As a result of the Annual Tax Act 2022 (JStG), the Value Added Tax Act has changed as of 01.01.2023, in particular with regard to solar modules for photovoltaic systems including their essential components and storage systems. The so-called zero tax rate was introduced. This results in a tax reduction from 19% VAT to 0% VAT – if the requirements are met.
In order not to risk a warning notice, it is recommended that distributors of photovoltaic systems review the previous price presentation in their online shop and possibly revise their own general terms and conditions.
I. Legal basis
The tax reduction to zero results from section 12 para. 3 No. 1 UStG. According to this, the VAT for solar modules and their essential components and the storage system is reduced to 0% if the customer is the operator of a photovoltaic system and the photovoltaic system is either
- is installed on or near private dwellings, flats or public and other buildings serving the public good
- the installed gross capacity of the photovoltaic system does not or will not exceed 30 kilowatts (peak) according to the Market Master Data Register (MaStR).
II. What does this mean in concrete terms?
In principle, solar modules for the operation of a photovoltaic system, essential components and their storage units that are offered for sale by the entrepreneur are eligible. Leasing and rental objects are not included.
- Essential components do not include accessories, such as screws and cables in particular, but also electricity consumers for the newly generated electricity. The standard tax rate of 19% is still relevant for these.
A further prerequisite for claiming the tax reduction is that the purchaser is himself the operator of the plant that is the subject of the contract.
In addition, the photovoltaic system must either be installed at a privileged location or the presumption rule must apply, according to which the requirements for a preferential tax treatment are deemed to be met if the installed gross output of the solar system does not exceed 30 kW (peak) or will not exceed 30 kW (peak).
- It is important for the assessment of the gross capacity that this is to be examined on a unit-related basis. In the case of a subsequent extension of a solar module system, the output of the existing unit is to be added to the extension and thus, if applicable, the standard tax rate of 19% is relevant.
2. The burden of proof lies with the entrepreneur
The entrepreneur is responsible for providing evidence that the conditions for the application of the zero tax rate have been met.
In order for the trader to meet his burden of proof with regard to the conditions to be fulfilled by the customer, it is sufficient if the customer declares to the trader that he himself is the operator of the system and that it is installed at a privileged location or that the presumption rule applies.
Such a declaration by the purchaser can also be made within the framework of the contractual agreement (e.g. general terms and conditions). The integration of a corresponding “operator declaration” in the entrepreneur’s own GTC is advisable. Following on from this, it must be ensured that the GTC are effectively included in the contract pursuant to section 305 para. 2 BGB.
III Requirements for the Presentation of Prices
The legal requirements for the presentation of prices in online shops, in particular with regard to VAT information, are subject to the Price Indication Ordinance (PAngV) and the general provisions of competition law (Unfair Competition Act, UWG).
The principle of price truth and price clarity resulting from the interaction of the PAngV and the UWG makes it necessary, for reasons of transparency, to provide information at the given point about which circumstances lead to the applicability of the zero tax rate.
1. Indication of the total price
Pursuant to section 3 para. 1, section 6 para. 1 No. 1 PAngV, the total price must be indicated in internet offers to consumers and that the price charged for the goods includes VAT. In practice, the information is regularly provided by the note “incl. VAT” in the immediate vicinity of the price indication.
In the case of a solar module for a photovoltaic system, essential components and storage units that meet the legal requirements, the standard rate of VAT is reduced from 19% to 0%. However, the value added tax does not generally cease to apply. Therefore, the obligation to indicate that the price offered is based on the tax reduction as a result of the zero tax rate remains.
2. Do not create a false impression
Pursuant to section 3 paras. 1, 3 UWG in conjunction with annex No. 10 and section 5 paras. 1, 2 No. 2 UWG, in particular such unfair commercial acts are inadmissible which either present a statutory obligation as a special feature of an offer and thereby create the impression that it is a special attractive offer existing independently of the statutory situation, or if statements are made which lead the consumer to assume that there is a special price advantage.
- An advertisement stating, for example, that 0% VAT would be charged for solar modules exclusively in this shop is therefore inadmissible.
- An advertisement could also be misleading if the reduction in VAT is claimed to apply to everyone without restriction, as this only applies under certain conditions, or if it is claimed that the price is exclusive of VAT.
IV. Current case law
The Regional Court of Gießen, decision of 24.03.2023 – Case No. 8 O 3/23, recently dealt with the price indication of a photovoltaic dealer on the Google Shopping platform, whereby it was not apparent from the advertisement on Google Shopping itself that the price was the price subject to reduced VAT. The Regional Court assumed that this was an exceptional case and decided, after weighing up the interests, that the price information in the advertisement did not violate the Price Indication Ordinance and was not misleading or unfair.
The court stated that an illegal price indication may not be made on a platform, such as Google Shopping in this case, because it is not technically possible to implement it otherwise. In such a case, the use of the platform must be waived.
However, the advertisement referred to the corresponding offer in the entrepreneur’s own online shop. In this online shop, the trader had placed a link with the text “Exemption from VAT” next to the offer in the price information. Next to it was another link informing that the article fulfilled the requirements of section 12 para. 3 UStG for the tax reduction. Again, another link then led to the wording of section 12 para. 3 UStG by clicking on it.
The trader’s price information therefore complied with the legally prescribed requirements:
“It is true that section 3 para. 1 PAngV obliges traders who offer goods to consumers to indicate the total price. If a total price cannot be calculated uniformly in advance due to the particular circumstances of the individual case, an exception must be made to the total price requirement (see BGH WRP 2016, 581, marginal 24). Such an exceptional case exists here.”
This exceptional case was justified by the fact that
- a large number of interested buyers of the photovoltaic systems are affected by the VAT reduction and for them only the 0% price is of interest.
- the indication of the price incl. 19% can also have a misleading effect, as it suggests a higher price than the one ultimately to be paid.
- the purpose of the promotion, i.e. to contribute to climate protection through the purchase of photovoltaic systems using renewable energies, is to be specifically taken into account by stating the 0% price and referring to the tax reduction.
The reasons given were more important in the weighing of interests than any attraction effect achieved by the price indication in the individual case. This was all the more true since the entrepreneur had provided comprehensible information about the details of the VAT reduction in his online shop before the interested party’s final purchase decision.