VAT and home batteries

The Dutch net metering scheme ends in 2027, reducing the benefit for owners of solar panels. Home batteries offer a way out, and under certain conditions the VAT on purchase and installation can be reclaimed.

A home battery is usually used to store self-generated electricity for private consumption. Where the battery is used to buy and sell electricity to an energy company and that company pays for the electricity fed back, the owner qualifies as a taxable person. Feeding electricity back for consideration on a continuing basis is an economic activity subject to 21% VAT.

The Dutch Tax Administration lists a number of indicators for assessing whether there is an economic activity:

• the battery is equipped with an energy management system (EMS) enabling electricity trading
• a dynamic energy contract has been taken out enabling electricity trading
• the purchase invoice and the energy contract are in the battery owner's name

Deduction and private use

The purchase and installation of a home battery attract 21% VAT. A taxable person is entitled to a refund of that VAT to the extent the battery is used for business purposes. Alternatively they can deduct the VAT in full on purchase and then declare and pay VAT on the private use in the return for the final period of the financial year.

Private use means the household's own electricity consumption, business use means feeding electricity back for consideration. Feeding back free of charge counts as private use. An EMS makes the split between private and business traceable.

Watch out for the small business scheme

When buying a home battery it is important that the owner is not applying the small business scheme. Taxable persons with turnover below € 20,000, including owners of solar panels, may apply that scheme. Where someone bought solar panels in the past and then registered for the scheme, the VAT on the home battery is not deductible.

Only deregister from the scheme where doing so pays off on balance. Check carefully whether the deduction on purchase and installation outweighs the VAT due on private use (for five years, each year in the final period of the financial year) and any flat-rate VAT charge for the private use of the solar panels, where full deduction was taken at the time.