Deduct balcony power plant from taxes: What’s included?

Money back from the tax authorities?
Deduct balcony power plant from taxes: What’s included?

25.09.2024, 08:47

Under certain conditions, balcony power plants can be claimed as tax deductions. How this works and what is important is explained below.

The trend towards sustainable energy production is gaining momentum. Small solar systems for balconies – so-called balcony power plants – are a popular option. With just a few square meters of solar surface, electricity can be generated for your own use. But there is another advantage: under certain conditions, owners or tenants can claim their mini PV system as a tax deduction.

Tax advantages of a balcony power plant

For many tenants and homeowners who do not have space for a large solar system on the roof, balcony power plants are an attractive alternative. Getting started with your own electricity production is relatively straightforward, and the investment is limited compared to large solar systems.

Purchasing a balcony power plant can not only save energy costs in the long term, but also bring in cash when you file your tax return. There are several ways in which the costs of such a power plant can be taken into account for tax purposes.

1. Save VAT: Tax exemption for small plants

Since the beginning of 2023, there has been a VAT exemption in Germany for the purchase of photovoltaic systems up to 30 kilowatt peak (kW). “The self-generated electricity is free and tax-free with a balcony power plant. VAT has also been abolished for balcony power plants since January 1, 2023“reports the Taxpayers’ Association This means that no 19 percent VAT is due on the purchase price. This regulation also applies to balcony power plants, which are usually well below this limit.

Anyone who buys a balcony power plant only pays the net price, which directly reduces the purchase costs. Sun lovers can find cheap offers at Kleines Kraftwerk, for example:

Note: Prices are volatile and retailers may occasionally adjust the recommended retail price (RRP). If prices differ from those shown here, retailers have changed them after the article was published.

• Full Black 450 Wp PV Module (Bifacial)
• Hoymiles 400W Micro Inverter (HMS-400W-1T)
• Premium brackets for lattice balconies
• Connection cable of your choice
• German assembly instructions

Currently reduced by 50 percent is also a Balcony power plant with balcony bracket from EET Solar, sold via the online platform Tink. However: instead of 450 watts peak, this system only has an output of 430 Wp – still a strong offer for less than 200 euros.

• Easy and quick to install
• Can be combined with several solar panels
• Includes five-meter Schuko power cable

2. Claim craft costs for tax purposes

Any costs incurred in installing a balcony power plant can be claimed as a tax deduction. This falls under household services or tradesmen’s services that can be declared in the income tax return. However: Payment must be made by bank transfer. Cash payments are not accepted by the tax office. And: The invoice and proof of payment (bank statement) should be kept in a safe place in case the tax office wants to see them as part of the tax return.

3. Deduction as advertising costs or business expenses

In certain cases, the purchase of a balcony power plant can also be deducted as advertising costs or business expenses in the tax return. This applies in particular to people who use the balcony power plant to generate electricity that they feed into the public grid in whole or in part. In such a case, you are considered an entrepreneur for tax purposes – the costs for the balcony power plant can be declared as a business expense.

Notice: The exact conditions for the tax deductibility of balcony power plants depend on individual factors, such as the type of use (self-consumption or feed-in), the amount of the acquisition costs and the personal income situation. A tax advisor can help you to make the most of the tax-deductible options.

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What does it take to deduct the balcony power plant from your taxes?

In order for the balcony power plant to be taken into account in the tax return, a few important things must be taken into account:

• Proof of acquisition costs: It is important to keep all receipts and invoices for the purchase of the balcony power plant and its components. This includes the solar modules, the inverter, the mounting material and any installation costs.
• Proof of use: Anyone who feeds the electricity they generate into the grid must provide proof of this. The tax office usually requires confirmation from the grid operator or proof of feed-in via a special measuring device.
• Tax registration as an entrepreneur: Anyone who feeds electricity into the public grid is considered a business for tax purposes. This means that a business registration and the submission of a sales tax return are required, even if no sales tax is payable.

However, depending on the size and use of the balcony power plant, these requirements can vary. A tax advisor can help you take the right steps.