Austria: The new government plans to increase the tax burden on photovoltaics

The Austrian Parliament is about to vote on the Renewable Energy Expansion Acceleration Bill (EABG), which will have a direct impact on the future direction of renewable energy in Austria. The local photovoltaic industry association PV Austri expressed deep concern about this, believing that if the bill is approved in its current form, it is highly likely to increase the tax burden on the photovoltaic industry.

It is reported that the new Austrian government is governed by a coalition of three parties, led by Prime Minister Christian Stocker. The government plans to restore the 20% value-added tax (VAT) levied on photovoltaic systems of 35kW and below in this bill, while the previous government had originally planned to implement a two-year VAT exemption from January 1, 2024.

According to the "2024-2028 EU Solar Market Outlook" released by the European Photovoltaic Association, Austria will add 2.5GW of new photovoltaic installed capacity in 2024, a year-on-year decrease of 14%, with a cumulative installed capacity of 9.1GW. Among them, the slowdown in the rooftop photovoltaic market is the main reason, while the VAT reduction policy has to some extent buffered the impact of the market downturn. A survey conducted in PV Austria shows that 90% of photovoltaic companies expect a sharp decline in market demand once value-added tax is restored, and small and medium-sized enterprises will face operational difficulties, which may even trigger a layoff crisis affecting thousands of people. PV Austria stated, "The government's plan to announce the early cancellation of value-added tax exemptions for small photovoltaic systems has caused significant uncertainty within the industry and severely weakened market trust in policies

In addition, renewable energy projects with a capacity of over 1MW also face the risk of tax increases. The government believes that the restoration of taxation on small-scale photovoltaic systems can bring an additional tax revenue of 175 million euros to the national treasury by 2025. However, PV Austria refutes that the actual increase in revenue is only up to 30 million euros, and this measure will make market regulation more complex and increase administrative burden. The restoration of comprehensive taxation on photovoltaic systems has undermined the government's trust between household users and local installation companies, who truly need stable and predictable policies. Herbert Paierl, CEO of PV Austria, said, "While reasonable fiscal consolidation is important, simply focusing on taxation and imposing taxes on small photovoltaic systems is undoubtedly a heavy blow to the already weak business environment in Austria

PV Austria also emphasized that these measures are contrary to the European Commission's policy of reducing energy prices. The EU's Affordable Energy Action Plan aims to reduce energy costs and accelerate approval processes to promote the development of renewable energy, but the new Austrian government's approach clearly goes against this policy direction and may have a negative impact on the country's energy prices in the long run.