electricity and gas at set prices.
In a March 2023 article, we reported on the interpretation unclarities regarding the compensation. The Ministry of Finance has now clarified this issue, stating that the compensation received shall increase the tax base. If the customer of electricity or gas is the end consumer, meaning that the original supply was carried out in the standard VAT regime, the energy supplier is obliged to pay output VAT on the total amount of the compensation received. However, they do not have to issue corrective tax documents stating the increased tax base to individual customers.
If the original energy supply was subject to the reverse charge regime, the energy supplier should quantify the specific part of the compensation relating to a specific customer and issue a corrective tax document to that customer under the reverse charge regime. However, if the energy supplier pays the output VAT on the full amount of the compensation received as if the original supply was in the standard VAT regime and does not issue a corrective tax document, the financial administration will not challenge such an approach.