To promote the expansion of photovoltaic systems, the Federal Ministry of Finance has included sales tax measures in the Annual Tax Act 2022. This resulted in the zero tax rate for the purchase of PV systems and accessories and the extension of the simplification regulation. We explain when and for whom the tax exemption for photovoltaics applies.
Is a PV system tax-free in 2024?
PV systems on single-family homes with a gross nominal output of up to 30 kWp have been tax-free since 2022. The tax exemption applies to both income tax and trade tax. In addition, the zero tax rate will also apply in 2024, which means that VAT will not be charged when purchasing a photovoltaic system.
Learn more about taxes on PV systems in this article.
Sales tax: When and for whom does 0 % VAT apply?
The zero tax rate generally applies to all photovoltaic systems installed on or near residential, commercial and public buildings. Accordingly, 0% VAT is charged on the purchase, delivery and installation of PV systems, including essential system components and electricity storage.
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What special cases are there?
Balcony power plants, the rental of PV systems and mobile solar modules are exempt from the zero tax rate:
- For the rental of a photovoltaic system the tax exemption does not apply. However, this depends on the contract details. If you automatically become the owner of the system at the end of the rental period, the 0% VAT applies. If taking over the system is voluntary and economically viable, it also applies. In some cases, the provider can offer the system for a symbolic price of 1 euro. It should be noted that only the rental portion for delivery and installation is tax-privileged. Services are subject to regular sales tax. The Federal Ministry of Finance has clarified this in an official letter - If 10% of the rental is declared as a service and taxed, this is recognized as a flat rate;
- mobile solar modules are typically used for camping and outdoor purposes and are not eligible for zero-rating;
- balcony power plants, also called mini solar systems or plug-in PV systems, were already exempt from VAT.
Does the VAT exemption also apply retroactively?
The zero tax rate only applies to PV systems delivered or installed after 1 January 2023. It will not be applied retroactively to existing photovoltaic systems.
The VAT refers to the period of delivery or service and not to the time of purchase, invoicing or payment. If the components were delivered in 2022 but the installation did not take place until 2023 or 2024, the exemption from VAT applies.
Is sales tax payable on personal consumption?
With the Annual Tax Act 2022, sales tax on self-consumption will no longer apply. This applies regardless of the self-consumption rate. This exemption also applies to PV systems that were purchased or accepted before January 1, 2023.
Income tax: When and for whom does the tax exemption apply?
The VAT measures included in the Annual Tax Act 2022 also provide for the exemption of income tax. In order for operators of PV systems to be exempt from income tax, they must meet certain requirements:
- For single-family homes (including outbuildings), the installed gross nominal capacity may not exceed 30 kWp according to the market data register;
- For other buildings the installed gross capacity according to the market data register must not exceed 15 kWp per residential or commercial unit;
- Overall, the PV operator may not exceed the installed gross capacity of 100 kWp according to the market data register.
All existing PV systems and their owners who meet the criteria are included in the tax relief. The date of purchase or commissioning is not important here. This means that no more depreciation is necessary. You can continue to deduct the labor costs for installing a PV system like other services on your home with a tax reduction of up to €1,200 per household per year.
Does the income tax exemption also apply retroactively?
The regulation applies to the tax year 2022 and beyond, with a distinction being made between the years up to 2021 and from 2022. There will be no changes to the tax assessments for previous years up to 2021. The changes will only apply from the tax year 2022, including for existing PV systems.
Depreciation before 2022, including investment depreciation, is still possible.
How do I apply for tax exemption for photovoltaics?
You do not need to apply for the tax exemption, it happens automatically. The zero tax rate applies automatically, so the VAT on the purchase of PV systems and accessories is already 0.%. The exemption from income tax occurs when you register with the tax office. If you meet the above conditions, you are automatically exempt from income tax.
