Clarifications on the reduced VAT rate for photovoltaic panels

We remind you that, by Law 39/2023, starting from January 2023, the supply and installation of photovoltaic panels, solar thermal panels and other efficient heating systems are operations to which a reduced VAT rate applies, if they are intended for housing or public authority buildings.

Thus, the value added tax on photovoltaic panels and heat pumps for private consumers has been reduced to 5%. It should be noted that the tax relief is not available to companies using these installations.

However, as the law containing the measure was not detailed enough to be implemented correctly in practice, the parliamentarians came up with a new law with additional clarifications, which will apply from 14 July 2023.

Therefore, in the Official Gazette (Part I) no. 633 of 11 July 2023, Law 216/2023 was published to amend and supplement Law no. 227/2015 on the Tax Code, applicable as of 14 July 2023.

 

According to the new regulations, the following changes occur:

 

  • heat pumps are included in the list of equipment, which until now were not expressly included in this facility (they were, in theory, covered by the original intention of the parliamentarians, but the language used did not cover them concretely);
  • reference is made to the necessary components purchased separately, which was not specified until now (the idea of “complete solutions” is dropped, which was not defined anywhere in the legislation and made it very difficult to apply the measure);
  • the supply and/or installation of components for the repair and/or extension of the systems in question, as well as the supply of these systems as a component part of the supply of construction (including the supply and installation of the systems as an extra option when supplying a construction), are included in the 5% VAT list;
  • special clarifications appear for certain terms – in particular, it is separately detailed what is meant by “high efficiency”, “installation kits”, “necessary components purchased separately” and “dwellings” (in the case of dwellings, it is explained that dwellings and condominiums are covered, regardless of whether they are owned by natural or legal persons);
  • high efficiency – seasonal energy efficiency class for space heating of minimum B, as defined in Annex II of the Delegated Regulation (EU) No . 811/2013 of 18 February 2013 supplementing Directive 2010/30/EU of the European Parliament and of the Council with regard to energy labelling of space heating installations, dual-function heating installations, space heating installation, temperature controller and solar device packages and space heating installation, temperature controller and solar device packages.