A measure to support energy transition

The 6% VAT reduction was introduced as part of the Portuguese State Budget Law in 2021, designed to promote energy decarbonization and make renewable energy more accessible for homeowners. This measure also aligns with EU-wide directives to reduce reliance on fossil fuels and increase the use of clean energy sources like solar.

The goal was simple: make solar power and energy storage solutions more affordable for households, helping to reduce both energy bills and dependence on the grid. This incentive applies only to residential installations, and the deadline for benefiting from the reduced rate is June 30, 2025.

What equipment and services are covered?

The reduced 6% VAT rate applies to the following components and services for residential solar installations:

● Solar photovoltaic panels

● Inverters (both traditional and hybrid models)

● Solar battery systems for storing excess energy

● All installation services, materials, and equipment needed to get the system up and running

The 6% VAT rate significantly lowers the overall cost of installing a solar system, making it more affordable for homeowners looking to invest in renewable energy solutions. Explore solar panels in Algarve

Impact on costs

Thanks to the 6% VAT, the cost of installing solar has been much more affordable for many homeowners. For example, a typical system that costs €7,000 would only incur €420 in VAT under the current 6% rate. But once the VAT reverts to 23% after June 2025, that same system would incur €1,610 in VAT, an increase of almost €1,200.

Credits: Supplied Image; Author: Client;

Planning ahead

Even though the deadline may seem far off, solar installations can take time to plan and complete. From site assessments and the actual installation, the process can take several weeks or even months. As we approach the June 2025 deadline, the demand for solar installations is likely to increase, leading to longer wait times for scheduling and installation.

To take advantage of the reduced VAT rate, it’s important to ensure that your solar system is fully installed and operational before the end of June 2025. Find out more about solar installations in Algarve

Portugal’s renewable energy targets

Portugal has been a pioneer in renewable energy, with nearly 60% of its electricity generated from renewable sources in recent years. The government aims to reach 80% renewable electricity production by 2030, with solar energy playing a major role.

The reduced VAT rate was introduced to help homeowners contribute to these national targets while reducing their energy bills and increasing their energy independence.

What happens after the deadline?

There’s currently no announcement about extending the reduced VAT beyond June 2025. Unless new legislation is introduced, the standard 23% VAT rate will apply to all new residential solar systems installed after this date.

For anyone considering solar, it’s a good idea to start the planning process early, explore your options, and keep the upcoming deadline in mind.

Need advice for a local solar company?

At Voltaicos, we’re here to guide you through the entire process of installing solar, helping you make the most of the reduced VAT rate before it expires. Our team is multilingual and ready to assist you every step of the way, from the initial consultation to installation and beyond.

Voltaicos solar installations | www.voltaicos.pt | +351 926 250 355 | info@voltaicos.pt