Romania urged to cut VAT on solar panels and storage batteries

The Association of Prosumers and Energy Communities (APCE) is urging the Romanian Parliament to urgently adopt a package of fiscal measures that would eliminate value-added tax (VAT) on photovoltaic systems and energy storage batteries. This proposal mirrors a German model, which has been in place since January 2023, and leverages EU Directive 2022/542, allowing member states to apply a zero VAT rate.

APCE argues that recent events, including severe drought, low water levels on the Danube, and reduced hydroelectric and nuclear power output, have exposed the fragility of Romania's national energy system. The association contends that Romania has been slow to encourage investments in distributed energy production and storage, unlike other European nations that implemented similar fiscal incentives years ago. "While other European states adopted courageous fiscal measures years ago, Romania continues to treat citizens' investments in energy independence as a source of budget revenue, not a strategic objective," APCE stated in a release.

The proposed legislation includes a 0% VAT rate for photovoltaic systems up to 27 kW, storage batteries, and essential system components. It would extend this benefit to individuals, NGOs, religious institutions, schools, hospitals, public entities, and eligible SMEs. Additionally, it calls for the elimination of VAT and excise duties on electricity stored in batteries and subsequently used.

The association projects that these measures would stimulate the annual installation of approximately 96,000 new photovoltaic systems, contributing an additional 768 MW of power and 1.54 GWh of new storage capacity. This would mobilize private investments estimated at around 614 million euros. The estimated gross budgetary impact from uncollected VAT is approximately 129 million euros annually, a figure APCE notes would be partially offset by payments like health insurance contributions and profit taxes from installation companies.