Company installs solar panels on the house of a manager or employee

Company installs solar panels on the house of a manager or employee

Your employer installs solar panels on the roof of your private home. Why? To give you a benefit? Or maybe you are the manager and the company is located in (a part of) your house? What about taxes? The minister surprises.

All benefits are salary

The standard rule is that all benefits that the company grants to employees – employees or company directors – are regarded as salary or as company directors' compensation. Benefits are taxed at their market value. The 'market value' here is the value that the benefits have with the recipient.

There are 2 types of exceptions to this.
Some benefits are not considered taxable benefits, but social benefits. They are therefore not taxable in the hands of the employee. Just think of the eco vouchers.
Other benefits are considered taxable benefits, but their value is estimated on a lump sum basis. A typical example is the provision of a house: the recipient is not taxed on the actual benefit, but on an amount based on the cadastral income of the house.

Solar panels: whose are they?

How do you calculate the benefit if the employer has solar panels installed for an employee? That depends on whose the solar panels are.

If the solar panels become the property of the employee, the taxable benefit is equal to the value of the solar panels. In response to a parliamentary question, the Minister of Finance clarified that the benefit is valued based on the market price for the same installation for private customers.

But it can also be agreed that the installation remains the property of the employer. In that case, the advantage is not the value of the solar panels, but the price that the employee would have to pay if he/she were to rent the solar panels. In other words: the current annual lease price for solar panels on the private market.

And the electricity?

The minister further clarifies in his answer that once the provision of the solar panels has been taxed, the electricity produced can no longer be regarded as a benefit in kind. This applies both in the hypothesis that the employee is the owner of the installation, and when the installation is put at his disposal and he pays tax on a fictitious lease price.

Alternative for free electricity?

At the beginning of 2022, an electricity company launched a product in which the employer concluded an electricity contract for the employee, so that he could receive free electricity or electricity at a reduced price – subject to conditions and with some restrictions. The 'free provision of heating and of electricity used for purposes other than heating' is also taxable, but in principle on a lump sum amount. The value of such benefit in 2022 is equal to 2.130 euros per year for heating, and 1.060 euros per year for electricity for executives and business leaders. For other employees, this value is set at respectively 960 and 480 euros per year.
That lump sum valuation is much lower than the actual value of the benefit, so the gain was calculated quickly. However, the minister reacted fairly quickly by limiting the lump sum estimate for free heating and electricity to situations where the house is also put at the disposal of the employee. If not, then the real value of the benefit counts.

The question is therefore (and certainly if the employer remains the owner of the solar panels) what is actually ‘put at the disposal' here: the solar panels or the electricity?

Suppose you live in a house owned by your company. And your company installs solar panels on the building, which saves you electricity… What is your advantage then? The solar panels or the electricity...? It seems that the last word on this has not yet been written.