solar system
June 23, 2010 | 30,00 EUR | answered by Michael Herrmann
Hello,
I am a freelancer and have a planning office. I am liable for value added tax and have a profit/surplus of approximately 15,000.00 euros.
Question: I would like to have a solar system installed on my own residential building. Can I purchase this through the office, i.e. deduct the VAT, and depreciate it? If yes, for how many years would I have to depreciate it? Do I then have to rent it out privately, if so for how many years and at what monthly rent? Offer for the solar system is approximately 8,000.00 euros.
I thank you in advance for a quick and hopefully positive response.
Kind regards
First of all, thank you very much for your inquiry, which I would like to answer based on the information provided and in the context of your commitment as part of an initial consultation. The response is based on the description of the situation. Missing or incorrect information regarding the actual circumstances can affect the legal outcome.
Operating a photovoltaic system is considered a commercial activity according to § 15 of the Income Tax Act. Therefore, you generate income from a commercial operation.
Generally, in the first few years, there will be losses from the commercial operation. These can be offset against positive income from other sources, resulting in tax savings.
A prerequisite for offsetting losses is the intention to make a profit. Over the next 20 years, there must be an expectation of income exceeding expenses. This is generally the case with new solar systems due to the high feed-in tariffs. However, the intention to make a profit can also be assessed on a case-by-case basis, taking into account the individual performance data of the system, the subsidies received, the investments made, and the financing.
Starting the commercial activity or opening the commercial operation "Photovoltaics" should be reported to the tax office. Buying through the office is not necessary and not recommended in order to maintain the status as a freelancer.
As a "business owner," you are required to keep all documents related to the photovoltaic system for 10 years. There is no difference compared to freelance work in this regard.
Income from operations includes the feed-in tariff from the grid operator. If you have opted for VAT, it also includes the VAT received from the grid operator and a VAT refund from the tax office, for example, on the acquisition costs of the system.
Operating expenses include depreciation of the system, the special depreciation according to § 7g of the Income Tax Act, ongoing operating costs such as maintenance, upkeep, meter fees, and photovoltaic insurance, as well as interest and loan origination fees for loan financing. If you have opted for VAT, this also includes the VAT paid on the acquisition costs of the system and all VAT payments made to the tax office throughout the year, such as advance payments from VAT returns and the final payment based on the VAT annual return for the previous year.
Photovoltaic systems installed on the roof are solely for the commercial operation of generating electricity and are therefore considered operating fixtures. They are classified as movable assets with a normal useful life of 20 years.
For tax purposes, both activities (freelancer and photovoltaic system) should be consolidated in one tax return or advance return. The input tax from the purchase is of course deductible. However, the income must also be taxed. There is no choice in this regard, as you already have the status of an entrepreneur as a freelancer.
I hope that with this information, I have given you a first overview of the situation within the scope of your commitment and remain
Sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax Advisor
