Last week, the German parliament approved a new tax relief scheme for roof-top solar PV, including an exemption of value-added tax for systems below 30 kilowatts. It is understood that the German parliament conducts debates on annual tax laws at the end of each year to formulate new regulations for the upcoming 12 months. The 2022 annual tax law approved by the Federal Parliament last week marked a comprehensive modification of the tax treatment of PV systems for the first time.

The new rules address critical issues for small-scale PV systems and encompass two important modifications for PV systems. The first measure is to reduce the value-added tax for residential PV systems up to 30 KW to 0%. The second measure provides tax-exempt treatment for operators of small-scale PV systems.

However, formally, this relief is not an exemption of value-added tax on the sale of PV systems, but rather suppliers or installers invoicing customers at net prices, with 0% value added tax added on.

The zero tax rate for value-added tax will apply to the supply and installation of PV systems with necessary components. It will also apply to storage systems in residential buildings, public buildings, and buildings used for public utility activities, with no limit on the scale of the storage system. Income tax exemption will apply to the operational income of PV systems for single-unit residences and other buildings, with a scale not exceeding 30 kW. For multi-unit residential buildings, the scale limit will be set at 15 kW per residence and commercial unit.

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