Have you thought about installing a photovoltaic (PV) system on the roof of your house in the past? Then the changes in the law as of January 1, 2023 should inspire your project. Because from now on, it could increasingly pay off to produce your own electricity. What changes specifically:
Anyone who has a PV system installed on, on or near their own home from January 1, 2023 will not pay sales tax on the delivery, purchase and installation, according to Corinna Kodim from the House Owners' Association
So far, homeowners have only been able to have the VAT paid on purchase refunded if they have waived their tax exemption for small businesses, writes the magazine “Finanztest” (11/2022 issue). Because this entailed considerable bureaucracy and sales tax had to be paid for the self-generated electricity, many of those affected decided not to do so.
According to “Finanztest”, a “welcome side effect” of the simplified regulations is that so far wage tax aid associations have not been allowed to advise employees who generate solar power themselves. That is now changing.
According to the Federal Ministry of Finance, the replacement of defective PV system components and the expansion of existing modules also fall under the tax exemption. Likewise, the purchase of a so-called balcony power plant. However, as before, 19 percent sales tax applies to repairs without the simultaneous delivery of spare parts.
It remains to be seen whether the acquisition and installation costs of the systems will fall as a result in the coming year. In an extensive list of questions and answers, the Federal Ministry of Finance points out that retailers and manufacturers are required to pass on the sales tax exemption to customers. However, they are not obliged to do so.
Anyone who feeds in their PV electricity, or at least parts of it, will not have to pay tax on the resulting income. The tax exemption applies to PV systems on single-family houses and commercial properties up to a gross nominal output of 30 kW. In multi-family houses or mixed-use properties, the gross nominal power of the PV unit may not exceed 15 kW per residential and commercial unit.
The date of commissioning is irrelevant for the tax exemption, says a spokeswoman for the Federal Ministry of Finance. It also applies to existing systems. And more importantly, the tax exemption is even granted retrospectively for all PV income generated after December 31, 2021.
But be careful: Despite the tax exemption, PV system operators who feed electricity into the grid are obliged to register with the responsible tax office. In terms of the Value Added Tax Act, they continue to be regarded as entrepreneurs.
For all systems that are commissioned or have already been commissioned between July 30, 2022 and January 31, 2024, new, higher remuneration rates for the solar power fed into the grid apply. They apply to the year of commissioning and the 20 following years. Also new: There are now two different tariffs.
Self-consumption model: If you decide to use the generated solar power yourself and only feed the surplus into the public grid, you get up to 8.2 cents per kilowatt hour (kWh) according to “Finanztest” – 25 percent more than before.
Full feed-in model: Anyone who feeds all of the electricity they generate into the public grid even gets up to 13 cents per kWh. However, those who feed in electricity fully do not save a cent on their own electricity bill. If you want to benefit from the higher feed-in tariff, you have to inform your grid operator in the starting year before commissioning that all of the electricity is to be fed into the grid. According to the “Finanztest”, the notification must be available by December 1st in the following years.
Operators of PV systems do not have to stick to one model forever, but can reassess which tariff is better for them year after year. "This is important because, depending on how the electricity price develops, one or the other model can be advantageous for the same system," writes "Finanztest". In addition, self-consumption can increase over time, for example after purchasing an electric car or a heat pump.
Basically, according to the “Finanztest”, full feed-in can be worthwhile if you can only use a small part of the electricity generated yourself – for example in the case of large PV systems or low electricity requirements. If you want to calculate more precisely which model is worthwhile for your own household, you can use the photovoltaic system calculator from Stiftung Warentest.
In order to prevent possible overloading of the power grid, PV system operators were previously obliged to throttle the feed-in power of their systems up to 25 kW to either 70 percent of their nominal power or to equip them with an expensive control device.
For new systems that went into operation after September 14, 2022, this regulation has already been lifted ahead of schedule. From January 1, 2023, this so-called 70 percent rule will no longer apply to existing systems with an installed capacity of up to and including 7 kW.