The Micro-Renewable Energy Federation (MREF) has welcomed the publication of guidelines by the Revenue Commissioners on the operation of the new zero VAT rate on domestic solar PV (photovoltaic) installations.
These guidelines confirm that the zero VAT rate will be available for installations on farm homes, but not for farm buildings.
Pat Smith, the chairperson of the MREF, said: “The guidelines confirm that the new zero VAT rate will now apply to farm home installations where the solar PV is installed on the home or outhouse, so long as the system is for domestic purposes.”
The new zero VAT rate came into effect yesterday (Monday, May 1).
Revenue has also clarified that the VAT rate will continue to be applied on solar PV farm installations as before, but that this VAT is refundable as a qualifying renewable energy investment.
Revenue pointed out that, where solar panels are supplied and installed on farm buildings, the reduced VAT rate of 13.5% (as opposed to the full rate of 23%) may apply in certain circumstances.
The guidelines state that, where solar panels are supplied as part of a ‘supply and install’ contract in relation to commercial and other buildings (not private dwellings), the supply may be subject to the reduced rate, subject to the ‘two-thirds’ rule.
A ‘supply and install’ contract is where building services are provided in conjunction with the goods required for that building contract.
Where the value of the solar panels and/or other goods supplied does not exceed two-thirds of the total value of the contract, the full amount payable under the building contract will be subject to the reduced rate. Otherwise, the standard VAT rate will apply.
The Revenue guideline document also says that flat fate 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 purpose of a farming business.
Qualifying equipment includes PV systems and ancillary equipment to PV systems required to store electricity or connection to the grid.
The equipment must be named on the Triple E product register, a register of products approved as being energy efficient.