Small-scale solar systems, often referred to as balcony power plants, are very popular, not least due to the subsidies available in numerous cities and federal states. But up to what power generation capacity in kilowatts can these systems be operated by tenants and owners without incurring income tax on the energy generated?

An income tax exemption applies to system operators if the nominal output does not exceed 30 kilowatts-peak (kWp) for single-family homes, outbuildings and commercial properties and 15 kWp per (residential) unit for multi-family homes and mixed-use properties – the output specified in the so-called Market Master Data Register is the relevant output. There is also an upper limit of 100 kWp per taxpayer, regardless of the number of buildings or properties. It should be noted that if the upper limit is exceeded, not only will the excess amount be taxable, but the tax exemption for all systems will no longer apply.

The PV systems must also be installed on the side of, on top of or in a building – for example on the roof or balcony. These can also be installed on outbuildings such as garages, carports or garden sheds. It does not matter whether the buildings are owned by the operator or not. Open-space systems, installed in meadows for example, are not tax-exempt. The following are also tax-exempt if the above mentioned requirements have been met:

• Income from feed-in tariffs
• Charges for supplying electricity to tenants
• Reimbursement for charging electric vehicles
• Grants and VAT refunds

There is also a tax exemption applicable from 2022 if, in addition to feeding electricity into the grid, operators also draw electricity for their own homes, offices or electric vehicles. The down-side is that the “mandatory tax exemption” also applies to systems installed before 2022 and special depreciation allowances previously claimed can now only be claimed to a very limited extent. Negative income attributable to the systems can no longer be taken into account.

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