Reselling electricity produced by a photovoltaic installation generates income subject to a specific tax framework. Depending on the power of the installation, the chosen sales method, and the producer’s status, the rules regarding taxation, VAT, and contributions vary significantly. Understanding these mechanisms before signing a purchase agreement helps avoid unpleasant surprises on the income declaration.
Power threshold and income tax exemption
The first criterion that determines the applicable taxation is the power of the installation in kWc. For individuals with a photovoltaic installation connected to the grid at a maximum of two points, with a power of 3 kWc or less, the income from resale is exempt from income tax. This exemption applies provided that the produced energy is not used for professional purposes.
Beyond 3 kWc, income becomes taxable from the first euro received. This power limit thus constitutes a determining threshold in the sizing choice of an installation. Finding all tax information on Je Comprends Enfin allows for verification of the exact conditions applicable to each situation.
A point often overlooked: the threshold of 305 euros in annual receipts also plays a role. Even for an installation exceeding 3 kWc, income below this amount may benefit from simplified treatment depending on the chosen tax regime.
Tax regime applicable to electricity resale income
When photovoltaic income is taxable, two tax regimes are available: the micro-BIC regime and the simplified real regime. The choice between these two options depends on the amount of annual receipts and the producer’s tax strategy.
Micro-BIC: flat-rate deduction
The micro-BIC regime applies by right when annual receipts remain below a certain ceiling. It provides for a flat-rate deduction on declared income, simplifying the declaration. The producer declares the gross amount of their electricity sales, and the administration automatically applies the deduction.
This regime is suitable for moderately sized residential installations, where actual expenses (maintenance, insurance, depreciation) remain low.
Real regime: deduction of actual expenses
The simplified real regime allows for the deduction of all actual expenses incurred: depreciation of equipment, maintenance costs, loan interest, insurance. For a higher power installation with significant operating costs, the real regime can reduce the taxable base much more than the flat-rate deduction.
Switching from one regime to another is possible but governed by timing rules. This choice must be anticipated from the first year of production to avoid being stuck in an unfavorable regime.
VAT on solar installations and electricity sales
The applicable VAT depends on the installed power. For installations of 3 kWc or less on a building completed more than two years ago, the reduced rate of 5.5% applies to the purchase and installation of the equipment. Beyond this power, the normal rate of 20% applies.
On the sale of electricity itself, VAT comes into play differently depending on the seller’s status. An individual exempt from VAT does not charge it on their sales. In contrast, a business or operator subject to the real VAT regime must collect tax on the electricity sold while recovering the tax paid on their purchases and investments.
- Installation of 3 kWc or less on a building over two years old: VAT at 5.5% on equipment and installation
- Installation over 3 kWc or recent building: VAT at 20%
- Sale of electricity by a VAT taxpayer: collection of tax on resale receipts, with the possibility of deduction on investments
CFE, property tax, and flat-rate taxation of network companies
The business property tax (CFE) does not apply to photovoltaic installations with a power of 9 kWc or less. Beyond this threshold, the producer is generally liable for this local tax, calculated on the rental value of the property used for the activity.
The property tax on built properties (TFPB) does not apply to individuals for their rooftop panels. Ground-mounted installations operated by businesses, however, fall under this taxation, which alters the profitability of large-scale projects.
Local authorities that produce and sell photovoltaic electricity find themselves in a particular tax situation. A producing municipality may be subject to corporate tax, CFE, and flat-rate taxation on network companies (IFER). This aspect is often overlooked in feasibility studies of projects undertaken by local authorities.
S21 system and evolution of the resale framework
The regulatory framework is evolving. The S21 system provides for the elimination of the self-consumption bonus and introduces a single tariff for injected electricity, announced at 1.1 euro cents per kWh excluding taxes. Total sales would no longer be permitted for installations up to 9 kWc, refocusing the model on self-consumption with surplus sales.
The date of the complete connection request determines the applicable purchase tariff. It is not the date of signing the quote or the date of commissioning that sets the tariff, but rather the moment the request is registered. On a long-term contract, this distinction can change the total remuneration received.
- The purchase tariff is fixed at the date of registration of the complete connection request
- Rights acquired before the entry into force of the S21 system remain protected
- Self-consumption with surplus sales becomes the main model for residential installations up to 9 kWc
The reduction of public support for resale and the decrease in purchase tariffs necessitate recalculating the overall fiscal profitability of a project. A producer who relied on total sales must now integrate self-consumption into their economic model, which also changes the amount of taxable income and, consequently, the appropriate tax regime.
