taxation of own-generated solar electricity

156 posts in this topic

We are still considering whether to install PV Solaranlage on our roof or not. I am trying to figurer out the taxation aspect.

Since some of the electricity produced will be sold to the grid, we are in fact becoming Kleinunternhemen. 

 

Questions:

 

1) How much will the income from selling electricity be taxed? With our "normal" rate set by our whole income? This was my first and only guess, but one PV vendor told me the taxation rate for  selling own Strom is 19%. What's right?

 

2) MwSt. We are quoted of course Netto and Brutto prices for having the Anlage installed. Am I correct to understand that to the vendor/installer we will pay the price including MwSt., but since we are becoming kleinunternhemer eventually via our tax return we claim this MwSt. back from the Finanzamt?

 

Thanks,

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2 minutes ago, Gambatte said:

We are still considering whether to install PV Solaranlage on our roof or not. I am trying to figurer out the taxation aspect.

Since some of the electricity produced will be sold to the grid, we are in fact becoming Kleinunternhemen. 

 

You only become a Kleinunternehmer if you choose to. And the KU regulation is only relevant for sales tax=VAT=Umsatzsteuer=Mehrwertsteuer. 

 

2 minutes ago, Gambatte said:

 

Questions:

 

1) How much will the income from selling electricity be taxed? With our "normal" rate set by our whole income?

 

Yes.

 

2 minutes ago, Gambatte said:

This was my first and only guess, but one PV vendor told me the taxation rate for  selling own Strom is 19%.

 

That's VAT.

 

2 minutes ago, Gambatte said:

 

What's right?

 

2) MwSt.

 

19%

 

2 minutes ago, Gambatte said:

 

We are quoted of course Netto and Brutto prices for having the Anlage installed. Am I correct to understand that to the vendor/installer we will pay the price including MwSt.,

 

Of course. 

 

2 minutes ago, Gambatte said:

but since we are becoming kleinunternhemer eventually via our tax return we claim this MwSt. back from the Finanzamt?

 

No, as a Kleinunternehmer you can't get the MwSt back. This is only possible if the small business regulation is waived.

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Wow you are fast!

Yes, I knew Mwst is 19pc.

So if your answer is correct what I got from a vendor is false... He stated that the income tax rate on income for selling Strom is 19pc...

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5 minutes ago, Gambatte said:

Wow you are fast!

Yes, I knew Mwst is 19pc.

So if your answer is correct what I got from a vendor is false... He stated that the income tax rate on income for selling Strom is 19pc...

 

Yeah, I got that, but it's wrong. The profits are not taxed at a flat rate. 

 

"Doch egal, ob Sie Einspeisevergütung, Marktprämie oder direkt Geld von Verbrauchern erhalten – auf Erlöse aus dem verkauften Solarstrom ist Einkommensteuer zu entrichten, so lange Sie dabei Gewinn erwirtschaften. Auch der Solarstrom, den Sie nicht verkaufen, sondern selbst nutzen, zählt dann als Einnahme im steuerrechtlichen Sinn, auf die Sie die Einkommensteuer entrichten müssen.

 

Zusammen mit Ihren übrigen Einkünften wie Gehalt, Rente oder Honorare geben Sie diese gewerblichen Einnahmen in der Einkommensteuererklärung an. Diese müssen Sie als Betreiber einer gewerblichen PV-Anlage jedes Jahr beim Finanzamt einreichen."

 

https://www.finanztip.de/photovoltaik/pv-steuer/

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So it seems also that not only they tax the electricity I sell, but also the one I save buy not having to buy it... That's very mean from the taxman...

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1 hour ago, Gambatte said:

So it seems also that not only they tax the electricity I sell, but also the one I save buy not having to buy it... That's very mean from the taxman...

 

No, it is not. it's your choice.

 

Either you create a company (done in a minute, just get a "Umsatzsteuer ID" on the finanzamt homepage). Then you get back the 19% Umsatzsteuer of the invoice for your PV anlage from finanzamt, same for all maintenance and repairs. But then you have to "buy" the electricity you use privately from this company and pay taxes for this income.

 

Or you keep the PV private, then you don't get back Umsatzsteuer, but you don't have to pay income taxes for the power you consume.

 

Most people I know use option 1. I myself built and own PV for about 250.000 Euros, so I have no choice.

One more thing: Keep it smaller than 10 kWp, then it's a Kleinanlage which makes things much easier. You don't have to deal with the nightmare Netzentgelt.

Special insurances for PV (e.g. hail) are very expensive, but many house insurances include it into the building insurance for free or cheap (up to 10 kWp).

You have to register the PV into https://www.marktstammdatenregister.de

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Another question here...

say I decide NOT to register as Kleinunternehmer (maybe with the idea to switch to Kleinunternehmer after the initial 6yr period...), so I can get the MwSt. for the initial purchase and installation refunded.

Then I will have to report for Umsatzsteuer to the Finanzamt, during the first 2yr every month, and eventually once per year.

 

Question:

what is the procedure to report FA for the Umsatzsteuer? Website? Formular? Postcard, whatsapp...?

 

Thank you,

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4 hours ago, Gambatte said:

what is the procedure to report FA for the Umsatzsteuer? Website? Formular? Postcard, whatsapp...?

 

See https://www.expattax.de/vat-taxes-germany/:

 

"Your Finanzamt will ask you to initially submit monthly VAT returns for your VAT taxes (unless you are registered as a “Kleinunternehmer” – a micro business).You will have to report your monthly VAT liability to the Finanzamt and make VAT payments accordingly. The reporting (“Umsatzsteuervoranmeldung”) is done electronically via www.elsterformular.de where you also find the relevant forms.  At the end of the year you need to file a profit and loss calculation (“Gewinnermittlung”) as part of your annual income tax return as well as an annual VAT return. This has to be done electronically via www.elsterformular.de where you also find the relevant forms. Since January, 1st 2013 as freelancer or contractor you have to submit your “Umsatzsteuervoranmeldung” with electronic signature. Therefore you have to register on ElsterOnline-Portal. With your registration you get an Elster-certificate which offers safe data transmission."

 

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From my experience, here are some key elements to consider:

 

1. If you are registered for MWST (VAT), you get the MWST you paid on the system back. This can be quite some amount.

2. You have to jump through a number of hurdles to get the system registered, which includes changing the meter.

3. Give some serious consideration to also installing a battery. Personally I like the Telsa Powerwall, but that is probably oversized for someone without an electric car.

4. Panels need to face south. If you have an East-West property, the installer will opt for the west roof side. Add at least some panels on the east for that morning sun.

5. Except in summer, you will not have enough solar energy when you need it, i.e. breakfast and dinner time, i.e. when the sun is rising and setting. That's where a battery helps. But batteries are currently expensive, so more solar panels can work out cheaper.

6. The electricity company, when it's finally registered (correctly) pays you a fraction of what they charge you. In our case it's around 1/3rd of the price you pay. That money is taxable, so in the end, let's say 1/5th of the price you pay for that electricity back again.

7. If you stick to under 7KW system you don't have to pay taxes on self consumed electricity. At 10KW there is some other threshold, but how this works I am not sure.

8. I think, but I am not sure, the battery adds to this KW amount for some reason. Can anyone provide some insight here?

9. Around half of the 30c you pay for electricity from the electricty company, as far as I can tell, is for some form of tax/levy.

10. Mains Gas may actually work out cheaper for heating than electricity, even with a heat pump.

11. Rarely is it 'easy' to dump the excess solar power into something, be that a hotwater tank, an electric car/bike etc. These generate fixed loads, but the solar varies from minute to minute as clouds go by. Large loads (Cars, Dishwasher, Washing Machine, Cooker etc) can draw from the expensive mains electric if the solar is not quite enough.

12. There are some loans from KFW bank for certain measures, and grants for others, e.g. car charger.

13. There are many panel types, not just the ugly blue ones. Personally I like the Shingle (overlapping) ones.

14. There is even PVT (electric and water) panels, but I never hear good things about thermal solar, so I can't say anything on this topic, just that I might have opted for it, had I known.

15. Germany wants everyone to have an electric car. Think about this when doing the wiring.

 

Hope this helps.

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Scook, good points. Here my comments to your comments.

 

9 hours ago, scook17 said:

1. If you are registered for MWST (VAT), you get the MWST you paid on the system back. This can be quite some amount.

Yes. But you also pay VAT on all the electricity you produce. And getting the original VAT back is some hassle, if like most and like us you are intimidated by the complexities of the German tax system maybe you end up hiring a Steuerberater, as we did, another 1k gone. All in all I think opting for Kleinunternehmer (no VAT back, but also not VAT to pay on the Electricity you produce) is the best choice.

 

9 hours ago, scook17 said:

2. You have to jump through a number of hurdles to get the system registered, which includes changing the meter.

Yes of course. Unless you install the modules at the very beginning, when you build the house.

 

9 hours ago, scook17 said:

3. Give some serious consideration to also installing a battery. Personally I like the Telsa Powerwall, but that is probably oversized for someone without an electric car.

Good point. In 2019, we decided batteries were still ridiculously expensive but we thought realistic prices were going to drop. That's not yet happened. All in all, with today's numbers, installing a 10keur 10kWh 10-20yr battery is still MUCH more expensive than not installing it.

Batteries also need a different Wechselrichter, 1000eur more expensive.

 

9 hours ago, scook17 said:

4. Panels need to face south. If you have an East-West property, the installer will opt for the west roof side. Add at least some panels on the east for that morning sun.

Jain. Of course Sud panels produce overall more. But East and West panels produce more at the time you consume it.

 

9 hours ago, scook17 said:

6. The electricity company, when it's finally registered (correctly) pays you a fraction of what they charge you. In our case it's around 1/3rd of the price you pay. That money is taxable, so in the end, let's say 1/5th of the price you pay for that electricity back again.

Yes of course. You pay taxes even on the electricity you produce and use yourself. Cheeky vendors like to omit all tax aspects. If you press them they like to say "we are not allowed to give tax advice", which is of course true, but the actually want you not to think about tax, better chance for them to make a sale. 

I bet most families who get PV installed ignore the fact of having to tax all the electricity you produce.

 

9 hours ago, scook17 said:

7. If you stick to under 7KW system you don't have to pay taxes on self consumed electricity. At 10KW there is some other threshold, but how this works I am not sure.

I didn't know about this 7kWp. You sure?

I think households don't have roof space for >10kWp

 

9 hours ago, scook17 said:

13. There are many panel types, not just the ugly blue ones. Personally I like the Shingle (overlapping) ones.

I never seen panels other than black.

 

9 hours ago, scook17 said:

10. Mains Gas may actually work out cheaper for heating than electricity, even with a heat pump.

Heatpumps are cheap to buy and to run but very expensive to install. With the data available when we built our house in 2019 it was going to take 30yr of heating to recover the initial 13ker higher cost. Of course this ignore *) enviroment, and *) higher house value. Many heating engineers discouraged us from getting a heat pump, they say their are problematic.

 

9 hours ago, scook17 said:

15. Germany wants everyone to have an electric car. Think about this when doing the wiring.

Since I bought a 5keur petrol car 8yr ago it costed me ca 140eur/month EVERYTHING included.

Even if ecar are cheaper to run as they say, how long it takes to recover the higher initial cost?

If the ecar cost 50k, and energy repair insurance taxes parking financing motorway and speeding tickets were all zero (they are not) it would take (50k-5k)/140/12 = 27yr. Longer if these costs are not all zero.

As of today, everything included ecar are much dearer than cheap petrol cars.  Are they cheaper than quality petrol/diesel car? Dunno, maybe, but if you look for a cheap car you buy neither electric nor a high end petrol/benzin one.

 

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Had to fill in another form for registration this week. Via MaSTR web portal. They asked about load limiting to 70% of the available power. Also asked about battery storage. We have neither, but I didn't get why they asked about this. You have to register solar and then register batteries separately.

 

Compared to some countries, Germany's approach does not encourage take up. Some European sellers offer a plug in system, so called balcony solar. The special control unit feeds in to the apartment 500w or so, which covers most peoples use of standby power etc. Consumer just runs the extention cable to a socket, which does tend to be a pain in they they are often inside the apartment. Germany insisted such systems are illegal and require a special socket which can only be installed by an electrician.

 

Some countries use net metering, so the electricity meter runs backwards. In Germany, no, far too simple for you average household. You give us one unit and we'll give you 1/3rd of the unit cost and insist you register a 'busines' with all the associated costs and then tax the income from that, so in effect, you get 1/5th of the unit cost, or need to give them 5x the electricity you use to break even on the unit cost. Then they wonder why solar installation rate falls over the past few years. You average Joe just wants a cheaper bill and they make him jump through so many hoops. Joe is not an 'electricity supplier', he's just a guy who throught it would be good to help power his home.

 

The only business benefit I can see if the depreciation (20 years @ 5%), so you get some support, but really, I honestly don't see how the goverment plans to get to net zero carbon, when they do things like turn off solar systems. Half of German'y househols have natrual gas. Others oil or wood. That electricity is so dam expensive means not one uses it unless they have too. Even heat pumps don't help that much. 

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On 29.1.2021, 10:00:30, Gambatte said:

Since I bought a 5keur petrol car 8yr ago it costed me ca 140eur/month EVERYTHING included.

Even if ecar are cheaper to run as they say, how long it takes to recover the higher initial cost?

If the ecar cost 50k, and energy repair insurance taxes parking financing motorway and speeding tickets were all zero (they are not) it would take (50k-5k)/140/12 = 27yr. Longer if these costs are not all zero.

As of today, everything included ecar are much dearer than cheap petrol cars.  Are they cheaper than quality petrol/diesel car? Dunno, maybe, but if you look for a cheap car you buy neither electric nor a high end petrol/benzin one.

 

The average new car price in Germany is 34k€. The Tesla Model 3 SR+ costs around that after Umweltbonus. Zoe goes even lower.

You are pulling an extreme case, not the normal case, and making a general argument from that.

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1 hour ago, MikeMelga said:

You are pulling an extreme case, not the normal case, and making a general argument from that.

Yes of course. I'm looking at MY case, the only case that interests me.

If you want a cheap car electric is not the answer.

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Some actual figures for anyone interested, as today arrived the 2020 statement. We installed a 5.72KW system mid 2017. At that time the Ct/KhW was 12,24c. Electricty price today is around 30c give or take a few cents depending on the supplier. System is in Bavaria, but I guess it's similar elsewhere for Germany.

 

2019 - Produced 6374 KWh of which 4266 was sent to the grid. So we used 2108 Kwh ourselves, around 33%.

2020 - Produced 6577 KWh of which 4269 was sent to the grid. So we used 2308 Kwh ourselves, around 35%.

So much for my efforts to increase self consumption. Basically 2/3rds of the energy we generate got sent to the grid, but I believe this is typical.

We are preditced to use 3276 KWh from the grid itself, so in total our enegy consumption is around 5.5KWh.

 

So 12.24c x 4269KWh is the massive sum of 522 Euros. But from this there is a deduction of 2.53ct/KWh for 'Absenkung Vergütung EEG' of 108 Euros, so we actually received a taxable income of 414 Euros. Lets say I deduct a third of that in tax, so 275 Euros or so. Does anyone know why they deduct 2.53ct?

 

Now electricity cost 1166 Euros for the year, so you can see a system based on having no storage is not profitable, with it paying only around 25% of the actual electricity cost. Yes, the bill would be much higher otherwise, but this was the point I was trying to make about storage. A Tesla power wall would cost in the order of 10K Euros, and be guaranteed for 10 years. During that time I would have paid 11,600 Euros in electricity costs, so it's a marginal break even deal.

 

BTW from what I find online, I see the rate for rooftop systems in 2021, Feb, is 8.04 ct and comes down each month, so somewhat lower than back in 2017. Hope this helps with working out the figures.

 

 

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