Conditions for VAT reduction on solar panels, heat pumps and solar water heaters

The measures are part of the federal government's energy agreement and serve to financially help families and single people make their homes energy efficient. Finance Minister Vincent Van Peteghem is happy to clarify some of the conditions for benefiting from the VAT reductions.

"For many families, joining the energy transition is the last thing on their minds today. While it is precisely the way to structurally reduce energy bills. That is why we must not scare people off today. We have to guide them: where are we going and how do we tackle it. With these measures we offer them direction and clarity and that includes clear conditions."

Vincent Van Peteghem, Minister of Finance

VAT reductions for the installation of solar panels, heat pumps and solar water heaters will apply from April 1, 2022, to December 31, 2023, for homes under 10 years old, including new construction and homes rebuilt after demolition. But Europe allows a tariff reduction only for the supply and installation of these goods. Indeed, the purchase of a new home in its entirety including a heat pump and/or solar water heater and/or solar panels that, must be subject to the original VAT rate of 21%. Despite the fact that these were installed at a reduced VAT rate. So unfortunately, the VAT reduction to 6% does not apply to purchases on plan.

A reduced VAT rate for the installation of solar panels, heat pumps and solar water heaters has long existed for homes older than 10 years.

Some other conditions also apply.

A first condition states that the operations are provided and billed to a final consumer. This may include:

• private homes owned by individuals;
• residential institutions for the elderly which are recognized by the competent authorities;
• boarding schools added to or dependent on schools or universities;
• Youth protection homes and residential facilities that house minors in a sustainable manner, in days overnight, and are recognized by the competent authorities;
• shelters that house homeless people and persons in difficulty in day and overnight stays and are recognized by the competent authorities;
• psychiatric care homes that house in a sustainable manner in day and night accommodation persons with long-term and stabilized mental disorder or mentally handicapped persons and are recognized by the competent authorities;
• buildings where, under the title of an initiative of sheltered housing recognized by the competent authority, housing in a sustainable manner in day and night accommodation and supervision of psychiatric patients takes place.

A second condition stipulates that the acts relate to a property that, after its execution, is used exclusively or primarily as a private residence;

A third condition relates to the age of the home. As already stated, this concerns homes less than 10 years old, including newly built homes and homes rebuilt after demolition. A reduced VAT rate for the installation of solar panels, heat pumps and solar water heaters has long existed for homes older than 10 years.

A fourth condition is a technical one to allow a reduced VAT rate for heating systems such as solar water heaters and heat pumps only when certain reference standards on emissions are met. Taking into account the fact that most solar water heaters and heat pumps have little or no emissions, such installations therefore have no problem meeting these reference standards. Only for certain technical installations that partially rely on fossil fuels, e.g. solar water heaters that only partially function on the basis of solar heat, will it be necessary to check whether they meet the existing reference standards. In this case, the specific reference standard included for the specific additional fossil fuel heating installation associated with the solar water heater in question will have to be considered.

A fifth condition relates to the mandatory statement on the invoice. As with renovation works, the VAT certificate was replaced by an explicit statement on the invoice and the customer is given one month to dispute the invoice and the reduced VAT rate.

The Royal Decree approved today by the Federal Council of Ministers also extends the already existing VAT reduction for demolition and reconstruction until the end of 2023. The conditions to benefit from this VAT reduction can be found on the FPS Finance website.

SOURCE: Deputy Prime Minister and Minister of Finance Vincent Van Peteghem