Solar Power Systems – A Tax Guide for Business Owners

Solar Power

Systems – A Tax Guide for Business Owners

Solar energy is sustainable and good for the environment. However, a solar power system can also offer financial benefits. In addition to using the solar energy for personal consumption, it is possible to feed excess power into the public grid. This is, of course, compensated and can therefore be economically attractive. A well-planned photovoltaic system can thus be considered an “investment opportunity” for business owners. The applicable feed-in tariff is based on the Renewable Energy Sources Act (EEG). If you, as a business owner, are considering purchasing a photovoltaic system, you should also consider and plan for tax implications beforehand. As your tax advisor in Düsseldorf

and Oberhausen,

we have summarized the most important tax considerations regarding photovoltaic systems.

Tax Framework – Clarification Is Needed

Unfortunately, it is not uncommon for business owners to give little thought to the tax implications a photovoltaic system may have. By installing and using such a system, one can quickly end up generating energy for commercial purposes without realizing it. The tax status as a business operator has a wide range of tax implications and should therefore be considered in advance. To avoid any tax disadvantages, a tax advisor should be consulted early on. There is often a great need for clarification!

Only with a professional tax advisor can “mistakes” be avoided. Our team in Düsseldorf and Oberhausen is therefore your point of contact for photovoltaic systems and taxes. In this article, we would like to examine the basic tax aspects of a solar system. It is important to note that this is general information and cannot replace an individual consultation.

Income Tax

If the photovoltaic system generates income, this is generally considered business income. Due to tax exemptions for small- to medium-sized systems, business tax is usually not owed. The typical useful life of a photovoltaic system is approximately 20 years. Acquisition costs can therefore be depreciated on a straight-line basis over 20 years. In the year of acquisition and the four following years, a special depreciation of 20% in total is possible.

If you, as a business owner, claim an investment deduction, you can claim up to 40% of the acquisition costs as business expenses. Expenses for ongoing maintenance or repairs are also deductible.

In general, profit can be determined using a simple net income calculation. Complex bookkeeping and financial reporting are therefore not necessary. The situation may differ for business owners if the photovoltaic system is part of an existing commercial operation.

Sales Tax

Many system operators are considered small business owners and therefore enjoy VAT benefits. Small business owners hardly have to deal with VAT at all. Entrepreneurs who wish to operate a photovoltaic system in addition to their regular business are generally not considered small business owners. The specific aspects of sales tax must therefore always be clarified on a case-by-case basis.

Although feed-in tariffs are subject to sales tax, they do not result in any burden for system operators. The grid operator that purchases your electricity covers the sales tax. For the self-consumption of solar energy, a tax-free transfer of value is subject to taxation.

Real Estate Transfer Tax

When buying or selling a building with a solar system, the purchase price of the system is usually not subject to real estate transfer tax. The prerequisite for this is that the system is not used solely for personal consumption, but actually feeds energy into the public power grid. Only under these conditions is the photovoltaic system considered a business asset and is therefore not subject to real estate transfer tax.

Important Websites

We cannot cover all the important information in this article. As mentioned earlier, a detailed consultation is therefore essential. If you would like to research the topic further on your own, we have compiled the most important websites on photovoltaic systems for business owners.

1. Legal

• clearingstelle-eeg.de
• energieverbraucher.de

2. Subsidies

• kfw.de
• solarfoederung.de
• energiefoerderung.info

3. Government Agencies and Associations

• “Federal Ministry for Economic Affairs and Energy”: www.bmwi.de and www.erneuerbare-energien.de
• “Federal Network Agency”: www.bundesnetzagentur.de
• German Solar Industry Association: www.solarwirtschaft.de
• German Renewable Energy Federation: www.bee-ev.de
• German Solar Energy Society: www.dgs.de
• Federation of Energy Consumers: www.energieverbraucher.de

Any questions? We’re your tax advisors!

The tax implications of a photovoltaic system can seem confusing and complicated. Fortunately, our tax advisors in Düsseldorf and Oberhausen are here to help you with any questions and provide you with detailed advice. We look forward to welcoming you to a consultation in Düsseldorf or Oberhausen. Contact us today!