VAT reduction on solar panels postponed until early 2023

VAT could be reduced from 17% to 3% on photovoltaic installations, but not before the beginning of 2023. (Photo: Romain Gamba/Maison Moderne/Archives)

VAT could be reduced from 17% to 3% on photovoltaic installations, but not before the beginning of 2023. (Photo: Romain Gamba/Maison Moderne/Archives)

The government is analysing the possibility of a reduced VAT rate on photovoltaic installations, which could come into force no earlier than 1 January 2023, without retroactive application for those who would have installed panels before this date.

While a reduction in VAT on photovoltaic panels from 17% to 3% has been mooted, many customers are wondering whether they should not wait before investing in such installations, stated MP Marc GoergenMarc Goergen (Piratepartei) in a parliamentary question, in which he asks the ministers for finance and energy to elaborate on a possible date of implementation.

"The government is currently analysing the introduction of a reduced VAT rate for photovoltaic installations. If such a reduction were to be introduced, the reduced tax rate would come into force on 1 January 2023 at the earliest", replied Yuriko BackesYuriko Backes (DP) and Claude TurmesClaude Turmes (déi Gréng).

From 8,653 to 9,167 installations in one year

Regarding those who took out their contract between the time of the announcement and the implementation: "There will be no retroactive application of a lower rate, as this would entail an extremely high administrative burden," the ministers said. If a customer has already paid a deposit, calculated at the normal VAT rate, but his photovoltaic system is not delivered and installed until after 1 January, he will nevertheless benefit from the reduced rate on what remains to be paid.

The conclusion is that it is better to wait a few months to make savings. However, “the government has no indication that the number of orders has decreased [since the announcements of the upcoming VAT reduction]. We are hearing a great deal of interest from craft businesses.”

In fact, photovoltaic production almost doubled in July 2022 compared to the previous year, reaching a peak of 40.1GWh. This is due to the high level of sunshine, which reached 377 hours in July. The increase in the number of photovoltaic installations from 8,653 to 9,167 in one year also contributed to this result.

This story was first published in French on Paperjam. It has been translated and edited for Delano.