The future of mobility and tax challenges in Brazil

In a world that searches more sustainable solutions, EVs (electric vehicles) emerge as a ecological alternative It is economic. For this transition to be successful, the charging infrastructure is essential.

Electricity distribution, traditionally a monopoly activity, now faces challenges with the entry of third parties providing energy for recharging. The question is: Are we prepared for this revolution?

Billing models and Brazilian legislation

At the energy charging segment for electric vehicles, we find a variety of agents playing crucial roles.

These include energy distributors, which provide the necessary energy; charging solution providers, who develop and implement charging systems and infrastructure; automotive and logistics companies, which produce and transport electric vehicles; manufacturers of electric vehicle parts, responsible for producing essential components for these vehicles; and, finally, information technology and telecommunications companies, which provide the technological and connectivity solutions necessary for the efficient operation and management of charging stations.

There are models that charge a fixed amount per recharge, others that charge for the time the equipment is used and R$/kWh consumed.

In Brazil, ANEEL (National Electric Energy Agency), through Normative Resolution 819/2018, opened doors for third parties to enter this segment, allowing the recharging of electric vehicles by agents other than energy distribution concessionaires.

A Normative Resolution 1000/2021 revoked the Normative Resolution 819/2018 and addressed this issue in Chapter V, starting from article 550. Bao Ribeiro Advogados consultancy has been a pioneer, since 2018, in structuring business models in this emerging segment.

International tax treatment

The way countries tax EV charging varies considerably. According to Deloitte, in Belgium, recharging is treated as a supply of electricity, subject to VAT (or Value Added Tax).

In France, the vision is different, the Law No. 1,428/2019 defines charging station operators as service providers, not energy resellers.

Tax challenges in Brazil: service or sale of energy?

The big question in Brazil is “Is EV recharging a service or energy sales?”

Article 554 of Resolution 1000/2021 characterizes charging stations operated by third parties as complementary ancillary activities, which are an “unregulated activity, the provision of which is related to the use of the public electricity distribution service and which can be provided either by the distributor and by third parties”.

ANEEL, in its Technical Note 63/2018-SRD/ANEEL, suggests that it can be treated as a service. In theory, ANEEL, acting as a regulatory agency for the electricity sector, should not regulate activities carried out by third parties that do not belong to the sector.

Given that third parties may provide the charging service, the challenge lies in understanding how states and municipalities will interpret the sale of energy at charging stations.

Since energy is considered a commodity by the Federal Constitution of Brazil, its resale is a commercial transaction, therefore, ICMS would apply. But, if the top-up is seen as a service, another tax, the ISS, would be applied.

Complementary Law 116/2003, which deals with the taxation of services, indicates that top-ups may be subject to ISS charges. Despite this, the STF (Supreme Federal Court) has differences regarding the interpretation of the ISS legislation, when there are legal transactions that involve the provision of services and sales of goods.

Conclusion and future perspectives

A Electric mobility is undeniably the future. However, for this future to be bright, it is crucial that challenges, especially tax ones, are faced head on. Legislative clarity is essential to attract investment and ensure that the EV market grows robustly and sustainably.

In future articles, we will delve even deeper into these discussions, providing detailed insights and analysis to guide anyone interested in this rapidly evolving market.