The French Senate has recently passed the 2025 Budget Law, introducing a significant reduction in the value-added tax (VAT) for photovoltaic (PV) systems under 9 kW, lowering the rate to 5.5% effective October 1, 2025.
While this move is celebrated by industry professionals, there are concerns that the implementation delay may lead homeowners to postpone installations in hopes of benefitting from the new, lower rate.
Prior to this law, only PV systems that were 3 kW or smaller could take advantage of a preferential VAT rate of 10%. This limitation has often forced homeowners to restrict the size of their installations or opt for the standard 20% VAT rate, which could deter many from investing in renewable energy solutions.
The change comes after years of advocacy from the Groupement Des Particuliers Producteurs D’électricité Photovoltaïque (GPPEP), a French association representing small power producers. GPPEP has long sought a VAT alignment that reflects the lower rates applied to the construction sector, thereby promoting larger residential installations.
According to GPPEP President Joël Mercy, the reduced VAT not only supports installers and craftsmen but also offers a chance to combat “eco-delinquency,” potentially minimizing fraudulent VAT recovery claims.
However, clarity surrounding the application of this new VAT measure is still awaited, as it is contingent upon another ministerial decree scheduled for release by October 1, 2025. This forthcoming decree is expected to outline measures ensuring that new installations maximize self-consumption, achieve energy efficiency goals, and adhere to established environmental standards.
The anticipated VAT reduction is largely welcomed by various industry stakeholders, including Enerplan, an organization that has actively campaigned for the change. Nevertheless, the eight-month wait until the new rate takes effect raises questions and prompts concern among professionals that project timelines could be affected.
Industry experts are urging for prompt clarification regarding the new VAT terms, alongside the swift introduction of transitional measures aimed at preventing a potential slowdown in the sector. Meanwhile, Enerplan continues to engage with government ministries to help refine the details of the upcoming decree and ensure a prosperous future for the industry as advancements in renewable energy continue to progress.
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