VAT Implications of Converting Natural Gas to Electricity: No Deliveries Under Dutch VAT Law

• The Kennisgroep omzetbelasting addressed a question about VAT implications of converting natural gas to electricity.
• X and Y enter an agreement to convert natural gas to electricity, with X providing the gas to Y.
• Y does not pay X for the gas but receives a fixed fee and a fee per MWh of electricity generated.
• The total fee paid by X to Y is significantly lower than the usual market rate for the electricity produced.
• X retains ownership of the gas until it is converted and owns the electricity immediately after generation.
• The conversion process is the responsibility and risk of X.
• In Y’s power plant, gas is burned to convert water to steam, which drives a turbine to generate electricity.
• Both the gas and steam are consumed in the electricity generation process.
• The transfer of gas from X to Y and electricity from Y to X are not considered deliveries under article 3, first paragraph, part a, of the Wet OB 1968.

Source: taxence.nl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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