Several European countries have adjusted VAT for residential solar


Recently, the Irish government announced that the value-added tax (VAT) on household photovoltaic modules will be reduced from 13.5% to 0%, taking the 3KW system for example, which will save homeowners about 1,000 euros. The new tax policy (0%) will take effect from 1 May 2023.


Also this year, the German government cut the VAT on household PV systems from 21% to 0%, which is part of the 2023 tax plan, and German household PV owners can also enjoy a "net metering" policy. In December 2022, the German parliament approved a new rooftop photovoltaic tax cut, with the first action to cut the Value-added tax on residential photovoltaic systems of up to 30kW to 0%, and the second action to provide tax-free treatment for small photovoltaic system operators.


Starting from 1 April 2022, the UK government announced that they would reduce VAT on heat pumps and solar modules used in residential applications from 5% to 0%, the zero tax rate will last for five years and then to a VAT deduction rate of 5%.


In January 2023, the Romanian Parliament passed a discount on the VAT for residential properties and public buildings from 19% to 5%, combined with a net metering policy for these systems from 2022, to help the country's Casa Verde Fotovoltaice (Green Photovoltaic Home) plan to support rooftop PV deployment.


The efforts of European countries for tax reduction and and exemption for household photovoltaic systems was driven by a proposal from the European Council at the end of 2021. The proposal changed the EU's rules on VAT rates to give member states more flexibility to include photovoltaic modules for homes and applications in the "public interest" in a list of goods and services that can be subject to 0% -5% VAT.

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