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Photovoltaics in the company - prosumer deposit and VAT

A prosumer generating surplus electricity is considered a VAT payer. The effect of recognizing a prosumer as a VAT payer making a VAT-taxed supply is the need to issue invoices for the supply of energy.
Monika Pastuszak
Senior Tax Specialist, Tax Advisor

Companies that have a photovoltaic installation and feed the generated energy into the grid from the installation, and are VAT payers, need to look carefully at the billing system adopted with the electricity utility for accounting and tax purposes.

For example, the billing system referred to as net-billing, introduced as a result of an amendment to the Renewable Energy Sources Act (the RES Act), raises the issue of the tax settlement of the amount indicated on invoices from the energy supplier as a reduction of the amount to be paid often referred to on invoices as the prosumer deposit under Polish VAT regulations.

In the currently issued interpretations of individual tax regulations in the field of VAT, when settling in the so-called net-billing system introduced in the Renewable Energy Act, the interpretative authority presents the position that a company that is an active VAT payer, which has such amounts reducing the gross amounts payable resulting from the balance of the photovoltaic energy deposit, acts as a VAT payer, and by introducing energy into the grid energy company will supply goods to the energy company within the meaning of Art. 7(1) of the VAT Act, which would mean it would be subject to VAT.

Individual interpretations

Such a position has been confirmed in a number of individual interpretations, including an individual interpretation dated May 30, 2023, with reference 0114-KDIP4-1.4012.164.2023.1.BS, in which the tax authority indicated that: "Consequently, you, as a prosumer - an active VAT taxpayer, by introducing energy into the power grid, make a supply of goods to the power company within the meaning of Article 7(1) of the Law. The circumstance of mutual compensation of the prosumer's obligation towards the energy company and of this company towards the prosumer (which follows from Article 4c (3) of the RES Act), does not affect the determination of the chargeable nature of the supply of electricity generated in your micro-installation by you."

An entrepreneur who is a prosumer and an active VAT payer who supplies energy from renewable energy sources to an energy company for a fee in the net-billing system is obliged to issue a VAT invoice for this purpose, which should be done no later than upon the expiry of the payment deadline. Tax liability in connection with the delivery will arise when the invoice is issued. However, if such an entrepreneur does not issue an invoice or issues it with a delay (i.e. after the payment deadline), tax liability will arise when the payment deadline expires.

Tax base

In order to determine the VAT taxable base for a VAT-taxpayer company generating electricity from a RES installation, the value due to the prosumer, determined as the product of the amount of electricity injected into the grid by the company after hourly balancing and the market price of electricity, should be reduced by the amount of output VAT. The value on the invoices from the power company presented as a deduction amount due to the settlement of energy injected into the grid from RES installations is a gross amount (with VAT). The above position was expressed, among others, in an individual interpretation dated January 12, 2023 with ref. 0114-KDIP4-1.4012.417.2022.1.APR.

Due to the need to analyze the settlement model used in a given company in the event of having a photovoltaic installation used in business activities, if you have any doubts or questions, please contact KR Group.

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