EU rules household PV systems exempt from VAT


The European Court of Justice has ruled installers of household PV systems can reclaim any VAT paid when purchasing such installations, even if they make a loss on energy fed back into the grid.

The ruling was announced from the Court of Justice in Luxembourg on Thursday after an Austrian householder appealed against his local tax office’s ruling that he could not reclaim the VAT paid on his PV system.

Mr Fuchs, from the Linz district of Austria, had his system installed in 2005 and supplies solar energy to Ökostrom Solarpartner on a monthly basis.

In common with many domestic PV systems, the energy generated is less than that required for all Mr Fuchs’ household needs and the homeowner therefore pays more each month for electricity than he receives in payments from the same company.

When Mr Fuchs asked his local tax office, the Freistadt Rohrbach Urfahr finanzamt, to refund the VAT he paid on the system, the request was refused on the basis the applicant was not engaged in ‘economic activity’ and therefore not at risk of being taxed twice.

Mr Fuchs appealed to the Independent Finance Tribunal of Linz on the basis that, even though he made a loss every month, the regular supply of energy to Ökostrom Solarpartner, and consequent remuneration, amounted to economic activity and therefore he was not liable to pay VAT on the materials used.

The Linz office upheld the appeal and sought guidance from the EU Court of Justice which has delivered a verdict which will reduce the cost of installations intended to feed back into national grids on a regular basis, regardless of the amount of energy generated.