vat on solar panels

Understanding VAT on solar panels – A Comprehensive Guide

VAT, or Value Added Tax, is a tax that is added to the price of goods and services at each stage of production or distribution. This means that the tax is not just paid on the final product, but also on the raw materials and labor that are used to produce it. VAT is a consumption tax, which means that it is ultimately paid by the consumer.

Below is a simplified comparison table showing how VAT on solar panels can vary in different countries:

Country VAT Rate (%) VAT Exemption Reduced VAT
United States 0% - 10% No Yes
United Kingdom 5% No Yes
Germany 19% Yes No
Australia 10% No No
Ireland 5% No No
Japan 8% Yes No

The above table shows how much VAT is charged on solar panels in different countries. It also describes whether there are any exemptions or reduced rates available. But one important point should be noticed: the actual VAT rates and rules can change over time. So best practice should be to concern local tax authorities before purchasing.

How Does VAT Apply to Solar Panels?

In most countries, you have to pay VAT on Solar Panels, just like any other product or service. But the amount of VAT you pay varies from region to region. In some countries, you pay less VAT on Solar systems or no VAT at all.

VAT on Solar Installations

It means that on VAT when you purchase and install a solar energy system in solar panels, inverters, and related equipment are included. It varies from one country to another. In such a scenario, labor costs are also included in it.

Here's an overview of how VAT on solar installations generally works:

  • VAT on Equipment

    • Purchase of solar panels
    • Inverters
    • Batteries
    • Cables
    • Stands
    • Other necessary equipment

  • VAT on Installation Services

    • Labor cost
    • Installation services

  • Consult Local Regulations

    • Consult the tax authority where you live.

VAT on Solar Panels for Business

VAT for Business on Solar Panels depends upon the location in which the business is located. Normally, when business is on a standard VAT rate, it is typically 20%. Some countries offer reduced VAT rates for the following businesses:

  • Energy-saving equipment
  • Services for the benefit of the environment

Businesses pay VAT on the purchase and installation of solar panels. The amount of VAT that they pay will be calculated on the total cost of setup. When discussing VAT on Solar Panels for business, the following guidelines should be keenly observed.

  • VAT Registration

    It is the main point in which it is necessary for the business to register for VAT. Because if not register for VAT then VAT on Solar Panels could not be possible.

  • VAT Rates Reduced

    Some countries have lower VAT rates or don’t charge for products that save energy, like solar panels. It is the strategy to encourage businesses to use renewable energy sources. Due to the low rate of VAT, many business persons jump into this industry.

  • Commercial Use

    If solar panels are used for commercial use, then their quality is different from the domestic use. Because in commercial usage there is a maximum load on panels as compared to residential.

  • Export or International Transactions

    VAT rules for purchasing solar panels are different when purchasing from other countries. So if you're purchasing solar panels from another country for business use, you'll need to consider the relevant cross-border VAT regulations.

  • Claiming Input Tax

    Businesses can often get back the VAT that they pay on solar panels. This is called a VAT refund. It means that the government gives some money to businesses which they paid VAT on purchasing solar panels.

  • Consult a Tax Professional

    Because VAT rules are complicated and vary from country to country, it is best for businesses to talk to a tax professional or accountant who knows the local tax laws. They can help you understand how to account for VAT on solar panel purchases and make sure you are following the law.

    It's important to remember that tax laws can change, so it's a good idea to check with your local tax authority regularly to make sure you're following the latest rules.

Free Solar Panels

Free solar panels are not free, but they can be a good way to go solar without paying a lot of money upfront. There are a few different ways to get "free" solar panels. One way is to sign a solar lease agreement. With a solar lease, the solar company owns the solar panels and installs them on your roof for free. You pay a fixed monthly fee for the electricity that the solar panels produce.

solar panels vat

Value Added Tax (VAT) on solar panels in the United Kingdom plays a significant role in shaping the renewable energy landscape. As of my last knowledge update in September 2021, solar panels were subject to a reduced rate of VAT, reflecting the government's commitment to promoting clean energy solutions and reducing carbon emissions.

The reduced rate of 5% VAT on solar panels was established to encourage homeowners, businesses, and organizations to invest in solar energy systems. This reduction in VAT makes solar panel installations more affordable, thereby incentivizing the adoption of renewable energy technologies. It is part of a broader strategy to transition the country towards a more sustainable and environmentally friendly energy mix.

The reduced VAT rate applies not only to the purchase of solar panels but also to their installation. This holistic approach ensures that the cost of going solar is lowered at every stage of the process, making it an attractive option for those looking to reduce their carbon footprint and energy bills concurrently.

It's important to note that VAT rates and policies can change over time due to government decisions and evolving environmental priorities. Therefore, it's advisable to check with HM Revenue & Customs or consult a tax professional for the most up-to-date information on VAT rates and regulations related to solar panels in the UK.

In conclusion, the reduced rate of VAT on solar panels in the UK is a positive step towards achieving a more sustainable and greener energy future. It not only benefits individuals and businesses by making solar installations more affordable but also contributes to the country's overall efforts to combat climate change and reduce its reliance on fossil fuels.

Here are some common ways "free" solar panels can be obtained:


  • Generate revenue for governments

  • Economic growth by encouraging businesses

  • Claim VAT paid on solar panel purchasing

  • Environmental & energy-saving benefits

  • Government focused on clean energy & sustainability


  • Rules & rates can be complex

  • Larger burden on low-income households


It is important to use the opportunity of VAT on Solar Plates. However, you should be aware of the VAT rules and regulations in your country or region before planning to install panels. If you are a business and need to install it then first confirm your ability to claim input tax credits.

In general, governments around the world are minimizing or zeroing the VAT on solar panels. This is because they know that solar energy is good for the environment and helps countries be more energy independent.


What is VAT, and how does it apply to solar panels?

VAT is a consumption tax levied on the value added to goods and services at each stage of production or distribution. It applies to solar panels as they are considered goods.

Do I have to pay VAT on solar panels for my residential property?

The VAT treatment of solar panels for residential properties varies by country and region. Some places offer reduced VAT rates or exemptions for residential solar installations, while others apply the standard rate.

Is VAT on solar panels the same for businesses and individuals?

Businesses and individuals may be charged different amounts of VAT on solar panels. When a business claims input tax then it reduces the overall tax bill.

How do I claim VAT paid on solar panels as a business expense?

Businesses typically claim VAT paid on solar panels as input tax credits. The process for claiming these credits can vary by local rules, so it's important to follow local tax regulations and keep accurate records.

Does VAT on solar panels affect the cost-effectiveness of solar energy systems?

VAT (value-added tax) can make solar energy systems more expensive because it is added to the cost of buying and putting in solar panels. However, there are often tax breaks and lower VAT rates for solar energy, which can make it more affordable.

Are there any environmental benefits associated with VAT on solar panels?

VAT is a tax that can be used to fund clean energy projects, such as solar panel installations. This can help to reduce our impact on the environment.

Rían Doyle

I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.