New regulation for small systems through the Annual Tax Act 2022 The annual tax law aims to simplify the taxation of smaller photovoltaic systems. An exemption from income tax is to be introduced for income and withdrawals from the operation of small plants. This replaces the previous right, regulated by the BMF letter, to apply for treatment as a hobby. Losses from such an investment can then no longer be claimed. A “zero tax rate” should apply to sales tax for the delivery, intra-community acquisition, import and installation of small photovoltaic systems and electricity storage systems. The input tax deduction for the supplying companies remains. Further relief, for example for corporations with the extended reduction or for cooperatives, is not planned.

income tax According to the draft Annual Tax Act 2022 passed by the Federal Cabinet on September 14, 2022, a tax exemption for income and withdrawals in connection with the operation of photovoltaic systems is to be introduced (Section 3 No. 72 EStG-E). The tax exemption should apply to income and withdrawals that are generated or made after December 31, 2022 – regardless of when the system was put into operation. The exemption should apply to existing photovoltaic systems on, at or in single-family houses (including outbuildings) with an installed capacity of up to 30kW (peak) on, at or in non-residential buildings with an installed gross output of up to 30kW(peak) on, at or in other buildings used primarily for residential purposes with an installed capacity of up to 15kW (peak) per residential or commercial unit, a maximum of 100 kW (peak) in total per taxpayer or partnership.

The “installed gross capacity according to the market master data register” is used as the installed capacity. The tax exemption applies regardless of how the electricity generated is used. This means that income from systems whose generated electricity is fed completely into the public grid, is used to charge a private or business electric car or is used by the tenant is tax-free. The tax exemption also applies to photovoltaic systems on apartment buildings and mixed-use buildings with residential and commercial units, with predominant use for residential purposes up to a size of 15 kW (peak) per residential and commercial unit. This also favors the operation of photovoltaic systems by private landlords, homeowners’ associations, cooperatives and rental companies.

In the case of asset-managing partnerships, the operation of photovoltaic systems that do not exceed the preferential system sizes does not lead to a commercial infection of the rental income. This means that in the future, asset-managing partnerships can also install photovoltaic systems of up to 15 kW (peak) per residential and commercial unit (max. 100 kW (peak)) on their rental properties and supply their tenants with self-produced electricity without having to fear any tax disadvantages Income and withdrawals from such systems are tax-free, no tax losses can be claimed.In addition, income tax assistance associations should also be allowed to advise their members on income tax in the future if they operate photovoltaic systems with an installed capacity of up to 30kW (peak), which subject to the income tax exemption mentioned above.

value added tax Annual Tax Law 2022 The Annual Tax Act 2022 aims to reduce the sales tax rate for the purchase and installation of small photovoltaic systems to zero. Since it is not a tax exemption, the input tax deduction of the companies that supply and install the system remains intact. This will make the installation of such systems cheaper. Since there will no longer be any input taxes that the operator wants to deduct from his sales tax, small businesses within the meaning of of Section 19 (1) UStG will make it unnecessary in future to waive the application of this regulation. Right from the start, you no longer need to submit any sales tax returns and you no longer have to pay tax on the income and the value of private consumption. The regulation would therefore represent a significant simplification for the operators of small plants. The fact that there is no option to deduct input tax is not a disadvantage because the acquisition costs will be correspondingly lower.

According to the new § 12 para. 3 UStG-E, the tax is reduced to 0 percent for the following sales: The delivery of solar modules to the operator of a photovoltaic system, of the essential components for the operation of a photovoltaic system Memory that serve the with the solar panels

Source: IVD