Investment deductions for tax-exempt solar systems

The reversal of the investment deduction for a now tax-exempt photovoltaic system is in any case legal for the time being.

In order to claim an investment deduction, the asset purchased must be used to generate business income. As the retroactive tax exemption for small photovoltaic systems means that many solar system operators no longer have to determine their profits, investment deductions claimed before 2021 can in many cases no longer be used for photovoltaic systems acquired from 2022 onwards and will therefore be reversed by the tax office.

The Cologne Fiscal Court confirmed this practice in proceedings concerning the suspension of enforcement. The taxpayer had purchased his investment in 2022, i.e. before the change in the law. However, the court ruled that there is no special protection for the expectation that the previous legal situation will remain in place. An appeal against the decision is pending at the Federal Fiscal Court. However, the final word on this issue is likely to be some time in coming, as the Federal Constitutional Court will probably also have to deal with the issue, as numerous solar system purchasers are affected by the change in the law and are now expected to retroactively waive their fixed investment deduction amount.