Supply and Installation of Solar Panels for Private Dwellings

On 5 April 2023 the Irish Department of Finance announced that a zero rate of VAT would apply for the supply and installation of solar panels for private dwellings from 1 May 2023. This measure was possible as a result of amendments made to the Principal VAT Directive by Council Directive (EU) 2022/542 of 5 April 2022, which added a number of new categories to which Member States can apply a zero rate of VAT.

Following on from the above announcement, the Irish Revenue Commissioners published guidance on the application of the zero rate of VAT with respect to private dwellings. The guidance contains a number of confirmations on the application of the zero rate of VAT including the following:

• the zero rate of VAT applies to the supply and installation of solar panels on or adjacent to immoveable goods, being private dwellings. The term “on or adjacent” allows that the solar panels can be fitted onto the private dwelling (e.g. to the roof) or ground mounted beside it;
• for the purpose of the application of the zero rate “Private Dwelling” includes houses (including a domestic residence on a farm), apartments, duplexes and other types of private dwellings such as caravans and mobile homes that are attached to the ground in a way that effectively makes them immobilised and “Solar Panels” includes photovoltaic panels, solar windows and solar walls;
• for the zero rate of VAT to apply, the supply of the solar panels and the installation of same must be the responsibility of the same business in the same supply (i.e. a supply and install contract); and
• the zero rate of VAT does not apply to the supply and installation of solar panels on or adjacent to moveable goods such as boats or mobile homes, etc.

Key takeaway

The application of the zero rate of VAT is intended to significantly reduce the installation cost for private households and is part of the Irish government’s commitment to carbon reduction.