Romania has passed a reduction in VAT for solar modules from 19% to 5%.

“The law does not provide any installation size limit in order to benefit from the reduction,” Mihaela Nyerges, partner at Nyerges & Partners, told pv magazine.

The measure only applies to PV panels for residential homes or public buildings belonging to central or local authorities or entities. Commercial companies are excluded from the tax cuts. The VAT reduction also applies to solar thermal panels, installation kits, and low-emission heat pumps.

The incentives are expected to increase solar uptake across Romania and boost self-consumption. Amid rising energy prices, the country has seen a sharp increase in prosumers since it introduced more favorable net metering provisions in 2022. Romania is also supporting rooftop PV deployment via the Casa Verde Fotovoltaice (green PV home) scheme.

“The VAT reduction will stimulate even more the already growing market, although we can expect that the VAT reduction will be passed only partially to consumers due to rising demand,” said Nyerges.

According to the latest statistics from the International Renewable Energy Agency (IRENA), Romania had 1,398 MW of solar installed by the end of 2021.