VAT reduction will fuel home energy production and reduce reliance on the grid – Farrell

A temporary reduction in the VAT rate which applies to home energy production such as wind and solar, and also applies to residential retrofitting, should be implemented to help people with energy cost pressures, according to Fine Gael TD Alan Farrell.

Deputy Farrell, Fine Gael Spokesperson on Climate Action said, “Europe faces an extremely difficult challenge with regard to the energy crisis. I am, however, pleased that both the European Commission and the Irish Government are willing to put all options on the table, in an effort to bring energy bills down.

“I believe the solutions to the energy crisis will require a multitude of policies and initiatives, among them should be a temporary reduction in the VAT rate applied to renewable energy produced at home, namely solar panels and wind turbines; in addition to reducing VAT on residential retrofitting costs.”

Deputy Farrell continued, “By reducing VAT we can provide an incentive that will fuel public interest in pursuing these energy options. Not only will this result in cheaper bills for the consumer, it will also benefit our environment; and reduce the burden on energy demand. Making our homes more self-sufficient is a win-win.

“In Ireland, the current VAT rate for supply and installation of solar panels stands at 13.5%. However, the EU have adopted a position that VAT rates will be available for amendments through this crisis and some of our European partners have already taken this up. In Belgium, supply and install of solar panels, heat pumps and solar water heating systems, stands at 6% VAT; while in France the VAT rate for solar panel is currently at 10%.

“Earlier this year, ECOFIN Minister approved a change to the VAT Directive allowing certain products and services to be charged VAT at as little as 5%. While Ireland has already obtained approval for VAT reductions on energy bills (to 9%), as part of the Summer initiative to reduce the cost of living, further action can and should be taken.

Deputy Farrell added, “The energy crisis has been forced upon us as a direct result of Putin’s war of aggression in Ukraine, but this does not mean we are powerless to address it. We need to remove as many barriers to renewable energy as possible. By doing so we will leave people financially and environmentally better off.”