The cabinet of the government of the Netherlands has proposed a plan to scrap VAT on PV modules (or solar panels) that are to be installed at private residences (i.e., on rooftops or within the vicinity) starting on January 1, 2023. Currently, the VAT on PV modules is at 21%. If the rate goes down to 0%, then home owners who want to adopt solar PV will save hundreds of euros in procurement cost. This news was first reported by Sino-Dutch Business Daily (China Times) and other European news outlets in late April.

Marnix van Rij, Netherlands State Secretary for Finance, submitted the draft legislation to amend the tax law for consultation on April 20. According to the sources in the government, the elimination of this particular VAT is contingent upon and subject to budget feasibility, the outcome of the consultation, and a review of the related legislative implementation.

Since the end of 2021, EU member states have been permitted to cancel VAT on PV modules installed on private homes, office buildings, public buildings, and structures that deemed to offer public benefits. This February, the Dutch government started to investigate on the feasibility of introducing a similar policy. However, the draft amendment that the State Secretary for Finance has submitted for consultation does not remove the VAT on PV modules installed on commercial and public buildings. 

Presently, Dutch home owners who set up PV systems that are connected to the grid can claim a full or partial tax refund when they file their tax returns. In this instance, home owners are also recognized as “small entrepreneurs”. However, this tax break is subject to various conditions and not applicable to everyone.

The State Secretary for Finance said that in addition to cost savings for buyers of PV systems, a significant amount of paperwork will be eliminated with this amendment.