Solar modules in the EU could be subject to lower value added tax (VAT) rates after an agreement was reached on the 8th December by finance ministers across the block.
The European Council agreed to update the rules on VAT rates to bring the tax’s rules in line with EU priorities such as fighting climate crisis.
Following consultations between EU member states, they have decided to widen the list of goods and services that can benefit from reduced VAT rates to include, among other things, solar panels installed on private homes and public buildings.
“This is an early Christmas gift from the Council” Walburga Hemetsberger, CEO of trade association SolarPower Europe (SPE), said in a statement to PV Tech.
“As many Europeans suffer from the latest gas-driven hike in energy prices, the reduced VAT rates for solar will soon make it even more affordable for European households and businesses to invest in solar and access clean and cheap energy.”
Under the new rules, EU member states will continue to apply the standard rate of VAT above 15%. However, they will now have the possibility to apply two reduced rates as low as 5% to goods and services in 24 categories.
The council has agreed to phase out reduced VAT rates or exemptions on fossil fuels and other goods with similar impact on greenhouse gas emissions by 2030.
According to the European Commission (EC), current EU VAT rules are almost 30 years old and were in urgent need of modernisation.
The updated rules will be sent to the European Parliament for its consultation by March 2022.
The MREF calls for VAT on PV installs to be reduced immediately
The Micro-Renewable Energy Federation (MREF) calls for the immediate implementation in Ireland of a decision agreed by EU Finance ministers to reduce rates of VAT on solar PV Panels.
MREF chairman, Pat Smith said that, under new EU rules, member states now have the scope to apply reduced rates of VAT as low as 5% on Solar PV equipment. This would be a major reduction in the VAT rate of 13.5% that applies to Solar PV installation on homes and would represent a clear statement of intent by government of their commitments to drive the transition to renewable and more sustainable energy sources for homes and businesses.
Mr. Smith said that this is a significant EU-led development that must be introduced without delay in Ireland. He said that MREF has written directly to Minister Eamon Ryan urging him to act and implement this decision immediately.
Mr. Smith also confirmed that MREF has also asked Minister Ryan to review grant rates applying to domestic installation of solar PV technology as costs are facing significant inflationary pressure. He said lower VAT rates would be a major support in addressing this reality and a significant boost to homeowners and the micro-generation section in 2022.
Scully, J (2021) ‘Solar Modules set to benefit from reduced VAT rates in EU’. PV Tech. Read full article here: https://www.pv-tech.org/solar-modules-set-to-benefit-from-reduced-vat-rates-in-eu/ Date accessed: 18/01/22