Solar systems have long been popular as investments. In addition to the promise of a secure return, the tax advantages for solar systems are particularly attractive. However, the prospect of high tax savings should not blind investors to the real risks associated with such an investment. When considering offers, it is crucial to carefully assess whether the opportunities and risks are in a balanced proportion. This is where our advice to potential investors begins.
Tax advantages through investment allowance
Solaranlagen als Kapitalanlage sind besonders interessant, wenn für die Anschaffungskosten der sogenannte “Investitionsabzugsbetrag (IAB)” gemäß § 7g EStG in Anspruch genommen werden kann. Because then, up to 50% of the acquisition costs can be deducted from profits in the pre- or first operational year. This suddenly reduces the tax burden for the system operator. The remaining part of the acquisition costs is depreciated evenly over the following 20 years.
Investors with particularly high incomes can save up to €100,000 with the help of the investment allowance (IAB) – money that would otherwise flow to the tax authorities. However, the corresponding capital is tied up in the solar system as a tangible asset. Since this asset generates ongoing income, financial advisors often refer to it as “solar rent”: the tax that would normally be paid is converted into income for the next 20 to 30 years.
Offers for direct investments in solar systems
As investment objects, larger rooftop installations or independent parts of ground-mounted solar systems are particularly popular. Typically, the land on which the installations are built is not included in the sale. Rather, the land is leased from the respective property owner for a duration of 30 years.
Investment offers for solar systems are often tailored to the tax limits for claiming an investment allowance (IAB). Larger systems can be divided into various components for this purpose. The individual systems typically have an installed capacity between 150 and 500 kWp.
Currently, the demand for such systems exceeds the supply by a significant margin. Therefore, the providers dictate the rules in this market. Some providers seem to benefit greatly from the fact that private investors often have little experience with solar systems of this capacity.
Consider legal pitfalls
However, caution should be exercised, especially in such cases. However, it should not be overlooked that the investment objects are real technical installations, and significant amounts of money are at stake. To ensure the investment does not end in a financial disaster, legal pitfalls should be carefully examined. Above all:
- Construction contract: Are the individual payments adequately secured? When should ownership transfer? By when must the installation be completed, and is the investment allowance (IAB) secured? What rights apply in case of delays? What happens in case of the contractor’s insolvency?
- Grid connection: Is the grid connection guaranteed? When can the grid connection be expected? Are the necessary easements secured?
- Roof use agreement: What compensation can the property owner demand? Is the roof usage secured permanently? What liability risks exist regarding the roof? What happens if the property is later sold or inherited?
- Maintenance and operation management contract: Who ensures smooth operation in daily business? What services does the operation manager have to provide? What costs are incurred for the investor?
- Power supply contract: How reliable are the projected revenues from on-site electricity sales? How long does the power supply contract last at a minimum? What risks and obligations does the investor face in their role as a electricity supplier?
Particular care is especially necessary when acquiring a component of a larger overall system. Because in general, multiple plant operators commonly share certain ancillary facilities such as connection lines or transformers. Therefore, in this scenario, the shared uses should also be clearly and appropriately regulated.
Investor consulting by the PROJEKTKANZLEI (PROJECT LAW FIRM)
We regularly advise potential investors on their investment decisions. Due to the special expertise of our law firm, we can evaluate the offers not only from a legal perspective. If needed, we can also provide practical recommendations and offer comprehensive consulting services.
Ideally, we review the offers before signing the contract. We point out risks early on and provide tips for improving contract drafts. Upon request, we also conduct contract negotiations with providers or develop specific regulatory proposals to secure investments.
If the contracts are already signed and issues arise during project implementation, our focus is on securing our clients’ investments to the best of our ability. We present options to rescue distressed projects and prevent further damage. If necessary, we also enforce the claims and rights of our clients in court.
Do you have any questions on this topic or do you need our assistance? Then please feel free to send us a short message at post@projektkanzlei.eu.
