The removal of VAT for solar panels will apply to private houses only and not to farm buildings, the Department of the Environment, Climate and Communications (DECC) has confirmed to Agriland.
The VAT rate on the supply and installation of solar panels in private homes is set to be reduced from 23% to zero from May 1.
According to the DECC the measure will reduce the average cost of the supply and installation of solar panels for householders by around €1,000.
The Department of Finance has estimated that the move will cost the State around €19 million annually.
Minister for Finance Michael McGrath and Minister for the Environment, Climate and Communications, Eamon Ryan confirmed that the Cabinet has agreed this week to the change which will involve an amendment to the Finance Bill 2023.
DECC
A spokesperson for the DECC told Agriland that the announcement to abolish VAT for solar panels for private dwellings “is another significant driver in Ireland’s rooftop revolution”.
However, they clarified that this measure will not apply to the installation of solar PV on farm buildings.
“The zero rate of VAT will apply to the supply and installation of solar panels on private dwellings.
“The minister [for the environment, Eamon Ryan] will continue to work with government colleagues and stakeholders regarding all measures that facilitate greater participation of citizens, businesses, farms, and communities in Ireland’s renewable energy transition,” the spokesperson added.
Pat Smith, chair of the Micro-Renewable Energy Federation (MREF), said that the recent decision to exclude VAT on domestic solar panels should have been extended to sole traders such as farmers to help with cash flow on such investments.
“However, the existing taxation rules around renewables do allow farmers to seek a full VAT refund on any renewable energy investment, even if they’re unregistered for VAT purposes.
“Farmers that are investing in renewable technologies such as solar PV should ensure that their accountant reclaims any VAT incurred on investments made,” Smith said.
Solar panels
Under the new Targeted Agriculture Modernisation Schemes (TAMS), administered by the Department of Agriculture, Food and the Marine (DAFM), grants are provided to farmers to carry out improvements to farm buildings and equipment.
“The Solar Capital Investment Scheme (SCIS) will encourage the purchase of solar investments thereby reducing dependence on fossil energy.
“The solar scheme will be ring fenced with its own investment ceiling of €90,000 and will be grant aided at the enhanced rate of 60%,” the DECC spokesperson said.
Under the scheme, which is currently accepting applications, farmers can include the energy required for their family home when calculating the overall solar panel requirement.