Taxation of a photovoltaic system
November 9, 2009 | 15,00 EUR | answered by Oliver Burchardt
We would like to have a photovoltaic system installed on our house this year, with a value of 26,000.00 euros and a capacity of 6.90 kWp. The profit would be approximately 190.00 euros per month. The amount will be financed over 10 years with an effective interest rate of 3.8%. Our average tax rate in the last tax return was 23.76%. What tax deduction can we expect per month, or what advance tax payment do we have to make (per month or quarter)? Do we need to register as a small business?
Best regards,
Peter Dumboeck
Dear Mr. Dumboeck,
Thank you for your question, which I would like to answer taking into account your commitment in the context of an initial consultation.
Please note that the tax assessment depends on the information provided in the facts. Adding or omitting information can affect the tax assessment.
Operating a photovoltaic system constitutes income from business operations for tax purposes, according to § 15 EStG. The relevant information can be provided in the form of an income-expenditure calculation on Form GSE.
As a result, you are also subject to trade tax. However, if you do not operate any other business, you are unlikely to reach the exemption threshold of €24,500 with the system you operate, so the submission of a trade tax return is not necessary.
From a value-added tax perspective, operating the system makes you a business entity and therefore subject to value-added tax. Although you may be classified as a small business if you do not exceed €17,500 in sales in the current year and do not expect to exceed €50,000 in sales in the coming year, in most cases the option for regular taxation is more advantageous. This is because in this case, you can receive a refund of the value-added tax paid when purchasing the system as input tax from the tax office.
From a business regulatory perspective, the small business does not constitute a business subject to registration requirements according to the Trade Regulation Act, at least if the area of the system is less than 30 sqm. However, this regulatory classification does not affect the qualification of income from a tax perspective.
Whether an advance payment is set by the tax office cannot be determined solely based on the information provided in the facts, as your entire tax situation needs to be considered. It needs to be assessed whether the annual tax set is higher than other advance payments or deductions (e.g. income tax payments) taking into account all types of income. Only if this is the case, the setting of an advance payment is considered. If this is the case, the advance payments are due on March 10, June 10, September 10, and December 10.
I hope that my explanations have provided you with an initial overview.
Best regards,
Oliver Burchardt
