Photovoltaics: the green energy source. Austrian tax aspects to consider when implementing photovoltaic systems

Since energy security and independence is becoming increasingly crucial, many businesses are currently taking this issue into their own hands. One way is to install photovoltaic panels. In this respect, besides federal and regional subsidies, the tax aspects should also be examined before implementing such green energy projects.

Types of photovoltaic systems

Photovoltaic systems work in three different ways: (i) all electricity generated is fed into an energy grid (total feeder); (ii) only electricity surpluses are fed into the energy grid (surplus feeder); or (iii) the generated electricity is used exclusively for own (business) purposes or stored in major batteries.

Potential (corporate) income tax and VAT consequences for total feeder and surplus feeder

With total feeder and surplus feeder, any business/corporation or individual can create an additional source of income with the generated electricity (surplus). This may have Austrian income and VAT consequences:

• If the electricity is fed fully (total feeder) or partially (surplus feeder) into an energy grid, the remuneration is qualified as a commercial source of income. Thus, the earnings gained from the electricity delivered are generally subject to Austrian income tax in case of individuals (at a rate of 0 to 55 %) or corporate income tax in case of corporations (at a rate of 25 % in 2022, 24 % in 2023 and 23 % as of 2024). In this case, operating expenses caused by the photovoltaic system can be deducted from the income generated (e.g. deduction of plant depreciations). For surplus feeders, such operating expenses can then be proportionally deducted. Additionally, individuals may benefit from a (new) tax exemption capped at 12,500 kWh of energy being fed into an energy supply grid per year, which will be granted for 2022 for the first time.
• The operation of a photovoltaic system may be subject to VAT in case solar energy is sold to an energy supply company (i.e. total or surplus feeder). If the electricity is fed into an energy grid, the electricity suppliers must charge VAT for the supply by means of a reverse charge mechanism. In this respect, certain VAT exemptions exist which must be considered in every single case. If energy supplies are treated as subject to VAT and no exemption applies, the business is entitled to the input VAT deduction.

The supply of electrical energy in Austria is also subject to a separate transfer tax – the Electricity Tax Act (Elektrizitätsabgabegesetz). This law provides for a tax that must be paid on every kWh, although certain exceptions need to be taken into account. In general, the supply of solar energy to a power supply company is not subject to such tax.

authors: Marco Thorbauer, Tobias Hayden, Clemens Grassinger, Benedikt Schachner-Gröhs, Philipp Statzinger, Stefan Egger