Explaining the Tax Reduction for Swedish Homeowners installing Green Technology in 2023
Homeowners in Sweden considering installing solar panels should be aware that by doing so, they can benefit from tax reductions for the cost of both labor and materials, as part of a government initiative known as the green deduction (or “grön teknik”). The subsidy was triggered by a governmental amendment which entered into force on 1st January 2023, and applies to installations paid for after 31st December 2022.
In this article we’ll look at the details of the initiative in further detail, including the nature and conditions of the deduction, and the best options for installing solar panels in your home.
How does it work?
Individual Swedish homeowners are now entitled to a tax reduction for the cost of labor and materials involved in installing so-called “green technology”, from solar cells and batteries to charging boxes for electric vehicles. Unlike before, when applicants had to spend first and apply for grants later, the new tax reduction is deducted directly from the suppliers’ invoice.
The relevant figures include a 20% deduction of labor and material costs related to grid-connected solar cell systems; a 50% reduction of labor and material costs for batteries & self-produced electricity; and a 50% reduction of labor and material costs for the installation of one or more electric car charging boxes. It is worth noting that the deduction applies to labor and material costs, but not to travel costs, planning or shipping. Sweden’s Tax Agency has approved a template for these costs, set at 3% of the total amount. This means the deduction covers 97% of the total cost, equivalent to a total deduction of 19.4% for solar cells, and 48.5% for solar cell batteries and charging boxes. The maximum deduction per person per year is SEK 50,000.
Additionally, if your home or property produces a surplus of renewable electricity, you may be entitled to a separate tax reduction for the number of kilowatt hours fed into the electricity grid, equivalent to 60 öre per kilowatt hour, and capped at SEK 18,000 per year.
What requirements need to be met to receive a tax deduction for green technology?
You are eligible for a tax deduction under the “grön teknik” initiative if:
a) the company performing the installation is approved for F tax in Sweden;
b) the facility in question is connected to the mains; tax reductions are not available for Off-Grid facilities;
c) you are the owner of the property and use it as a residence. Alternatively, you can apply for a tax reduction to install green technology in a relative’s home.
The tax reduction does not cover business properties, and companies cannot apply; however, they are invited to apply for Klimatklivet grants for public charging stations instead. These are granted to public charging stations for electric vehicles, such as trucks, boats, buses or airplanes, regardless of whether they are public or not.
What is the difference between “grön teknik” and ROT?
In Sweden, an ROT deduction is a tax deduction for renovation, maintenance and reconstruction. Prior to the new amendment, ROT deductions were available for solar cell installations, covering 30% of the labor cost, which made up 9% of the total cost.
Since the new tax reduction also applies to the cost of materials, the deduction will be larger overall than it was with ROT. As with ROT deductions, “grön teknik” has a ceiling of SEK 50,000 per person per year. Homeowners can apply for both ROT and “grön teknik” in the same year assuming their tax returns are up to date.
How should I proceed?
The company you hire to install the green technology will include the relevant tax reduction on its invoice for the costs of labor and materials. The responsibility for ensuring that the correct information is received by the Swedish Tax Agency rests with the company, and individual homeowners won’t be required to apply for grants after the fact, unlike with previous solar cell subsidies.
Once the installation is completed and paid for, the installing company should apply to the Swedish Tax Agency for payment of the tax reduction. The application needs to be received by the Agency no later than January 31st of the year following the one in which the homeowner paid for the installation.
The tax reduction which you have been approved for during the year is pre-filled on your return the following year. It is only when the time comes to approve your return that you should request your final tax reduction. Make sure to check whether the deduction amount is correct at this time.
We hope this guide helps you to assess whether to apply for the “grön teknik” subsidy for green technology in Swedish homes. To find out more about solar-generated renewable energy in the Nordic region, get in touch with SolarNordics today.
