The recent decision to exclude VAT on domestic solar PV systems should have been extended to sole traders such as farmers to help with cashflow issues on solar investments.

This is according to Pat Smith, chair of the Micro Renewable Energy Federation and MD of Local Power Ltd.

Last week, the Government agreed to eliminate VAT on solar PV systems for domestic homes, which is estimated to reduce the average cost of supply and installation from €9,000 to €8,000, resulting in a reduced payback period for installation from seven to 6.2 years at €0.32c/KWh.

Workaround

However, the existing taxation rules around renewables do allow farmers to seek a full VAT refund on any renewable energy investment, even if they are unregistered for VAT.

Farmers investing in renewable technologies such as solar PV should ensure that their accountant reclaims any VAT incurred on investments made, explained Smith.