FAQ

Yes, it is applied directly to the invoice. Please note that this is worth, under the terms of the grand-ducal regulation of 23 December 2022 amending: 1° the grand-ducal regulation amended on 21 December 1991 determining the limits and application conditions of the reduced, super-reduced and intermediate rates of value added tax; 2° […], not only for the photovoltaic (or hybrid) solar panels, but also for the thermal solar panels. “The thermal functioning solar panels installed after 31 December 2022” no longer come under the scope of application of the “housing VAT”.

The necessary explanations are provided by bulletin No 812 issued by the Registration Duties, Estates and VAT Authority. This bulletin deals with the temporary reduction of the different rates, but in the end, the reduction of VAT from 17 % to 3 % for the solar panels is to be considered alike.
By way of additional information, here are some examples below.

Deliveries of goods, other than new modes of transport, and provisions of services

There is reason to distinguish between deliveries and services performed in the B2B/B2G sector and those made in the B2C sector.

A. For deliveries of goods/provisions of services relating to B2B (Business to Business, i.e. the customer is subject to VAT) and B2G (Business to Government, i.e. the customer is a legal person not subject to VAT), there is an obligation to issue an invoice for the delivery / service performed as well as for the instalment payments.

Attention: the customer to whom the work is invoiced that can benefit from the super-reduced VAT rate as part of the said “housing VAT”  is, even if this relationship appears to be B2C (business to consumer), for the purposes of the “housing VAT” only provisions considered as being subject to VAT.

If a delivery is made, the applicable rate of VAT is that in force:

• on the 15th day of the month following the delivery of goods / provision of service;
• on the day when the invoice is issued, if it is issued before this date.

If instalments are paid, the applicable rate of VAT is that in force:

• on the day the instalment paid is received;
• on the day when the invoice is issued, if it is issued before the instalment is received.

As a result, the following cases may apply:

• the goods are delivered / the service is performed in 2022 and invoiced in 2022: rate of 17 %
• the goods are delivered / the service is performed in December 2022 and invoiced in 2023: rate applicable in 2023 up to 15 January, thus of 3 %
• the goods are delivered / the service is performed in 2023 and invoiced in 2023: rate of 3 %
• an instalment for the delivery / service not yet carried out is invoiced in 2022 and paid in 2022: rate of 17 %
• an instalment for the delivery / service not yet carried out is invoiced in December 2022 and paid in 2023: rate of 17 % (date of the invoice)
• an instalment for the delivery / service not yet carried out is paid in 2022 and invoiced in 2023: rate of 17 % (date of receipt)
• an instalment for the delivery / service not yet carried out is invoiced in 2023 and paid in 2023: rate of 3 %

B. For the deliveries and services performed in the B2C sector (business to consumer, the customer is neither subject to VAT, nor a non-taxable legal person), there is no obligation to issue an invoice either for the delivery / service itself (only exception, certain sales called “distance sales”, or for an instalment paid before the delivery / service has been performed.

If a delivery / service is performed, the applicable rate of VAT is that in force on the day when the delivery / service is performed (completed) (operative event).
If instalments are paid, the applicable rate of VAT is that in force on the day the instalment paid is received.

As a result, the following cases may apply:

• the delivery / service is performed in 2022 (and invoiced  in 2022): rate of 17 %
• the delivery / service is performed in December 2022 (and invoiced² in 2023): rate of 17 %
• the delivery / service is performed in 2023 (and invoiced in 2023): rate of 3 %
• an instalment for the delivery / service not yet carried out is (invoiced² in 2022 and) paid in 2022: rate of 17 %
• an instalment for the delivery / service not yet carried out is (invoiced² in December 2022 and) paid in 2023: rate of 3 % (date of receipt)
• an instalment for the delivery / service not yet carried out is paid in 2022 (and invoiced² in 2023): rate of 17 % (date of receipt)
• an instalment for the delivery / service not yet carried out is (invoiced² in 2023 and) paid in 2023: rate of 3 %.

Taking into account the instalment(s) when delivering goods or providing services

As far as taking into account the instalment when solar panels are installed:

A simple accounting reversal of the instalment has no influence on the rate that was applicable at the time when it was received or invoiced (according to the cases listed above). The only way of “reversing” the VAT due because of an invoiced/received instalment would be to reimburse the amount received to the customer.

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^{1 Annex B, points 21° and 22°, of the law amended on 12 February 1979 regarding value added tax and the grand-ducal regulation of 30 July 2002 regarding the application of value added tax on the allocation of housing for use as the principal dwelling and to original and renovation work carried out in the interest of the affected housing for use as the principal dwelling and fixing the conditions and execution methods relating to this}

^{2 Commercial invoice, without impact relating to VAT.}

The provision relating to the super-reduced rate reduces the scope of application to the level of the type of building that will be equipped with solar panels, namely “on private housing, housing and building, public and others, used for activities of general interest, and in close proximity to these”.

As far as “private housing” is concerned, this is housing of which at least three quarters of the total surface area is reserved for living purposes. The same rule applies to housing and public buildings and others used for activities of general interest: at least three quarters of the total surface area must be reserved for these purposes.

A definition of this is provided in the grand-ducal regulation of 23 December 2022 amending: 1° the grand-ducal regulation amended on 21 December 1991 determining the limits and application conditions of the reduced, super-reduced and intermediate rates of value added tax; 2° […], and the following explication is provided by bulletin No 816 issued by the Registration Duties, Estates and VAT Authority: “private housing and buildings used by public authorities not subject to tax for activities carried out as such or used by those subject to tax for activities of general interest exempt from VAT without the right to deduct input tax (notably hospitals, schools, children’s nurseries, youth hostels and retirement homes)”. The provision of cultural services is added to the latest list.

The delivery and installation of photovoltaic solar panels close to housing or buildings referred to above does not interfere with the application for the super-reduced VAT rate of 3 % as long as the delivery and installation takes place on adjoining or separate properties but located close to private housing or housing and buildings, public and others, used for activities of general interest and as long as such photovoltaic solar panels are connected to the thermal and/or electrical network of the housing or buildings in question.

The grand-ducal regulation of 23 December 2022 amending: 1° the grand-ducal regulation amended on 21 December 1991 determining the limits and application conditions of the reduced, super-reduced and intermediate rates of value added tax; 2° […] defines in the context of the reduction of the VAT rate the “delivery and installation of solar panels” as follows: “work on a property consisting of the delivery of solar panels and their installation”.

As a result, all the parts necessary for this installation and its operation also come under the super-reduced rate, which implies the following parts of the photovoltaic solar panels: photovoltaic panels (or hybrid solar collectors), fixing rails, DC and AC electric cabling connected directly to the photovoltaic installation, inverter, electrical protection devices, bidirectional meter; and for the thermal solar panels: thermal solar collectors, fixing rails, insulated pipework, solar storage reservoir, calorimeter, peripheral equipment (power feed, regulation, heat exchangers); as well as, of course, the costs of installation.

For the photovoltaic solar panels, a storage installation (battery) is therefore not involved.

It is also important to note that the super-reduced rate only applies to such installation work on a solar power plant. Bulletin No 816 issued by the Registration Duties, Estates and VAT Authority defines this notion of “work on a property” as follows: “Therefore, there is reason for understanding this new provision not as the delivery of solar panels or the installation of such panels carried out separately, but as work on a property that consists of a delivery of solar panels with installation”.

Since 1 January 2017 (date of the energy consultant's invoice), thermal insulation must meet energy efficiency and durability criteria. The energy efficiency criteria correspond in substance to those of the previous PRIMe House scheme and are expressed in four energy performance standards.

The durability criteria refer to the environmental quality and nature of the thermal insulation, as well as the way in which it is attached.

Environmental quality is defined by the environmental impact of insulation materials assessed using the environmental indicator I_eco12.

The Ministry of the Economy regularly checks the calculations. The experts concerned can therefore be reported to the Ministry of the Economy or to Klima-Agence.

The deviations must be documented and the main contractor must be notified of them. The municipality has the right to request additional calculations and/or documentation. The "as built” EPC indicates whether the minimum requirements have been met despite the deviations once the building is completed. As with any non-compliance with the building permit, the municipality can demand that the construction work required to ensure compliance with the EPC be carried out during the construction period and call the police if necessary.

The municipality has the right to request the "as built" EPC from the main contractor. Other measures may also be envisaged, for example the introduction of a deposit system. According to one Grand Ducal Regulation, municipalities even have the possibility of prosecuting the main contractor (sanctions enshrined in the Law of 5 August 1993 on the rational use of energy, as amended).

The municipality can itself decide on the consequences to be imposed on the main contractor/planner/construction company in the event of a breach of the legal requirements. In principle, a breach of these obligations can be treated in the same way as a breach of the distance rules or surface area coefficients.