30 kWp presumption regulation - tax rate with 0% sales tax 'VAT' for solar systems - the solar system input tax deduction option

The current course of the federal legislative process

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Annual tax law 2022 for solar/photovoltaics: 0% - zero percent sales tax, the zero tax rate for solar systems is coming!

Tax exemption: Tax hammer for solar expansion now approved by the Bundestag!

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Tax relief for solar systems – tax exemption: tax hammer in solar expansion now approved by the Bundestag!

Top selling point for solar installers: No more tax on solar systems

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Solar: Photovoltaics will be cheaper in 2023 - no more tax when buying and operating smaller solar systems

A '0% tax rate' differs from a tax exemption in the sense that the performing entrepreneur does not charge sales tax on the fee for the provision of services (e.g. sales), but for all input services (e.g. purchasing) that are associated with his service in connection with this, the full input tax deduction can be claimed.

Zero rate only for services to operators or end customers

End customer = customer for whom a product or service is ultimately intended, also called consumer or consumer.

The reduction in the tax rate to 0% only applies to the services provided to the operator of the photovoltaic system (usually the end consumer or private households). Deliveries from manufacturers, wholesalers or retailers to people and companies who are not operators of the photovoltaic system are still subject to the standard tax rate.

The application of the 0% tax rate is limited to the following services (according to Section 12 Para. 3 UStG):

• Delivery of solar modules including the components necessary for the operation of a solar system, as well as electricity storage devices to the operator of the solar system. This applies if the solar system is installed on or near private homes, apartments, public and other buildings that are used for activities serving the public good.
• The intra-community acquisition of favored items.
• The import of favored parts.
• The installation of preferential systems and electricity storage systems.

19% tax rate application example for companies

Purchasing a solar module from a wholesaler. The solar module costs €120 net. (Wholesaler's gross invoice amount = €120 + €22.80 / 19% VAT)

Here, an input tax (19%) of €22.80 (from the purchase price of €120) is incurred by the purchasing dealer.

The dealer now sells the solar module for €160 net, plus the 19% VAT to the end customer. That's a total of €190.40 (including €30.40 from 19% VAT).

The sales tax is therefore stated on the invoice that is created when a sale or service is completed, while the input tax is noted on the purchase invoice.

The dealer therefore has a tax liability of €30.40 minus the €22.80 input tax that was already paid to the wholesaler.

This leaves a remaining tax liability of €7.60.

This must be reported to the tax office in the next VAT return, which will then be collected by the tax authority.

0% tax rate application example for companies

Purchasing a solar module from a wholesaler. The solar module costs €120 net.

Here, an input tax (19%) of €22.80 (from the purchase price of €120) is incurred by the purchasing dealer.

The dealer now sells the solar module to the end customer for €160, with regard to the 30 kWp presumption regulation. The customer will therefore not be charged any further tax costs. The sales tax is 0% and 0 €.

Sales tax is a so-called consumption tax. It is also called VAT.

The dealer is now entitled to an input tax refund that has already been paid to the wholesaler.

The input tax of €22.80 that has already been paid to the wholesaler can be reclaimed from the tax office via the next advance VAT return.

Many entrepreneurs have to submit advance sales tax returns monthly or quarterly, among other things in order to report and pay sales tax that has already been incurred to the tax office or to receive a refund in the event of an excess input tax. In the sales tax return after the end of a calendar year or a possibly shortened period, the sales tax advance payments already made will be taken into account.

Meaning and purpose

Sales tax is an annual tax. By submitting advance sales tax returns, on the one hand the state has a lower risk of non-payment and gains an interest rate advantage, and on the other hand, the entrepreneur can distribute his sales tax burden more evenly over the entire year and thus avoid payment difficulties at the beginning of the following year. Conversely, the entrepreneur has an interest advantage on input tax refunds.

Period, deadline and extension of deadline

The submission period for the advance VAT return generally depends on the VAT payment burden for the previous year. The tax office determines the tax obligation; If the submission period changes, the entrepreneur will receive a notification. In principle, the pre-registration period is the calendar quarter. However, if the previous year's sales tax burden does not exceed €1,000, the tax office can exempt the entrepreneur from the obligation to submit advance returns and pay advance payments for the following calendar year. If the previous year's sales tax payment was more than €7,500.00, the advance sales tax return must be prepared monthly in the following year. Newly founded companies must always submit monthly advance registrations for the first two years (Section 18 (2) UStG).

If the total surplus from reimbursements exceeds €7,500, the entrepreneur can voluntarily submit monthly advance declarations. With the exception of this regulation, the submission period cannot be freely chosen (Section 18 Paragraph 2a UStG).

The pre-registration must be submitted to the responsible tax office by the 10th day after the end of a pre-registration period.

Upon request, a permanent extension of the deadline can be granted, so that the deadline for submitting an advance registration is extended by one month (§ 46 UStDV). The application for a permanent extension of the deadline does not require any justification.

If there is a monthly registration requirement and a permanent extension of the deadline, a special advance payment of 1/11 of the total of the previous year's advance payments must be made once a year. For newly founded companies, the special advance payment is based on the expected sales in the year of founding and in the following year based on the total sales of the previous year extrapolated to a calendar year (§ 47). The special advance payment will be offset against a payment burden for the December pre-registration period. If registration is required quarterly, no special advance payment is required.

Reporting character and form of transmission

The taxpayer must calculate the sales tax burden or refund himself (self-assessment levy), state it in an advance sales tax return, submit this to the tax office and pay any sales tax on time. Due to the self-calculated tax, sales tax is a registration tax (Section 150 Paragraph 1 Sentence 3 AO). This means that it essentially corresponds to a self-assessment tax. The submission of the advance sales tax return is equivalent to a tax assessment subject to verification (Section 168 sentence 1 AO). If the tax registration leads to a remuneration or the reduction of a tax that has already been paid, it is only equivalent to a tax assessment if the responsible tax authority agrees (Section 168 sentence 2 AO).

Until 2004, the data was transmitted using a registration form on paper or voluntarily electronically; since 2005, pre-registration has been mandatory online via the ELSTER system. For this purpose, either the ELSTER portal can be used directly or the software from third-party providers can be used. Electronic transmission was already possible years before the ELSTER process was introduced. The basis for this was the “Ordinance on the submission of tax returns on mechanically usable data carriers and via remote data transmission” (Tax Registration Data Transmission Ordinance - StADÜV of October 21, 1998).

Since January 1, 2013, electronic transmission must be authenticated.

If it is not possible to submit the tax return electronically, an advance sales tax return can still be submitted in paper form under certain conditions (hardship case).

According to the DIHK, suppliers and installers of PV systems will in future have to differentiate whether they are small systems to which the zero tax rate applies or not.

Due to the 30 kilowatt peak presumption regulation, suppliers and installers of PV systems generally do not to inform the buyer about the type of use of the building. However, documentation is required that the relevant system is a system below 30 kilowatt peak (kWp).

It is not yet clear whether a simple note on the invoice that the purchase is for a system under 30 kWp is sufficient.

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