Rental of solar panels on VAT-exempt leased property is subject to VAT
The rental of solar panels that are placed on a property that is rented with exemption from VAT constitutes an independent service subject to VAT. This means that the landlord is entitled to recover VAT.
Issue of law and interest
The interested party rents a property and sublets it with a VAT exemption. A separate rental agreement has been concluded with the tenant for the use of the solar panels installed by the interested party. The question at issue is whether the rental of the solar panels constitutes an independent (taxed) service, or is linked to the rental of the property in such a way that it is comprised within that (exempted) service. The relevance of this case lies in the possibility for the interested party to reclaim VAT relating to the purchase, installation and maintenance of the solar panels. This is only possible if the rental of the solar panel constitutes an independent service, i.e. a service which does not follow the VAT treatment of the VAT exempt rental of the property.
The Zeeland-West-Brabant District Court ruled that the rental of the solar panels is considered a separate service, and therefore, that the interested party is entitled to recover VAT. The District Court thereby considered - inter alia - that it is important that a separate fee is charged for the rental of the solar panels, and that the tenant has the choice whether or not to rent the solar panels.
The question of whether the rental of solar panels is comprised within the exempted rental of the property depends on the facts and circumstances, and above all is open to interpretation. In certain circumstances, it can be beneficial to have this rental take place subject to VAT. Therefore, when installing solar panels, we recommend an assessment of what VAT consequences could occur, and what optimisation possibilities exist. Of course, we would be happy to assist you with this.
If you have any further questions on this issue or would like to receive more information, please contact Jérôme Germann, Jérôme Ariës or your trusted adviser at the Loyens & Loeff Real Estate Tax Team.