Austria's Proposed Removal of VAT Exemption on Solar PV Systems Sparks Controversy

The Austrian solar photovoltaic (PV) industry is up in arms over the likely decision of the soon-to-be-formed coalition government, comprising ÖVP, SPÖ, and NEOS, to prematurely eliminate the value-added tax (VAT) exemption for small-scale PV systems. This move persists despite warnings from the industry association, Photovoltaic Austria (PV Austria). A quick industry survey uncovers that a whopping 90% of businesses predict a sharp drop in demand, potentially endangering thousands of jobs within small and medium-sized enterprises, if the new government reinstates the tax.

Herbert Paierl, Chairman of PV Austria, expresses his disbelief about the re-imposition of the tax on small PV systems, which is currently being labeled as potential 'savings' for the treasury. "The presumed additional tax revenues of €175 million by 2025 cannot be justified – at most, it will be €30 million accompanied by further bureaucracy," he asserts. Paierl perceives the decision to fully tax PV systems as betrayal to private households and local craft businesses that crave nothing but reliability and planning certainty. "Undoubtedly, solid budget consolidation is crucial, but simply taxing small PV systems poses a threat to Austria's already struggling economy," adds Paierl.

The Implications of Eliminating VAT Exemption for Solar PV Systems

Beginning in 2024, according to Austria PV, the removal of VAT for PV systems up to 35 kW has been an uncomplicated and easily understandable incentive for those wishing to attain independence through their own PV system. A snapshot survey among the PV association's members paints a gloomy picture:

Around 73% of respondents believe that incentives like the VAT exemption are among the top arguments in favor of a PV system. If the VAT exemption is repealed prematurely, 90% of the companies surveyed fear that interest in private PV systems will dwindle. Even worse, 70% presume a major decrease. When asked about their current challenges, businesses in the PV industry cited the proposed reinstitution of taxation on small PV systems, perceived lack of political support, and the resulting uncertain order situation as their biggest trials. As such, the industry urges the future federal government to realistically assess the meagre yield from the taxation and to reconsider the proposed plan to tax small PV systems.

On a side note, Germany still maintains the VAT exemption for private solar photovoltaic installations.