VAT policy for solar power generation

Why did the government remove VAT on solar panels?

The government has scrapped VAT on solar panels to encourage the installation of renewable energy generation. This move aims to help lower people's bills during the cost of living crisis and support the country in meeting its net zero emissions commitment. What difference will the tax cut make?

Why is France introducing a VAT reduction for photovoltaic systems?

In a significant move to promote renewable energy, the French government has approved a VAT reduction for photovoltaic systems up to 9 kW to 5.5%. This change marks a key shift towards larger-scale residential PV installations and supports the industry's growth.

What is the VAT rate on solar panels?

The 0% VAT rate on solar panels will last until the 1st of April 2027. After that, VAT on solar panels will increase to 5% – meaning it won't go back to the 20% rate. You won't need to meet the pre-April 2022 criteria to qualify for the reduced rate either. The 5% VAT rate will apply to solar panels being installed on any residential property.

Will VAT be reduced on solar panels in 2022?

The European Union (EU) also updated its VAT regulations in April 2022, and now allows its member states to cut VAT on solar panels, and reduce VAT to as low as 5% on other energy-saving products, such as heat pumps. Since then, a few EU countries have taken advantage of the new regulations.