The EU published a new Directive this month “to promote the use of renewable energy sources by means of reduced VAT rates.”
The Directive states: “In order to support the transition towards the use of renewable energy sources and to foster the Union’s self-sufficiency with regard to energy, it is necessary to allow Member States to improve final consumers’ access to green energy sources.”
According to the new Directive, EU Member States will be free to apply a reduced VAT rate of 0% to 5% to the “supply and installation of solar panels on and adjacent to private dwellings, housing and public and other buildings used for activities in the public interest.”
This is in line with the EU’s environmental commitments on decarbonisation and the European Green Deal.
These provisions also apply to pharmaceuticals, contraceptive and hygienic protection products, medical protection products, transport and passenger transport services, bicycles, books, newspapers and paper publications and digital media, housing, heating and other goods and services detailed in the Annex to the Directive.
These new provisions are described in Directive No. 2022/542 (https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32022L0542&from=EN)
“This Directive came at the same time as the announcement by the Cyprus government of two new grants for the installation and replacement of integrated solar water heating systems and solar panels and the installation of new photovoltaic systems,” said energy analyst Charles Ellinas.
“It should further encourage the more widespread installation of rooftop solar panels for water heating and electricity generation,” added Ellinas, a Senior Fellow at the Global Energy Center, Atlantic Council.