Minister Joe O’Brien Welcomes Announcement of a Zero Rate of VAT for the Supply and Installation of Solar Panels

5th April, 2023

The Government has today (Wednesday, 5 April) approved a report stage amendment brought forward to be included Finance Bill 2023. The Bill gives legislative effect to the taxation measures recently announced by the Government, the purpose of which is to continue to assist families and businesses deal with high energy prices and cost of living challenges.


Welcoming the announcement, Joe O’Brien TD said:


I’m very happy to see this announcement and what it will mean for families in Fingal. As the average cost will be reduced by €1,000, it will help many families with high energy costs and the cost of living.


In terms of the environment, this announcement, as well as other measures like those promoting retrofitting, will help the Green Party and this Government reach our targets for the Climate Action Plan.”


The Department of the Environment, Climate and Communications has estimated that if a zero rate of VAT was passed on to consumers, it would reduce the average cost of the supply and installation solar panels for consumers from €9000 to €8000 and would thus help support households reducing their electricity bills. At €0.32c per KWh, this will reduce the payback period for installation from 7 to 6.2 years.


This is a permanent change that will come into effect from 1 May 2023


Minister for the Environment, Climate and Communications Eamon Ryan said:


“This move by Government is yet another step on Ireland’s journey to cleaner, cheaper, renewable energy. We have removed planning permission requirements to install solar panels on residential homes. Our Micro-generation Support Scheme is continuing to prove very successful, following record levels of installations supported in 2022 via the Domestic Solar PV Scheme – operated by the Sustainable Energy Authority of Ireland. With thousands of householders also signing up to sell their excess renewable electricity back to the grid; there is now an even greater opportunity for citizens to be part of the energy transition and become active energy consumers, whilst also supporting the electricity grid and strengthening Ireland’s energy security.


“While this move will help consumers, it will also help the environment. Currently over 50,000 homes have solar panels, with 17,000 solar installations connecting to the grid taking place just last year. This is expected to increase further as prices come down and solar becomes more mainstream.”


The Department of Finance has estimated that the measure will cost €19m annually.


People who have had solar panels installed this month can also avail of this offer. The guidance is that invoices should be raised within the first 15 days of the month following the month where the work is completed, which means invoices for work done in April won’t need to be sent out until the middle of May.


This measure is possible due to amendments made to Annex III of the VAT Directive in 2022, which added a number of new categories to which Member States can apply a zero or reduced rate of VAT. One such option is to apply a zero rate within category 10c which is for the ‘Supply and installation of solar panels on and adjacent to public and other buildings used for activities in the public interest, housing and private dwellings’.