Revenue and value-added tax in lease agreement for a photovoltaic system
December 16, 2020 | 30,00 EUR | answered by Steuerberater Knut Christiansen
Dear tax advisor,
I have installed a photovoltaic system on a leased roof. There is a solar power system lease agreement with the homeowner, who acts as the operator of the system towards the supplier.
The rent in the solar power system lease agreement is based on the variable feed-in tariff that the operator receives from the supplier.
The operator/homeowner is opting for the small business regulation. I have voluntarily registered for VAT.
Now to the question:
How does VAT or input tax work in this case? Does the supplier show VAT on the credit note to the operator (who is registered as a small business with the supplier)? Is this then passed on to me by the operator through the rent, and can I claim it as input tax?
Is there anything specific I need to pay attention to in this situation?
Hello,
here two processes need to be distinguished.
1. Rental of the PV system to the operator
2. Operation of the PV system and sale of the electricity generated
Your rental revenue is subject to value-added tax, as you have opted for VAT and do not claim the small business regulation. Therefore, you must calculate and pay VAT on the rent. However, this VAT is not deductible for the operator, as they are a small business. The non-deductible VAT in this case is considered operating expenses for them.
The operator receives a net compensation from the supplier, without VAT. This means that there are no further VAT implications for you. In particular, you cannot claim any input tax credit. You would only be able to claim an input tax credit if you receive an invoice with VAT specified, relating to the taxable revenue (rental of the system).
I hope this answers your question, if not feel free to ask further questions at no cost.
I would like to point out that this forum cannot replace a detailed and personalized tax consultation, but is mainly intended to provide an initial tax assessment. Adding or omitting relevant information could lead to a different legal assessment of your issue.
Best regards,
Knut Christiansen
Tax consultant
