Romania Reduces VAT on Solar from 19% to 5%
In a bid to boost residential solar uptake the government of Romania has reduced Value Added Tax (VAT) on residential solar products from 19% to 5%.
This move is aimed at increasing the uptake of solar products across the country.
Low-emission heat pumps, solar thermal panels and solar installation kits are also eligible for the tax break. Both home systems and installations on structures owned or administered by state or municipal governments are included. Commercial buildings that are managed by local or state governments are exempt from the tax break.
According to the International Renewable Energy Agency (IRENA), Romania had installed about 1.38 GW of solar at the end of 2019 and at this time renewable energy contributed about 18% of the total energy supply of this European country.
What this means
Obviously this move will increase the uptake of solar systems in Romania as this reduces the extra costs that come with this alternative source of energy.
Suppliers of solar systems will surely welcome this move as it allows them to make profits due to reduction in overall costs of solar products. Perhaps they can find it easier now to convince customers to go solar.
To the end users this will mean reduced prices for solar systems considering that the reduction is likely to be fairly transferred and felt by the end customers. Maybe the best time to go solar for those who were still waiting on the fence.
However, it is likely that the tax reduction will only be partially passed to end customers due to increasing demand and the fact that solar companies would want to maximize their profits despite the tax reduction.
This move will increase the uptake of solar installations. This will mean less reliance on the national grid and in turn a reduced demand. Thus, a huge benefit to the national utility and the government of Romania as they can dedicate electricity generated to other productive uses that help grow the economy.