In light of the increasing adoption of renewable energy sources, solar power has become a popular choice for many households and businesses. This guide aims to provide an understanding of the VAT treatment for the supply and installation of solar panels in various scenarios, including private dwellings, commercial buildings, and mixed-use buildings as clarified by a Revenue’s guidance.
VAT Treatment for Solar Panels in Private Dwellings
From May 1, 2023, the zero rate will apply to the supply and installation of solar panels on or adjacent to immovable goods, including private dwellings. This marks a shift from the previous reduced rate, which applied only when the solar panels did not exceed two-thirds of the total value of the supply.
Solar panels encompass photovoltaic panels, solar windows, and solar walls. Private dwellings include houses, apartments, duplexes, and other types of residential properties such as caravans and mobile homes that are attached to the ground in a way that effectively makes them immobilised.
The zero rate will not apply to buildings that are not private dwellings, such as commercial or industrial buildings, public buildings, retail shops, farm buildings, hotels, B&Bs, guest houses used for short-term accommodation, or holiday homes used for short-term accommodation.
For the zero rate to apply, the supply of the solar panels and their installation must be the responsibility of the same business in the same supply (i.e., a supply and install contract).
VAT Treatment for Solar Panels in Commercial and Other Buildings
When solar panels are supplied as part of a “supply and install” contract in relation to commercial and other buildings (not being private dwellings), the supply may be subject to the reduced rate (subject to the two-thirds rule).
VAT Treatment for Solar Panels in Mixed-Use Buildings
Solar panels supplied and installed on or adjacent to buildings used for both private dwelling and business purposes, such as B&Bs, can avail of the zero rate where the supply and install contract specifies that the solar panels are to be used fully or partially for the private residential part of the building. In cases of partial use, the consideration must be apportioned between the relevant rates.
VAT Treatment for Solar Panels in Farm Buildings
The zero rate applies when solar panels are supplied and installed on or adjacent to a private dwelling on a farm. When solar panels are supplied and installed on farm buildings (not private dwellings), the reduced rate may apply.
VAT Refund for Flat Rate Farmers
Flat rate farmers can reclaim VAT paid by them in relation to the construction, erection, or installation of qualifying equipment for the purpose of micro-generation of electricity for use solely or mainly for the purposes of a farming business.
Qualifying equipment includes photovoltaic systems and ancillary equipment to photovoltaic systems required to store electricity or connect to the grid. The equipment must be named on the Triple E Product Register. Further information on how to reclaim the VAT is available on the Revenue website.
Understanding the VAT treatment for the supply and installation of solar panels is essential for homeowners, businesses, and contractors alike. We hope this comprehensive guide serves as a valuable resource for navigating the VAT implications in various scenarios, helping to make informed decisions when it comes to solar panel adoption.
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