“Tenants Using Electricity Generated from Your Photovoltaic Installation? No Excise Tax
Photovoltaic installations are becoming increasingly common from year to year. It is more and more common for buildings with rental premises to have their photovoltaic installations – the energy produced from the installation is used to meet the needs of the tenants in the rented premises, with tenants being charged the costs of the electricity consumed on a recharging basis. Many people wonder whether excise duty on energy is payable in such a situation. Initially, the tax authorities issued conflicting interpretations, but ultimately, as a result of the intervention of the Head of the National Tax Administration (KAS), it turns out that excise tax does not have to be paid.
Is there an excise tax on energy from photovoltaic panels? As a general rule, the tax liability for excise tax in connection with the sale of electricity arises if the sale of electricity takes place for the end consumer within the country, including by an entity that does not have a concession to generate, store, transmit, distribute, or trade in electricity within the meaning of the Energy Law of April 10, 1997. However, based on § 5(1) and (2) of the Regulation of the Minister of Finance, Funds, and Regional Policy of June 28, 2021, on exemptions from excise tax (Journal of Laws of 2021, item 1178, as amended), the consumption of electricity generated from generators with a total power not exceeding 1 MW is exempt from excise tax by an entity that consumes this energy. Therefore, entities with photovoltaic installations with a capacity of less than 1 MW are entitled to take advantage of the excise tax exemption, if the capacity of the installation used to generate electricity for their own needs does not exceed 1 MW.
Charging tenants for electricity costs
Is there an excise tax on recharging energy to tenants of premises? If it is recognized that charging tenants for the cost of electricity generated from the photovoltaic panels owned by the lessor amounts to the resale of energy, this would mean that lessors not only have to pay excise tax but also have to fulfill many obligations, such as registration as a taxpayer for tax purposes or the submission of tax returns. However, in a letter from the Head of the National Tax Administration dated February 1, 2023 (ref. no. DOP7.8101.4.2022), it is stated that when a tenant rents premises in a building with a photovoltaic installation, it is possible to apply the excise tax exemption for the consumption of electricity when the total capacity of the generators does not exceed 1 MW. The Head of KAS pointed out that the tax liability arises when selling electricity in the country upon delivery of electricity to the final consumer (Article 9(1)(2) of the Excise Tax Act). At the same time, this issue is related to the obligation to issue an invoice or another document by the taxpayer, from which it follows the payment of the charge for the electricity sold by the taxpayer. Furthermore, the tenant of the premises cannot be attributed the status of the final consumer because in practice, this entity does not purchase electricity, but under the lease agreement, bears the cost of the electricity consumed in the rented premises. Therefore, this means that under the lease agreement for the premises, there is no sale of electricity to the final consumer. It is consumed in the lessor’s premises rented by the tenants based on the agreements concluded.
In summary, in the case of recharging energy to tenants of premises in a building where the photovoltaic installation is located, there is the possibility of applying the excise tax exemption for the consumption of electricity when the total capacity of the generators does not exceed 1 MW from the leased photovoltaic installation.”