VFUP3400 - Treatment of supplies of electricity and piped gas: cross-border supplies

Interconnectors

An interconnector is a means of linking energy transmission systems between different countries. The UK has links with France (electricity), Ireland (gas) and Belgium (gas). In addition, there are several interconnectors across Europe. Consequently, electricity and gas can be supplied across borders.

Movements of goods

Consideration must first be given to the place of supply of the goods. Although the supply of (piped) gas and electricity is a supply of goods, there were special place of supply rules for intra-community supplies, with the VAT treatment generally dependent on the place of consumption or where the customer belonged. For full details see VATPOSG5000: VAT place of supply of goods: gas and electricity and VAT Information Sheet 21/10: Place of supply of natural gas and electricity (also heat and cooling):.

Further guidance on cross border movements of goods can be found in:

Shipping, transmission and interconnector access charges

These are all regarded as supplies of freight transport.

The place of supply of freight transport follows the “general rule” for the place of supply of services; that is the place of supply is where the customer (who is in business) belongs. Full details can be found in VATPOSTR: VAT place of supply of transport. If the supply does not relate to imports or exports the liability will in most cases be standard-rated - full details can be found in VTRANS: transport.

The supply of interconnector capacity is treated as a supply of freight transport. This is because the operator is only concerned with moving a net quantity of energy in one direction at a time between the UK and another country.

Further guidance on freight transport services and the place of supply of services can be found in:

• Notice 744B: Freight transport;