This relief allows expenses incurred in connection with the purchase and installation of photovoltaic panels to be deducted from income tax – even if the investor has already benefited from the “My Electricity” subsidy. What conditions must be met to deduct installation-related costs from tax? Who can take advantage of this option?
Deducting photovoltaics from tax – legal basis and main conditions for making the deduction
The legal basis for applying the thermomodernisation relief is the Act of 9 November 2018, which entered into force on 1 January 2019. The provisions of the Act clearly indicate that the relief is available to taxpayers who settle their taxes according to the general tax scale (17% and 32%), the 19% flat tax, or who pay a lump sum tax on registered income. An important condition for being able to make the deduction is being the owner or co-owner of a detached house on which, and for the needs of which, the photovoltaic installation has been installed. Above all, the electricity produced by the micro-installation must be used for the needs of the detached house, which is why the installation may also be installed on the roof of a garage or another outbuilding. It is also acceptable for the building to contain up to two residential units, or one residential unit and one commercial unit with an area equal to or less than 30% of the total area of the building. The building on which the PV installation is to be constructed must already be completed; it cannot still be under construction.
Even if the above conditions are met, the date on which the final expense related to the purchase and installation of the micro-installation was incurred is crucial for being able to use the thermomodernisation relief. This means that incurring the final expense no later than 31 December 2018 excludes the taxpayer from the possibility of making the deduction. However, starting the investment before 31 December 2018 and completing it after that date (understood as incurring the final related expense, based on the date on the invoice) qualifies the taxpayer to use the relief.
What is and what is not an expense within the meaning of the provisions of the above-mentioned Act?
A detailed list of expenses eligible for deduction can be found in the ministerial regulation constituting an annex to the above-mentioned Act. Generally, all kinds of equipment, construction materials and services related to the investment may be deducted – above all, the installation service itself (which should always be entrusted to specialists in the field). Importantly, an investor cannot classify expenses that they did not actually incur as eligible – the relief applies to expenses financed with their own funds as well as through a loan or credit. If the investor received a subsidy for photovoltaics, e.g. PLN 3,000 from the “My Electricity” programme, the amount eligible for deduction is reduced by the value of the subsidy received.
The group of expenses not eligible in this respect also includes, among other things: expenses classified as tax-deductible costs, expenses included in the list of tax reliefs under the Tax Ordinance, and expenses co-financed by the National Fund for Environmental Protection and Water Management or provincial environmental protection and water management funds.
What amount of incurred expenses can be deducted?
The total deduction may not exceed PLN 53,000, and this limit covers the sum of all thermomodernisation investments carried out in a building owned by the taxpayer. For married couples, the PLN 53,000 limit is calculated separately for each spouse, meaning they can deduct a total of PLN 106,000. If the deduction amount exceeds the annual income, deductions may be made over the following six years.
Example calculations including a subsidy from the government “My Electricity” programme
In 2020, the owner of a detached house invested PLN 30,000 in photovoltaics. They also received a PLN 3,000 subsidy from the government’s “My Electricity” programme, reducing the actual expenses incurred to PLN 25,000 – since this amount does not exceed the PLN 53,000 limit, it may be deducted from tax in full or, if it exceeds the annual income, over the following years (for a maximum of six years). This can save several thousand zlotys!