ᐅ Introduction to Photovoltaic Systems (New Construction)

laien.haft schrieb:
If a small business is registered according to §19 UStG, value-added tax (VAT) on personal consumption is waived.
If no small business registration is made, input tax on the equipment costs can be reclaimed, but VAT on personal consumption applies.

Yes, that’s correct.
However, the first option is only viable if there are no other income sources from self-employment, since an annual turnover of €17,500 (approximately $18,900) is quickly reached (of course, not with a normally sized photovoltaic system on a single-family house).
The second scenario is probably the one most commonly used, as it is economically more sensible. A 7 kWp system costing €9,100 net (€1,300 per kWp) would result in a VAT liability of €1,729. The cost of self-consumed electricity is about 4 cents per kWh, meaning the small business regulation would only be advantageous after more than 43,000 kWh of self-consumed electricity. This effect becomes even more pronounced if the system is larger and therefore more expensive, if the VAT on all other procurement and services related to the photovoltaic system is included, or if the investment is significantly increased, e.g., by purchasing a battery storage system. The break-even point would likely only be reached after the system’s lifetime and therefore never actually occur.
Those who want to avoid the bureaucracy of VAT pre-registration—which is actually quite easy once you know how to do it—can outsource this task. The costs for this will reduce profits but are likely worthwhile compared to foregoing the VAT refund.

Alex85 schrieb:
Exactly.
The first option only applies if there are no additional income sources from self-employment, because an annual turnover of €17,500 (about $18,500) can be reached quickly (although not with a normally sized photovoltaic system on a single-family home, of course).
The second scenario is likely the one most commonly used, as it makes economic sense. A 7 kWp system costing €9,100 net ($10,200) (€1,300/kWp) would generate a VAT liability of €1,729 ($1,940). Self-consumption costs about 4 cents per kWh of electricity, meaning the small business regulation would only be advantageous after more than 43,000 kWh of self-consumed electricity. This effect increases significantly when the system is larger and therefore more expensive, when VAT on all other purchases and services related to the photovoltaic system is included, or if the investment is considerably higher, for example due to purchasing a storage system. The break-even point will likely not be reached until after the system’s lifetime and thus may never occur.
Those who want to avoid the bureaucracy of filing VAT advance returns—which is actually very simple once you know how—can of course outsource this task. The costs for this service reduce profits, but compared to foregoing VAT refunds, it is usually worthwhile.

... in the first calendar year €17,500 (about $18,500), then €50,000 (about $55,600).

Again, but then I’m out: Your calculation is too generalized.

Greetings to NRW.

laien.haft schrieb:
... in the first calendar year 17,500 € (about 19,500 USD), then 50,000 € (about 58,900 USD).

I recommend consulting a tax advisor.
If you make an investment decision based on your current level of knowledge, it will not end well.
Your statement is simply incorrect.

laien.haft schrieb:
Again, but then I’m out at least: Your calculation is too general.

That’s unfortunate, because there is nothing general about my calculations. They are based on straightforward facts that can be easily verified. Moreover, they do not represent extremes but realistic, average scenarios — so they are not exaggerations.

Best regards.

Value Added Tax Act (VAT Act)
§ 19 Taxation of Small Businesses
(1) The value added tax due on supplies according to § 1 paragraph 1 number 1 is not charged by businesses established domestically or in the areas specified in § 1 paragraph 3, if the turnover referred to in sentence 2 plus the tax on it did not exceed 17,500 euros (approximately 18,700 USD) in the previous calendar year and is not expected to exceed 50,000 euros (approximately 53,500 USD) in the current calendar year.

laien.haft schrieb:
Value Added Tax Act (VAT Act)
§ 19 Taxation of Small Businesses
(1) The VAT due on sales as defined in § 1 paragraph 1 number 1 is not charged by entrepreneurs who are resident in the country or in the areas specified in § 1 paragraph 3, if the turnover, including the VAT due on it, did not exceed 17,500 Euro (approx. $19,000) in the previous calendar year and is not expected to exceed 50,000 Euro (approx. $54,000) in the current calendar year.

Yes. I highlighted the crucial point in bold.
Both conditions must always be met. This means that if your turnover exceeds 17,500 Euro (approx. $19,000) in one year, the small business exemption no longer applies in the following year.
This can be a harsh realization if you were not aware beforehand because then, in the following year, you might incorrectly issue all invoices under the small business rule and later have to pay the full VAT amount out of pocket after filing your VAT return.

... that’s not entirely accurate either, but that’s not the main point anymore. However, you can quickly look it up yourself.
+ anyone exceeding €17,500 (approximately $19,000) should consider whether it makes sense to register a photovoltaic system under their name. This probably doesn’t apply to the average person.

A quick note on your “profitability calculation” – and then I’m really done:

I might follow your reasoning if you were an expert in this field. But that’s not the case.
Based on your “simple facts,” you come to this conclusion. That’s fine – it’s good enough for casual discussions.
Admittedly, I’m taking it easy by not presenting an alternative profitability analysis or going into detail on your “simple facts,” but it’s not worth the effort for me.

Have a nice evening!