Photovoltaic tax informationBy purchasing a photovoltaic installation you become an entrepreneur from a tax perspective. This means that firstly the earnings that you generated from the photovoltaic installation is recorded for income tax purposes and secondly your new photovoltaic industry is subject to VAT. In the following we would like to give you a more detailed overview of the tax treatment of photovoltaic installations:
Value-added taxA person is liable to value-added tax if "the power generated is entirely or partially, regularly and not just occasionally fed into the general power grid." In general value-added tax is only a transitory item for you (except for the refund upon purchase). If you receive the feed-in compensation payment transferred from your energy supplier, these amounts include 19% value-added tax. This portion must be paid to the tax authority. In invoices that you receive for your photovoltaic business, 19% value-added tax (pre-tax for you) is also included. This portion you refund to the tax authority. So that this is always correctly collected you must provide the VAT advance notifications. In these notifications your pre-tax amounts are offset against the VAT amounts. This results in either a pre-tax credit note (will be refunded to you by the tax authority) or a VAT amount payable (you need to refund to the tax authority). In the year of purchase and the following year you must provide the VAT advance notification on a monthly basis. This must be submitted to the tax authority by the 10th of the following month. This also applies to payment in the case of a VAT payable amount. If you have granted the tax authority a direct debit authorisation there is no need to worry about the payment deadline. At the end of each year you must provide an annual VAT statement. This just includes once again all the advance notifications together. After the first two years you can apply to provide quarterly VAT advance notifications if the VAT payable amount in the previous year was not greater than € 6,136. In conclusion: the VAT obligation has the crucial advantage for you that you can reclaim the VAT from the tax authority that you have to pay to the installer on purchasing the installation. Income taxSince you have income from a commercial operation from operating the photovoltaic installation, you must declare this income on your income tax declaration (Appendix G). This applies to positive (profit) and negative income (loss). In this regard you must prepare a cash-basis accounting (Einnahmenüberschussrechnung - EÜR) in accordance with §4 (3) German Income Tax Act (Einkommensteuergesetz - EStG). In this the operating expenses are deducted from the operating income and the balance is either profit or loss. For all payments the inflow and outflow principle applies, i.e. all amounts are taken into account in the year of the actual cash flow. It is important that the VAT paid is regarded as an expense and the VAT received as revenue. Since you are able to write off the photovoltaic installation in this EÜR, the respective write-off amounts will be regarded as an expense or cost. The value of your installation reduces as a result of wear and tear from year to year. This loss in value is taken into consideration by the amount of depreciation. The tax officials generally assume a 20-year useful life of a photovoltaic installation. To calculate the annual depreciation amounts there are two possibilities: linear or declining.
The depreciation amount therefore reduces each year. For an useful life of 20 years a maximum of 12.5% (upon purchase or manufacture from 01.01.2009 – 31.12.2010) of the actual residual value could be written off per year. However, it would be advisable to initially depreciate the installation by the declining method and then transfer to linear depreciation. Similarly a so-called special depreciation of 20% is possible under certain conditions. Special depreciation according to § 7g (1) German Income Tax Act (EStG) allows a person setting up their own business to write off a total of 20% of the purchase costs in the year of construction of the photovoltaic installation and in the subsequent four years. The distribution of the 20% can be chosen to be taken at any time in this period and takes place in parallel to the normal depreciation. A pro-rata division of special depreciation does not take place. Questionnaire for tax purposesIn principle the installation operator has to inform the tax authority on the operation of a photovoltaic installation. For this purpose a questionnaire for tax purposes (Fragebogen zur steuerlichen Erfassung) must be submitted to the tax authority. In the following link you will find a blank form and a sample. The tax authority issues the installation operator with a tax number insofar as one has not already been issued for other commercial functions.
Investment deductionThe investment deduction in combination with the purchase of a photovoltaic installation makes it possible for small companies (profit in the year of creating provisions below €100,000) to depreciate off the balance sheet a maximum of 40% of the planned investment (costs of the photovoltaic installation). This possibility also still exists retrospectively for 2007 resulting in the reduction of income by 40% of the purchasing costs of the photovoltaic installation. The investment deduction is performed once and reduces the calculation base of the depreciation. The depreciation is based on the resulting value after offsetting the investment deduction. The purchase of an asset must be planned in the following three years after deducting the investment allowance. Business taxBusiness tax is currently only due from a commercial profit of over € 24,500/year. Insofar as commercial earnings are only based on the operation of photovoltaics, installation operators remain under this tax exempt amount until far beyond 10 kWp.
We would like to point out that our tax information is only intended to be an overview and under no circumstances should this replace a discussion with your tax adviser. All details have been carefully checked to the best of our knowledge. We cannot accept responsibility in particular for the arrangement in a given case. |
Intersolar 2012
