In a letter dated October 29, 2021, the Federal Ministry of Finance introduced a revised simplification rule for small photovoltaic systems (\u201cPV systems\u201d). Under this regulation, the tax authorities will assume, without further review<\/strong> ,<\/strong> that the operation is a hobby activity not subject to income tax if the operator declares within a specified period that they wish to take advantage of the simplified rules<\/strong>. The right to opt for this hobby activity classification applies only to the intent to make a profit as defined by the Income Tax Act. The new hobby activity option therefore does not<\/strong> apply to value-added tax<\/strong>. <\/p>\n\n The following section addresses selected points of uncertainty.<\/p>\n\n The capacity limit must be assessed on a per-applicant or per-facility basis.<\/p>\n\n In the case of married couples, each spouse<\/strong> may take advantage of the simplified rule if the total capacity of the photovoltaic system(s) they operate does not exceed 10.0 kW\/kWp<\/strong>. In addition, married couples may also take advantage of the simplified rule for a jointly operated photovoltaic system with a capacity of up to 10.0 kW\/kWp. <\/p>\n\n The tax authorities apply the simplification rule on a per-operator or per-group-of-operators basis; that is, they treat<\/strong> all photovoltaic systems ( <\/strong>and\/or combined heat and power plants) owned by a taxpayer as a single business operation<\/strong>: The 10.0 kW\/kWp limit refers to the total capacity of the photovoltaic systems owned by the respective operator.<\/p>\n\n Treating the PV systems as a single business operation opens up opportunities for structuring the business.<\/p> If the total installed capacity of the photovoltaic system(s) exceeds the 10.0 kW\/kWp limit, it is possible to reduce the capacity or transfer portions of it to a spouse or partner.*<\/p> * Gift tax exemptions and other potential tax implications must be considered on a case-by-case basis.<\/p><\/blockquote>\n\n For existing facilities<\/strong> (put into operation after December 31, 2003, and after December 31, 2021), the application<\/strong> must be submitted by December 31, 2022<\/strong> (cut-off date).<\/p>\n\n For new systems<\/strong> commissioned after December 31, 2021, the application<\/strong> must be submitted by the end of the assessment period following the year of commissioning<\/strong> (e.g., by the end of 2023, if the PV system was commissioned in 2022).<\/p>\n\n The application has retroactive effect on previous tax assessment years; these must be amended to the extent permitted by procedural law.<\/p>\n\n By taking advantage of the simplification rule (hobby), labor costs may, in some cases, qualify for a tax reduction as household-related services under Section 35a(3) of the Income Tax Act. However, this requires that the services in question be those of a tradesperson performed in the household. If a photovoltaic system covered by the simplification rule is located on a rental property outside the taxpayer\u2019s own household, \u00a735a(3) of the Income Tax Act does not apply. <\/p>\n\n If you have any questions, the sch\u00fctze & wirtz tax consulting team will be happy to assist you.<\/p>\n\n Source: NWB, Federal Ministry of Finance<\/p>\n\n Photo: Bill Mead, Unsplash<\/p>\n\n Disclaimer: We assume no liability for the accuracy and completeness of the information. The information provided here does not constitute recommendations for action. <\/p>\n","protected":false},"excerpt":{"rendered":" Background In a letter dated October 29, 2021, the Federal Ministry of Finance introduced a revised simplification rule for small photovoltaic systems (\u201cPV systems\u201d). Under this regulation, the tax authorities will assume, without further review , that the operation is a hobby activity not subject to income tax if the operator declares within a specified period that they wish to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[507,628],"tags":[670,671,669,666,667],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\tExercise of Voting Rights by Operators<\/h2>\n\n
Specific Questions About Safe Electricity Use<\/h2>\n\n
Specific Questions<\/strong><\/td> Does not affect the application of the simplification rule<\/strong> for small PV systems<\/strong><\/td><\/tr> Solar power systems whose generated electricity is used to charge a privately owned electric car <\/strong> yes<\/td><\/tr> If the electricity generated is fed exclusively into the public grid<\/strong> without<\/strong> any of it being used<\/strong> for personal consumption<\/strong> <\/td> yes<\/td><\/tr> In the case of multi-family buildings<\/strong> where individual units are rented on a long-term basis and the electricity generated is fed into the public grid, it is used for personal residential purposes and for common areas (e.g., stairwells, basements, and heating systems).<\/td> no<\/td><\/tr> What happens when a property is vacant<\/strong>?<\/td> It depends on how the generated electricity is planned to be used in the future.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n Date of Application<\/h2>\n\n
Simplification Rule and Tax Deduction for Expenses Related to Household-Related Services<\/h2>\n\n