How is the electricity production of solar panels taxed?

Electricity production from solar panels has become significantly more common in recent years, and many households and companies have started to use solar energy. This raises questions about how electricity produced by solar panels is taxed in Finland. This article discusses the taxation of electricity production from solar panels comprehensively.

Taxation in households

For households, the taxation of electricity produced by solar panels is quite simple. If the electricity produced by the solar panels is used entirely in your own household, you do not have to pay taxes on it. This means that if the solar panels produce electricity that is used directly for lighting or heating the home, for example, no taxation is incurred.

If the household produces more electricity than it consumes and sells the excess electricity to the electricity grid, taxable income is generated. In this case, the income from the sold electricity is taxable capital income. Capital income taxation is determined in accordance with general capital income taxation principles.

Taxation in companies

For companies, the taxation of electricity produced by solar panels is more complicated. Companies can use the electricity produced by solar panels in their own operations without tax consequences, but if the electricity is sold to the electricity grid, taxable income is generated. The income from the sold electricity is the company’s taxable income, and it is taxed according to the company’s income taxation.

Furthermore, companies can take advantage of various tax incentives and subsidies for purchasing and using solar panels. For example, investment subsidies and tax deductions can lower the acquisition costs of solar panels and improve the profitability of the investment.

Value added tax (VAT)

The sale of electricity produced by solar panels is an activity subject to VAT. This means that if a household or company sells electricity to the electricity grid, VAT must be paid on the sale. The amount of VAT is determined according to the general VAT rate, which is 24% in Finland.

Tax-free income

It is good to note that small-scale electricity production can be tax-free under certain conditions. For example, for households, the tax exemption limit is 8,000 kWh per year. This means that if the household produces and sells less than 8,000 kWh of electricity per year, the income is tax-free.

Summary

Taxation of electricity production from solar panels in Finland depends on whether the electricity is used in one’s own household or sold to the electricity grid. As far as households are concerned, the electricity they use for their own use is tax-free, but the income from the sold electricity is taxable capital income. Income from electricity sold to companies is taxable business income, and sales tax must be paid. Small-scale electricity production can be tax-free under certain conditions.

More information on the taxation of electricity production from solar panels can be found, for example, on the website of the Tax Administration: Tax Administration – Aurinkopanelit .

I hope this article helped to clarify the taxation of electricity production from solar panels in Finland.