Insights
TAX & BUSINESS
Photovoltaic Decree of the Ministry of Finance
Recently the Ministry of Finance published the updated and expanded photovoltaic decree (PV-Erlass), which includes an additional section on energy communities.
An energy community is an association of at least two participants for the joint production, storage and utilisation of energy. In principle, a distinction is made between renewable energy communities (EEG, Erneuerbare-Energie-Gemeinschaften) and citizen energy communities (BEG, Bürgerenergiegemeinschaften). EEG and BEG differ with respect to the grid levels available, the types of energy covered and the permissible energy sources. In addition there is the model of the joint generation facility (GEA, Gemeinschaftliche Erzeugungsanlage), which gives participants the possibility to use the electricity generated via a common low‑voltage network.
Renewable Energy Communities
In practice renewable energy communities (EEG) are the most common, which is why the PV decree mainly focuses on them. EEG are often established in the form of a association or a cooperative and are subject in these two legal forms to corporation tax, although, for example in the case of losses, no minimum corporation tax is payable. The tax exemption for the feed‑in of up to 12,500 kWh per calendar year, which is available to natural persons (for installations with a bottleneck capacity of up to 35 kW p and a connection capacity of up to 25 kW p), does not apply to corporations.
The participants or members of the EEG are subject to income tax or corporation tax on their earnings. As the economic ownership of the photovoltaic system usually remains with the members, they are also entitled to depreciation and the investment allowance.
Threshold of 12,500 kWh
If natural persons are members of an EEG, the tax exemption described above can be applied to them. With respect to the exemption it makes no difference whether a natural person feeds electricity into an EEG or into the public grid. If the 12,500 kWh limit is exceeded, a partial exemption applies. Frequently the self‑generated electricity is primarily consumed by the members themselves, with only surpluses made available to the EEG (surplus model). If the EEG does not require the entire electricity, the surplus is fed by the member into the public grid. In such a case the participant earns income both from the feed‑in to the EEG and from the feed‑in to the public grid.
If members are corporations, they are subject to corporation tax on their profits. If a public‑law corporation participates in an EEG in the form of a partnership, a commercial‑type operation (BgA) arises. For tax‑favoured corporations, such as a charitable association, membership in an EEG in the form of a partnership constitutes a business activity that may jeopardise the tax benefit and may require an application for a specific exemption. Participation of a tax‑favoured corporation in an EEG in the form of a corporation or cooperative is subject, within the scope of asset management, to limited tax liability. For the assessment of the tax benefit of the corporation, the participation or membership is harmless.
The newly published photovoltaic decree is to be applied from the assessment year 2025 in principle. Taxpayers may, however, already rely on the decree for earlier assessment years.
Renewable Energy Communities
In practice renewable energy communities (EEG) are the most common, which is why the PV decree mainly focuses on them. EEG are often established in the form of a association or a cooperative and are subject in these two legal forms to corporation tax, although, for example in the case of losses, no minimum corporation tax is payable. The tax exemption for the feed‑in of up to 12,500 kWh per calendar year, which is available to natural persons (for installations with a bottleneck capacity of up to 35 kW p and a connection capacity of up to 25 kW p), does not apply to corporations.
The participants or members of the EEG are subject to income tax or corporation tax on their earnings. As the economic ownership of the photovoltaic system usually remains with the members, they are also entitled to depreciation and the investment allowance.
Threshold of 12,500 kWh
If natural persons are members of an EEG, the tax exemption described above can be applied to them. With respect to the exemption it makes no difference whether a natural person feeds electricity into an EEG or into the public grid. If the 12,500 kWh limit is exceeded, a partial exemption applies. Frequently the self‑generated electricity is primarily consumed by the members themselves, with only surpluses made available to the EEG (surplus model). If the EEG does not require the entire electricity, the surplus is fed by the member into the public grid. In such a case the participant earns income both from the feed‑in to the EEG and from the feed‑in to the public grid.
If members are corporations, they are subject to corporation tax on their profits. If a public‑law corporation participates in an EEG in the form of a partnership, a commercial‑type operation (BgA) arises. For tax‑favoured corporations, such as a charitable association, membership in an EEG in the form of a partnership constitutes a business activity that may jeopardise the tax benefit and may require an application for a specific exemption. Participation of a tax‑favoured corporation in an EEG in the form of a corporation or cooperative is subject, within the scope of asset management, to limited tax liability. For the assessment of the tax benefit of the corporation, the participation or membership is harmless.
The newly published photovoltaic decree is to be applied from the assessment year 2025 in principle. Taxpayers may, however, already rely on the decree for earlier assessment years.