Germany slashes VAT for residential PV to 0%

From pv magazine Germany

The German parliament debates an annual tax law at the end of every year, in order to pass new rules for the 12 months ahead. The 2022 annual tax law, which the Bundestag approved last week, includes a comprehensive change in the tax treatment of PV systems for the first time.

The new rules will resolve some key problems for small PV systems and will eliminate some bureaucratic requirements. The legislative package contains two important changes for photovoltaics. The first measure will slash the VAT to 0% for residential PV systems up to 30 kW in size. The second measure will provide tax exemptions to operators of small PV systems.

The new 0% VAT rate for PV systems has been made possible by a new regulation in the European VAT Directive, and Germany is now a pioneer in its application. Formally, it is not a VAT exemption on the sale of a PV system, but the supplier or installer bills the customer for the net price, “plus 0% VAT.”

The zero rate of VAT will be applied to the supply and installation of PV systems with the necessary accessories. It will also apply to storage systems in residential buildings, public buildings, and buildings used for public utility activities. There are no limits for the size of the storage systems.

The income tax exemption will be applied to income from the operation of PV systems up to 30 kW in size for single-family homes and other buildings. In the case of multi-family homes, the size limit will be set at 15 kW per residential and commercial unit and 100 kW per multi-family home.