If you’re looking to install solar panels, understanding the VAT (Value Added Tax) rate is essential. So, what is the solar panels VAT rate in Ireland?
Generally, solar panels are subject to the standard VAT rate. However, there are some significant exceptions, including a 0% VAT rate when solar panels are supplied and installed together as part of a single contract. This could make a huge difference to the overall cost of installation, especially for homeowners looking to switch to renewable energy.
In this guide, we will take you through the VAT rules for solar panels in Ireland.
Private Homes and the 0% VAT Rate
To make solar energy more affordable for homeowners, the Irish government introduced a great incentive.
As of 1 May 2023, a 0% VAT rate applies when solar panels are supplied and installed in private homes. This means the VAT is completely wiped out!
Who Can Benefit?
This applies to:
- Houses (including homes on farms)
- Apartments
- Duplexes
- Caravans or mobile homes that are attached to the ground
Previously, the VAT reduction only applied if the cost of the solar panels was less than two-thirds of the total cost.
But now, the 0% rate applies no matter the price.
Who is Not Eligible?
This VAT relief is specifically for private homes. However, there are some places that don’t qualify, including:
- Commercial buildings
- Industrial buildings
- Public buildings (except recognised schools)
- Retail shops
- Farm buildings
- Hotels, B&Bs, and guesthouses used for short stays
- Holiday homes used for short stays
This change is designed to make it easier for homeowners to adopt renewable energy, reduce their energy costs, and help Ireland meet its climate goals.
Why is This Important?
This is part of Ireland’s bigger plan to tackle climate change and encourage greener energy.
By making solar panels more affordable, the government hopes to:
- Lower energy bills for families
- Reduce reliance on fossil fuels
- Meet national climate targets
Recognised Schools and the 0% VAT Rate
Starting from 1 January 2024, the 0% VAT rate will also apply to the installation of solar panels in recognised schools. This replaces the old rule, which only allowed the reduced VAT rate if the solar panels cost less than two-thirds of the total price.
A recognised school is any school that provides primary or post primary education under the Education Act 1998.
Even if the school has extra facilities like gyms or cafes, it will still qualify for the 0% VAT rate as long as the main purpose is education and the solar panels are installed as part of a single supply-and-install contract.
How VAT Works for Solar Panels in Ireland?
Here’s a quick rundown of how VAT works:
- 0% VAT: Applies when solar panels and their installation are supplied by the same company in one contract.
- Standard VAT: Applies if you buy solar panels without installation.
- Reduced VAT: May apply if the installation is contracted separately, following the two-thirds rule.
- Two-thirds Rule: If the goods (like solar panels) cost more than two-thirds of the total price, the VAT rate for goods applies to the whole transaction.
- Exclusions: The 0% VAT rate doesn’t apply to solar panels on movable goods like boats or mobile homes.
Examples of VAT in Action:
- Example 1: Company A sells solar panels without installation, so the standard VAT rate applies.
- Example 2: Company B sells and installs solar panels at a private home or school, so the 0% VAT rate applies.
- Example 3: Company C supplies and installs solar panels but outsources the installation. The 0% VAT applies to the solar panels, but the subcontracted installation will have a reduced VAT rate.
VAT on Solar Panel Installations
Ancillary Equipment:
The 0% VAT rate also applies to things like wiring, batteries, and controllers when supplied and installed as part of the solar panel package.
Other Fixtures:
If other fixtures (like plumbing or electrical work) are part of the installation, the 0% VAT applies to solar panels and related equipment, but the other work is taxed at the standard or reduced rate.
For Commercial Buildings:
Commercial and non-residential properties might qualify for a reduced VAT rate on solar panels, depending on how much the solar panels cost compared to the overall installation. The two-thirds rule applies here too.
Mixed-Use Buildings:
If a building is both a home and a business (like a B&B), solar panels can qualify for the 0% VAT rate, but only for the residential part. The VAT must be split based on how much of the building is used as a home.
For Farms:
If you install solar panels on a home on a farm, the 0% VAT rate applies. However, for farm buildings (i.e not a private dwelling) the reduced VAT rate applies.
Flat-Rate Farmers:
Farmers who use solar panels to generate electricity for farming can claim back VAT on this equipment, as long as it’s listed on the Triple E Product Register.
Making the Switch to Solar!
Now that you know what is the solar panels VAT rate in Ireland, it’s the perfect time to take advantage of the 0% VAT rate.
The government incentives, along with possible grants from the Sustainable Energy Authority of Ireland (SEAI), make it easier than ever to install solar panels and reduce your energy bills in the long run.
Be sure to contact an approved supplier to confirm that you qualify for the VAT relief and start your journey towards a greener, more energy-efficient home today.
Frequently Asked Questions
1. What is the solar panels VAT rate in Ireland?
As of 1 May 2023, a 0% VAT rate applies when solar panels are supplied and installed together in private homes. The same applies to recognised schools from 1 January 2024. If you buy solar panels separately without installation, the standard VAT rate applies.
2. Who qualifies for the 0% VAT rate on solar panels?
The 0% VAT rate applies to:
- Private homes (houses, apartments, mobile homes attached to the ground)
- Recognised schools (as of 2024)
- Commercial buildings, retail shops, hotels, holiday homes, and industrial buildings do not qualify.
3. Does the 0% VAT rate cover batteries and other equipment?
Yes, ancillary equipment such as wiring, batteries, and controllers also qualify for the 0% VAT rate, but only if supplied and installed together as part of a solar panel package.
4. Can businesses or farms get a reduced VAT rate on solar panels?
Businesses and farms do not qualify for the 0% VAT rate but may be eligible for a reduced VAT rate, depending on the cost breakdown of the installation. The two-thirds rule applies, meaning if the solar panels make up more than two-thirds of the total cost, the VAT rate for goods applies to the whole transaction.
5. What happens if I buy solar panels but hire a separate installer?
If you buy solar panels separately, the standard VAT rate applies. If installation is contracted separately, a reduced VAT rate may apply, depending on the cost breakdown.
6. Can I still get grants if I qualify for the 0% VAT rate?
Yes! Homeowners may still be eligible for grants from the Sustainable Energy Authority of Ireland (SEAI), even with the 0% VAT incentive. Always check with an approved supplier to confirm your eligibility.