Ireland has joined the ranks of EU countries that have taken advantage of the EU's new VAT freedoms, reducing the value added tax (VAT) on the sale and installation of solar panels for private homes to zero. This reduction from 23% to 0% took effect as of May 1.The supply of solar panels is subject to the standard rate of VAT, but the zero rate or reduced rate may apply when solar panels are supplied and installed as part of a supply and installation contract. The zero VAT rate was implemented in the finance bill that was submitted to the Dáil this week. The Government announced that the VAT rate for the supply and installation of solar panels would be abolished as of May 1.In an effort to make solar panels more affordable, Green Party leader Eamon Ryan reduced the VAT rate applicable to the supply and installation of solar panels from 13.50% to 0%.
Finance Minister Michael McGrath believes that eliminating the VAT rate applicable to the installation of solar panels will encourage more people to use this technology. Ryan noted that there are more than 50,000 homes with solar panels in Ireland, and that 17,000 solar installations were connected to the grid last year alone. This means that these homes will have 14 years of practically free use since solar panels last about 20 years. One option is to apply a zero rate within category 10c, which refers to “supply and installation of solar panels in public buildings and other buildings used for public interest activities, homes and private housing or adjacent to them.” The Government's decision to reduce the VAT rate on solar panel installations is a positive step towards making renewable energy more accessible and affordable for Irish households.
By reducing the cost of purchasing solar panels, more people will be able to take advantage of this clean energy source and help reduce their carbon footprint.
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