Real estate and renewable energies -
solar energy systems and tenant electricity
Solar energy systems and the concept of tenant electricity are becoming increasingly important in Germany. Due to the improvement of framework conditions and rising electricity grid fees, tenant electricity models are becoming more and more attractive. However, there are also a number of income tax and VAT aspects that need to be considered in order to avoid tax disadvantages.
Solar energy systems - a sustainable energy source
Solar energy systems are an environmentally friendly and sustainable energy source. They use solar energy to generate electricity and help to reduce CO2 emissions. In recent years, technological progress and government subsidies have helped to make purchasing and installing solar energy systems more economically attractive. By installing solar energy systems, building owners can generate additional income.
Tenant electricity models - advantages for tenants and landlords
Tenant electricity models enable landlords to sell solar-generated electricity directly to their tenants, who in turn can reduce their energy costs by using this low-priced solar electricity. For their part, landlords benefit from additional income.
Our experts for property tax law
Income tax risks and commercial contamination
Landlords who operate solar energy systems become electricity producers. In this case, they are considered to be engaged in commercial activities in addition to their role as landlords. Among other things, particular attention must be paid to the income tax risks that may arise in the case of partnerships. What is known as commercial contamination can lead to the classification of the entire income of the company – including rental income – as commercial, which is regularly associated with significant tax disadvantages. There is also the risk of creating an unintentional split of the business, which entails additional tax disadvantages.
Measures to avoid tax risks
With careful planning that bears in mind the legal and tax situation, tax risks can largely be avoided. Outsourcing the electricity generation activity to a company set up specifically for this purpose would be one conceivable approach.
VAT aspects
In addition to the income tax risks, VAT aspects must also be considered. The supply of electricity is generally subject to VAT. Therefore, landlords who operate solar energy systems and/or offer tenant electricity models are subject to VAT obligations. However, they are also entitled to deduct input tax.
Conclusion
Solar energy systems and tenant electricity models offer numerous advantages for both landlords and tenants while contributing to the promotion of renewable energies. However, careful planning and advice are essential to minimise the risks with regard to income tax and VAT. By optimising the framework conditions and anticipating the tax implications, the full potential of solar energy systems and tenant electricity models can be exploited without incurring tax disadvantages.
