Situation:
A company purchases for sale and installation solar panels and heat pumps. What is the VAT tax treatment for the supply and installation of solar panels/heat pumps?
Solution:
We remind you that according to Law 39/2023, the reduced VAT rate (5%) applies to:
,,the supply and installation of photovoltaic panels, solar thermal panels, low emission high efficiency heating systems that fall within the reference values for PM emissions set out in Annex V to Commission Regulation (EU) 2015/1.189 of 28 April 2015 implementing Directive 2009/125/EC of the European Parliament and of the Council with regard to ecodesign requirements for solid fuel boilers and in Annex V to Regulation (EU) 2015/1. 185 of 24 April 2015 implementing Directive 2009/125/EC of the European Parliament and of the Council with regard to ecodesign requirements for solid fuel-fired space heating appliances and which have been awarded a European Union energy label for demonstrating compliance with the criterion referred to in Article 7(2) of Regulation (EU) 2017/1. 369 of the European Parliament and of the Council of 4 July 2017 establishing a framework for energy labelling and repealing Directive 2010/30/EU, intended for residential housing, including installation kits, components and complete solutions, respectively”.
According to point 23 of the Methodological Norms given in application of Article 280 of the Tax Code, in order to determine the tax regime applicable to taxable operations, as provided for in Article 280 paragraph (4) of the Tax Code, the following must be determined:
a) the nature of the transaction, i.e. whether it is a supply of goods or a supply of services;
b) if the supplier makes more than one supply to his customer under the same contract or transaction, it must be determined whether there is a main transaction and other ancillary transactions or whether each transaction can be considered independent. A delivery/supply is to be regarded as ancillary to a main delivery/supply if it does not constitute for the customer an end in itself, but a means of benefiting in the best way from the main delivery/supply made by the supplier/supplier. Ancillary transactions benefit from the tax treatment of the principal transaction with regard, inter alia, to the place of supply, rates, exemptions, as well as the supply to which they relate. In this respect, the European Court of Justice also ruled in Case C-349/96 Card Protection Plan and in Case C-463/16 Stadion Amsterdam CV;
c) Where the supplier makes several deliveries/supplies to his customer under the same contract or in the same transaction, and it is not possible to determine one main transaction and other ancillary transactions, each of which constitutes for the customer an end in itself, but which are so interrelated that they cannot be treated as independent transactions, a single complex transaction is deemed to be carried out”.
Thus, if only the components for photovoltaic panels are sold, without the photovoltaic panel, the reduced rate of VAT cannot be applied because the sale of these components is a distinct operation from the operation for which the legislator has provided for the reduced rate (supply and installation of photovoltaic panels, including installation kits, components and complete solutions, as appropriate).
In this situation, there is no main operation (supply and installation of the photovoltaic panel) so that the supply of components can be considered as an ancillary operation and benefit from the same VAT rate (5%).
As regards the supply of heat pumps, the reduced VAT rate also applies to low emission high efficiency heating systems that fall within the reference values for PM emissions set out in Annex V to Commission Regulation (EU) 2015/1.189 of 28 April 2015 implementing Directive 2009/125/EC
In view of this, a specialist study (technical field) should be carried out to clarify whether it falls within the requirements of the above Regulation.
Legal basis:
– Law 39/2023 for the completion of Article 291 paragraph (3) of Law No. 227/2015 on the Fiscal Code;
– Tax Code (approved by Law no. 227/2015, published in the Official Gazette no. 688 of 10.09.2015), as amended and supplemented;
– Methodological Norms for the application of the Tax Code (approved by Government Decision no. 1/2016).