The VAT rate on the supply and installation of solar panels in private homes is set to be reduced to zero from 1 May.

The Government has agreed to the change, which will be brought forward by way of a report-stage amendment to the Finance Bill 2023 tabled by Minister for Finance Michael McGrath.

The bill gives legislative effect to taxation measures recently announced by the Government that are aimed at helping families and businesses to deal with high energy prices and increases in the cost of living.

The Government says that the solar-panels measure has been made possible due to amendments made to the VAT Directive in 2022, which added a number of new categories to which EU member states could apply a zero or reduced rate of VAT.

Measure costs €19m a year

The Department of the Environment, Climate and Communications has estimated that if a zero rate of VAT were passed on to consumers, it would reduce the average cost of the supply and installation of solar panels for consumers from €9,000 to €8,000.

The Department of Finance has estimated that the measure will cost €19 million a year.

Eamon Ryan (Minister for the Environment, Climate and Communications) said that the move would help the environment, as well as consumers.

“Currently, over 50,000 homes have solar panels, with 17,000 solar installations connecting to the grid taking place just last year. This is expected to increase further as prices come down and solar becomes more mainstream,” he added.