Austria’s parliament is set to vote on the Acceleration Act for the Expansion of Renewable Energies (EABG), which will have a direct impact on the future direction of renewable energy in the country. The local photovoltaic industry association, PV Austria, has expressed deep concern, believing that if the bill is approved in its current form, it is likely to increase the tax burden on the photovoltaic (PV) industry.
Austria’s new three-party coalition government, led by Prime Minister Christian Stocker, plans to reinstate a 20% value-added tax (VAT) on PV systems of 35 kW and below under the bill. The previous government had planned to exempt such systems from VAT for two years starting from January 1, 2024.
According to the “EU Solar Market Outlook 2024-2028” published by SolarPower Europe, Austria is expected to add 2.5 GW of new PV installations in 2024, a year-on-year decrease of 14%, with cumulative installations reaching 9.1 GW. The slowdown in the rooftop PV market is the main reason for this decline, and the VAT exemption policy had to some extent mitigated the impact of the market downturn.
A survey conducted by PV Austria revealed that 90% of PV companies anticipate a sharp decline in market demand if VAT is reinstated, which could lead to operational difficulties for small and medium-sized enterprises (SMEs) and potentially trigger job losses affecting thousands of people. PV Austria stated, “The government’s planned early abolition of VAT exemptions for small PV systems has caused great uncertainty in the industry and severely weakened market trust in policies.”
In addition, renewable energy projects over 1 MW are also at risk of increased taxation. The government believes that reinstating the tax on small PV systems will generate an additional €175 million in revenue for the treasury in 2025. However, PV Austria counters that the actual revenue increase will be at most €30 million and that this measure will complicate market regulation and increase administrative burdens.
Reinstating full taxation on PV systems undermines trust between the government and household consumers as well as local installation companies, who genuinely need stable and predictable policies. Herbert Paierl, CEO of PV Austria, said, “While reasonable fiscal consolidation is important, a purely tax-oriented approach and taxation measures for small PV systems are undoubtedly a heavy blow to Austria’s already weak business environment.”
PV Austria also emphasized that these measures are at odds with the European Commission’s policies to reduce energy prices. The EU’s Affordable Energy Action Plan aims to lower energy costs and accelerate approval processes to promote renewable energy development, which is clearly contradicted by the new Austrian government’s approach. In the long run, this may adversely affect energy prices in the country.
