Dáil Éireann Debate, Wednesday - 4 February 2026
399. Deputy Grace Boland asked the Tánaiste and Minister for Finance if he will consider extending the VAT exemption for solar PV systems to retro-fitted domestic batteries and hybrid inverters, given their increasing affordability, their role in improving grid stability, and the potential resilience benefits for households; and if he will make a statement on the matter. [8439/26]
View answer400. Deputy Grace Boland asked the Tánaiste and Minister for Finance if he will consider providing a VAT exemption for changeover switches when installed as part of domestic battery storage systems; if his Department has examined the potential fiscal and regulatory implications of extending the existing VAT reliefs for renewable energy equipment to include these safety-critical components; and if he will make a statement on the matter. [8440/26]
View answerI propose to take Questions Nos. 399 and 400 together.
I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law is required to comply. In general, the Directive provides that all goods and services are liable to VAT at the standard rate unless they are exempt from VAT or fall within Annex III of the Directive, in which case lower VAT rates may apply subject to certain rules.
In accordance with the Directive and Irish legislation, the supply and installation of solar panels on or adjacent to immovable property, being private dwellings, is subject to the zero rate of VAT. For the zero rate to apply, both the supply of the solar panels and their installation must be the responsibility of the same business in the same supply (i.e. a supply and install contract). The zero rate applies to ancillary equipment, such as a battery or hybrid inverter, only where the ancillary equipment is supplied and installed with the solar panels as part of the same supply and install contract. Where equipment, such as a battery and hybrid inverter, is supplied separately to the supply and installation of the solar panels, those goods are subject to VAT at the standard rate, which is currently 23%.
The Directive also allows for historic VAT treatment to be maintained by a Member State under certain conditions. On this basis, Ireland has retained its application of its reduced rate of VAT, currently 13.5%, to the supply and installation of fixtures, subject to the two-thirds rule. Generally, the supply and installation of a domestic battery storage system is regarded as a fixture for VAT purposes. Therefore, where a changeover switch is installed as part of a supply and installation contract of a domestic battery storage system, the reduced rate of VAT may apply to the whole supply subject to the two-thirds rule. For the reduced rate to apply, both the supply and the installation must be the responsibility of the same business in the same supply (i.e. a supply and install contract); however, if the cost of any goods provided in the course of the supply and install contract exceeds two-thirds of the total contract price, then the rate which applies to the goods, in this case 23%, will apply to the entire transaction.
There is no discretion under the Directive for Ireland to apply a reduced rate or exemption from VAT to the supply of retrofitted domestic batteries and hybrid inverters or changeover switches that are supplied outside of a supply and install contract.
