It is understood that from 2023, Germany will exempt income tax and corresponding value-added tax for rooftop photovoltaics that meet the conditions.
The "conditions" here include:
1. Anyone running a photovoltaic system of no more than 30 kW on a single-family residence or commercial property will no longer be required to pay income tax on the electricity generated.
2. Multi-family conjoined houses and mixed-use property system providers with photovoltaic systems not exceeding 15KW will be exempt from income tax.
3. The purchase, import and installation of photovoltaic systems and energy storage systems will no longer be subject to value-added tax (VAT).
Interpretation of income tax:
At a time when the European energy crisis is intensifying, especially in the face of a new round of "suffocation" caused by the Russian-Ukrainian conflict and the upcoming winter, energy shortages will become a reality that Europe will soon face. Previously, due to energy shortages, the theft of photovoltaics in Europe intensified. According to German media reports, around the end of August alone, there were many reports of theft of photovoltaic products in Germany.
To keep its citizens from shivering in the cold wind, the German government continues to tackle the growing energy crisis by implementing a policy to support small distributed photovoltaics, a measure approved in its 2022 annual tax bill. Below 30 kilowatts, it is the installed capacity of general household photovoltaic systems and small industrial and commercial photovoltaic systems; and 15KW conjoined houses can be understood as apartment buildings.
Interpretation of VAT:
The VAT exemption measures for photovoltaic systems and energy storage systems proposed by the German government will constitute a major benefit for the installation of photovoltaics in private houses, apartments and public buildings. This policy does not apply to enterprises, because similar to China, VAT is often applied to enterprises similar to "general taxpayers". For private and public organizations, VAT cannot be deducted from "subsequent business" activities. .
Some operators need to offset VAT through special channels, including the Small Business Entrepreneur Regulation, and the current VAT exemption can greatly reduce the cost of photovoltaic and energy storage installations in private homes and public buildings.
In approving the regulation, the federal government also took advantage of the leeway provided by the new EU VAT Directive. Facilities that meet the above conditions also allow the Income Tax Aid Society to advise its members on income tax matters, something that was prohibited by previous fiscal legislation and may be seen as helping taxpayers to "reasonably avoid tax".
The fourth quarter may break out again
According to previous analysis, European PV modules imported from January to August are expected to exceed 60GW, which has greatly exceeded the industry expectation of 39GW of new installed capacity in Europe in 2022 (corresponding to 45-50GW modules). In the first half of the year, Germany added 3.217GW of installed capacity, an increase of only 18% year-on-year, far behind China, India, the Netherlands, Poland and other countries.
Under the influence of a new round of tax-free policies in Germany, the fourth quarter of this year may usher in a wave of installed capacity. If the rest of Europe follows this policy, Europe may not be importing enough components for installed capacity.
It is reported that the new German government aims to increase the total installed solar capacity from 59 GW by the end of 2021 to 200 GW by 2030, with the German states of North Rhine-Westphalia (NRW) and Baden-Württemberg. The states are the first two in Germany to make solar PV mandatory for certain construction projects.