Like many others, Aksnes, general manager of the Teber electricity company, found out about the scheme one time press release From the Norwegian Tax Agency on December 22. He finds it difficult to understand how this would happen.
– This looks messy. The IRS announces that it will collect a tax on a portion of solar energy, but without explaining how this will be done in practice, says Aknes.
He believes the tax agency's move contradicts much of what the government has stated: increasing energy production and increasing the share of renewable energy.
This will not only constitute an obstacle to the transition to a renewable society, but will also strain the legs of everyone who has invested in solar energy, he said.
Exports 2200 kilowatt hours
In an explanation on the website, the IRS stated that it will be informed how to enter this into the 2023 tax return. Therefore, the tax will have a retroactive effect.
Aknes believes there are many people who would have used energy from solar cells differently if they had known they would be taxed for the excess.
“Then you can use more of it yourself,” he says.
He says Tibber plus customers export an average of 2,200 kilowatt-hours per year. However, taxation is not easy because the value of solar energy follows the price of electricity. As you know, it varies from hour to hour.
– Do you then have to pay tax for every additional hour worked? Axnes asks.
He thinks calculating that would be disproportionately complex.
– If the entire year is taken as a basis, then certainly no one will be affected. He points out that the vast majority of them use more electricity than they get from solar cells over the course of a year.
Axnes calls for cleaning up regulations on potential taxes on solar energy.
– First of all, tax tools must be compatible with what we want to achieve. Aknes warns that if regulations are not understood, solar growth could stop altogether.
Uses the Internet as a “battery”
According to the Swedish Tax Agency, the system costs 10 kilowattss, It is fairly average today, around NOK 230,000. With an electricity price of £1.50, it will take 15 years before this plant is paid for – without a tax on excess electricity.
The assumption is that the plant produces 10,000 kWh per year, which can only be expected from plants with positive trends in southern Norway. The annual reduction is also not included.
The most deciding factor is still the price of electricity, and whether you can use electricity from the solar cells themselves. The problem is that you make a profit during the summer months – when the price of electricity and electricity consumption are at their lowest levels. That's why some electricity companies offer “solkonto”, a service that allows people to save their surplus for the dark hours.
The alternative is to sell the surplus electricity at the market price, and then buy the electricity in the usual way at a higher price in the winter.
In fact, it will take more than 15 years before the owners of the solar cell plant in the example start saving money on electricity. The IRS has informed that their earnings stream will also be taxed.
– In this case, you will no longer be able to use the network as a battery in the same way, says Andreas Strömsheim Aamodt, Head of Business Policy at Nelfo.
He believes the possibility of getting paid for excess electricity means more people have invested in solar cells.
– Violation of the principle of symmetry
Strömsheim-Aamodt was surprised that the Swedish Tax Agency does not provide basic deductions or other common schemes for other taxes.
– They seem to understand the profits of solar power plants as capital income from the first krone, and that there will be no right of deduction for acquisitions or expenses with the plants. This is believed to contradict the principle of symmetry.
The principle of symmetry in tax law means that if a transaction resulting in a profit is taxable, the same transaction in the event of a loss will be deductible.
– Here the Tax Authority proposes to impose the full tax, but it does not have the right to deduct.
– The entire scheme must be stopped
Strömsheim Aamodt reacts to the fact that the tax will come into effect from 2023, and points out that Norwegian citizens are protected in the constitution against retroactive laws.
-We must also be protected from retroactive taxes. Here we have a tax that was not notified until people went on holiday for Christmas in 2023, and then it will be applied all year round, says Strömsheim-Aamodt.
Nelfo's business policy spokesperson calls for a political solution by the government.
– They have to come up with an explanation. In fact, they should stop the entire scheme before they spend too many resources investigating something that clearly contradicts what they want, says Stromsheim-Aamodt.
– Usually taxable
Leni M. Ringsa, head of department at the Swedish Tax Agency, denies that separate tax rules are imposed for solar cell systems. She told TU that the Norwegian Tax Agency has not proposed new rules either.
– But the starting point of tax law is that any benefit obtained through labor, capital or business is taxable income. She explains that the rule regarding return on capital, in this case an individual's home, is not a new rule.
Ringså says that the Norwegian Tax Agency has received several inquiries about the tax imposed on the sale of excess electricity and how it is calculated.
– That's why we released information about the main rules that generally apply to the tax on capital returns, and mentioned that the sale of surplus flow is usually taxed as capital income, says Renjsu.
The tax authorities are currently investigating how each individual can find out whether he is subject to tax for the sale of surplus electricity, and how he should arrive at the amount that must be declared in the tax return.
– One of the key points will be how to calculate the surplus flow, what might be taxable, and what deduction options are available to you, says Ringså.
We will provide more complementary information on this matter during the month of March, she said.
The maximum VAT is NOK 50,000
“Individuals investing in solar energy systems will not usually have to register with the VAT register. This will only happen if you sell surplus energy for more than NOK 50,000 within a 12-month period (not necessarily a calendar year).
If you have a turnover of taxable goods and services above this limit, you are obliged to register with the VAT registry. The 25 percent VAT must then be calculated.
On the other hand, you can also claim VAT deductions on investments used in taxable business. For solar cell systems, this could be, for example, the VAT associated with the system itself which is used to sell surplus electricity.
If a taxable trader purchases a solar cell system to supply electricity to his own business, and at the same time resells the surplus, there will in principle be a full right to deduct input tax.
You will not receive a VAT deduction for private use if you do not exceed the limit of NOK 50,000. Then you won't have to pay VAT on the electricity you sell either.
Source: Asmund Hogseth, Deputy Director of the Swedish Tax Agency
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