New options for income tax
Operators of small solar plants can apply for tax exemption
In the result, all income from photovoltaic systems and mini combined heat and power plants had to be declared for income tax purposes.
After the Bundesrat demanded tax relief for small plants on or in private houses, the Federal Ministry of Finance reacted in summer 2021 and created a new wide range of regulations for such small plants.
To which installations do the regulations apply?
The plants must meet the following requirements:
- The plant was put into operation after March 31, 2003.
- It is a photovoltaic plant with an output of up to 10 kW/kWp or a comparable combined heat and power plant with an output of 2.5 kW.
- The generated electricity is used for one’s own private residential purposes or fed into the public power grid. The tax advantage is not jeopardized if the electricity is also consumed in the home office or if the rental income from rented rooms does not exceed Euro 520.00 in a calendar year; an unpaid letting out of living space is also not tax-detrimental. The same applies to mixed-use buildings (private residential purpose/own or third-party business purpose) if the use of electricity for the rooms or parts of the building used for business purposes is technically excluded.
- There are special features for uniform commercial operations (operation of several plants) and the treatment in the case of spouses (e.g. each operates a plant).
We will be happy to advise you individually if you operate several systems or if you have a special ownership structure as in the case of spouses. Even if your photovoltaic or combined heat and power plant exceeds the above-mentioned limits, we will be happy to assist you by pointing out your options because in all events, regardless of the size of the plant, it is up to you to prove and credibly demonstrate a lack of profit-making intent to the tax office in individual cases. Especially in the case of new modern plants that are only slightly above the limits, this can be quite expedient.
To which types of property do the regulations apply?
The regulations now apply to owner-occupied or rented out
- single-family and two-family house properties (also e.g. garages)
- apartment buildings;
- facilities owned by a tenant (i.e. not the property owner).
What to do?
As before, you must submit an application to your local tax office. Incidentally, claiming the new concession regulation does not lead to a denial of the input tax deduction under VAT law, i.e. it does not necessarily result in a small business regulation.
In the case of new systems, we recommend notifying the tax office informally about the commissioning of your photovoltaic system or combined heat and power plant prior to commissioning. Some tax offices have forms available that you can use for this purpose.
In the case of plants which have been put into operation you can make an application by sending a simple and informal letter.
The most recent BMF letter in this context contains the following application deadlines:
- For new plants (= commissioning after 31.12.2021), the application must be submitted by the end of the assessment period following the year of commissioning.
- For old installations (= commissioning before 31.12.2021), the application must be submitted by 31.12.2022.
- If the tax assessment notice for the assessment period 2020 has already been issued but has not yet become legally effective, the application can still be submitted with effect for 2020.
- If the tax assessment notice for the 2020 assessment period has already become final, the application can only be filed with effect from the 2021 assessment year. For 2020, the only remaining option is to apply for the granting of factual equity measures, but it remains to be seen whether this will be successful.
The new regulations are intended to reduce bureaucracy, promote the energy turnaround and protect the climate.
We will be happy to advise you individually on tax issues relating to your photovoltaic or combined heat and power plant.
Our tax consultant, Mr. Andreas Fenners, will be happy to answer all your questions regarding the new possibilities.