VAT Treatment of the Strom Balance Group Model Clarified by Mecklenburg-Vorpommern Directive

• The Mecklenburg-Vorpommern Finance Ministry issued, for the first time, a published administrative ruling on the VAT treatment of the “Strombilanzkreismodell” (power balance group model).
• Core rule: if an operator feeds self-generated, locally unused electricity into the public grid without compensation and later withdraws it at another own consumption site without separate payment, the administration treats neither the feed-in nor the withdrawal as a supply for VAT purposes.
• Under the model, electricity produced at one site is virtually balanced against consumption at other non-physically connected sites via a sub-balance group, while the grid operator only settles the net difference.
• The key VAT issue is whether this “grid passage” creates a taxable supply to the grid operator and a later supply back, or merely a grid-use service; this matters especially for public-law entities that cannot deduct input VAT, since extra supply transactions would create a final VAT cost.

Source: ecovis-kso.com

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.

---

---