TAX CREDITS FOR YOUR RENEWABLE ENERGEY PROJECT IN FRANCE

EcoPower Europe - Rewable Energy Projects in France EcoPower Europe - Rewable Energy Projects in France

What is Crédit d’Impôts (Tax Credit)?

Tax Credits are available for certain types of heating and energy saving improvements to your principal residence. The available tax credit allows a household to deduct this amount from their income tax liability for the year the work was completed. If the household income is below the taxable threshold and there is no tax liability, the tax credit is paid back as a reimbursement and you receive a cheque back (this really happens!)

What Conditions Must I Satisfy to Benefit?

  • You must be the proprietor, occupant or tenant of the property.
  • It must be your principal residence.
  • The property must have been used for habitation for a minimum of 2 years (not available to new builds or full renovations unless after 2 years). If you have paid or tax habitation has been paid (by a previous occupant for example) for the previous 2 years then that is deemed qualifying even if the property has not been lived in.
  • You must be tax resident in France (domiciled in France) and liable to pay tax in France (even if you have a nil return)
  • If you are claiming a tax credit for a single category of work your household income must not exceed €24 043 in 2012 for a single person, €34081 for a couple. See the link above for a more detailed explanation.
  • If the work crosses more than one year the year to calculate the tax credit and income conditions is the date the work was completed.

If you are claiming for an energy assessment of your property you may only claim once every 5 years.

 

What is the eligible expenditure?

The total amount of the expenditure on the works is capped at €8,000 for a single person and €16 000 for a couple subject to joint taxation. This amount is increased by €400 per additional person in their charge.

Please note this is the total facture amount and not the amount you can claim in tax credit reimbursement.

This ceiling is assessed over a period of five consecutive years between 1 January 2005 and 31 December 2015. In other words after 5 years you can make another claim for tax credits and your eligible expenditure starts again.

In most cases, the tax credit is only available for the product or equipment costs. The products or equipment MUST BE supplied and installed by the same company who must be registered to supply and install such equipment. It is worth noting that the Tax Credit is available for the “TTC” (including TVA) product cost.

How much Tax Credit can I claim?

Tax credit has evolved in 2014 and been simplified…

For works completed in 2014 there are currently 2 rates:

  • 25% if the work is carried out in ‘bouquet’, regardless of the income of the household
  • 15% if the expenditure is for one category of work, which is means tested (see note above).

For certain works ie. solar thermal for solar hot water there is a maximum spend per m2 of capture area which can be subject to the % levels above (1000€ per m2 maximum spend)

Please note that tax credit rates can be amended, modified and suspended at any time throughout the year and you should not base your financial decision to proceed purely on the likely tax credit reimbursement.

 

'Single'

'Bouquet'

Wind turbine

15%

25%

Solar hot Water

15%

25%

Thermodynamique Hot water

15%

25%

Condensating boiler

15%

25%

Heat Pump Air/Eau

15%

25%

Geothermic heat pump

15%

25%

Double Glazing

15%

25%

Pellet Boiler

15%

25%

Pellet wood burner

15%

25%

Floor insulation

15%

~

Roof insulation

15%

25%

Diagnostic performance energetique

15%

~

What is a ‘Bouquet’ of work?

A "Bouquet' of work corresponds to the combination of at least two categories of work to improve the energy performance of a property among a list of 6 categories within the same year or on two consecutive years but no longer.

The ‘Bouquet’ category must cover a significant part of the property and must be verifiable on the invoice ie. roof insulation should cover the whole roof space not just a part to qualify. If it is not complete the reduced rate of 15% rather than 25% may apply.

Works within the same category does not qualify for the rate of 25%.0

Categories (précis)

  1. insulation of walls must be at least 50% of the total area of the external walls facing outside
  2. roof insulation. Work must include every roof space (flat roofs, attic floors, crawling spaces etc.).
  3. double glazing to at least 50% of the windows of the property.
  4. initial installation or replacement of heating or domestic hot water equipment operated by wood or other biomass (stoves, insert fireplaces, stoves used as heating or with back boilers, boilers operating with wood or other biomass).
  5. production of domestic hot water using a renewable energy ie solar, thermodynamic water heater.
  6. boilers and energy generation equipment using a renewable energy source,  condensing boilers, micro-cogeneration gas boilers, heat pumps whose essential purpose is the production of heat, Biomass pellet boilers, Biomass log gasification boilers, wind turbines.

Please note that PhotoVoltaic solar panels are not included for 2014.

List of categories that can only be included as a single works and therefore subject to the 15% tax credit taux and subject to means tested income levels:

  • Floor insulation
  • Installation of insulating shutters
  • Installation of insulated external doors Insulation of heating and domestic hot water pipes
  • Installation of control and programmers for boilers and room thermostats
  • Installation of pipe work and equipment for connecting a network of renewable energies together
  • An energy performance report

Who can carry out the work?

The supply of the materials, equipment etc. and the installation must be completed by the same company. Tax credits are not available for DIY projects. In fact, it can actually work out lower cost if you have a system professionally installed as in many cases you may also benefit from reduced rates of TVA.

The company must be registered with a SIRET No. to supply and install such equipment.

What are qualifying products?

In most cases, the tax credit is only available for the product costs. The cost of the installation is not included and not subject to tax credit calculation.

Products qualify if they are subject to certain characteristics of performance in energy efficiency and as such comply with the French Normes NF EN, a EU quality mark, Solar Key Marked, CSTbat, flammeverte etc.

For insulation the materials must comply with standards per m2 kelvin/watt.

Check with your installer that the relevant standards are met for the equipment you are having installed.

Financing.

To facilitate the financing of renewable energy projects it is possible to combine the eco-loan at Zero % and tax credit provided in the year of installation the household income does not exceed €25 000 for a single person and €35 000 for a couple etc.

If you have other public aid for the purchase of equipment and materials (regional Council, general Council, ANAH), the tax credit calculation will be on the cost of the products after the grants etc. have been deducted.

How do I apply?

All you need to do is keep all paperwork relevant to your renewable energy installation. You will need to attach a copy of the final facture to your household tax return. The facture should include an attestation from the installing company or should be signed and dated with the company’s official stamp with the date of installation and when the final payment was made.

On tax form no 2042 REVENUS you will find a section on Réductions et Crédits d’impôts - usually section 7. Follow the section down the page until you reach Dépenses en faveur de la qualite environnementale de l’habitation principale. You will find a section here stating  - montant des dépenses ouvrant droit au credit d’impôts au taux de...

Work out the total TTC spend of the equipment and materials only on your facture and put this figure in the relevant box. Do not try to work out the relevant % as the tax office will do this for you. If they have any queries they will contact you but adding a copy of the facture to the paperwork helps with the process.

You should receive your tax credit as either a rebate from your tax liability or you will receive a cheque back usually in July of the year you have submitted your tax return. Please note that if you have an installation in January you will not receive your tax credit rebate until July of the following year.

Tax Credit Summary

The Tax Credit scheme has been very generous in the past and remains so for certain renewable energy systems and something that you must take advantage of if you qualify.

We are pleased to offer advice on tax credits and other finance options wherever possible. However, please note this is an interpretation only of the requirements and you should check with your own tax office or Hôtel des Impôts for your own particular circumstances.

For further information or to discuss the possibilities please call or email us at anytime.

REDUCED RATES OF TVA

The standard VAT rate is 20%, but certain works improving the energy efficiency of your home are eligible for a reduced VAT rate.

For 2014 that reduced rate for work opening the rights to tax credit is 5.5%.

Included is the following:

  • thermal insulation work.
  • work to improve your heating system.
  • controls and programmers
  • changing the boiler to a more energy efficient model
  • installation of  wood heating
  • installation of a heating or solar hot water system
  • installing a heat pump for heating and domestic hot water production
  • the installation of a system of electricity generation by renewable energies: wind or hydraulic (not PV)

The rate of VAT at 5.5% is applicable to the work invoiced from 1 January 2014.

Other renovation work not included in the list above may benefit from a rate of 10%

What are the conditions?

You must be the proprietor, occupant or tenant of the property. It must be your primary or secondary residence. The property must be over 2 years old (not new build) AND you must NOT have carried out the following categories of renovation works over the previous 2 years:

Work on the foundations or elements that affect the structural strength of the building AND

Works on 5 of the 6 categories following

  • Work on non structural floors
  • Work on the exterior windows, doors and shutters
  • Works on internal partitions
  • Installation of mains drainage and/or water
  • Works on installing an electrical system
  • Installation of a complete heating system AND
  • the work will not increase the livable floor area by more than 10%

As a rule of thumb if the renovations are deemed to be more than 50% of the building to be replaced then this is treated as a new building and reduced rates of TVA DO NOT apply.

Reduced rates of TVA only apply where the company supplying the materials/equipment is also installing the system.

To apply for the reduced rates of TVA you must complete an ATTESTATION form supplied by the installing company and keep a copy. The Attestation form must be signed and dated with a date prior to the installation date of your system.

Download form here:  2014attestation.pdf

Please note that the installing company will apply the appropriate rate of TVA based on the information you have supplied on the Attestation. You must keep a copy of the Attestation and if the TVA rate applied is rejected by the tax office you will be liable to pay the difference.

Please note that the guidance here is an interpretation of the requirements and for definitive advice we would always recommend you visit your local tax office with details of your individual circumstances.