Most European countries apply a reduced VAT rate to renewable heating. Great Britain charges 0% on energy-saving materials until 31 March 2027, then 5%; Ireland charges 0% on solar panels and 9% on heat pumps; France applies 5.5%; Belgium 6%; Poland 8%. The relief almost always depends on the installer supplying both the equipment and the labour as one job.
What VAT do the main European markets charge in 2026?
| Market | Heat pump | Solar thermal / solar panels | Key condition |
|---|---|---|---|
| Great Britain | 0% to 31 Mar 2027, then 5% | 0% to 31 Mar 2027, then 5% | Residential; supplied and installed together |
| Ireland | 9% (from 1 Jan 2025) | 0% on solar panels, private homes | Supply-and-install contract |
| France | 5.5% | 5.5% | Home over 2 years old; air-to-air added 18 Jul 2026 |
| Belgium | 6% | 6% | Solar: dwelling over 10 years old; heat pumps: all homes since 1 Jan 2026 |
| Poland | 8% or 23% | 8% on microinstallations | Home ≤ 300 m², installed in the structure |
| Germany | Standard rate on heat pumps | 0% on PV since 2023 | Solar thermal at the standard rate |
Treat this as a map, not a tax ruling. Rates and scopes moved repeatedly during 2026 — France extended 5.5% to air-to-air heat pumps on 18 July 2026 — so confirm the current official position with the national tax authority before pricing a job.
Why is VAT often worth more than a grant?
Because it applies to the whole invoice with no application, no means test and no deadline queue. On a £12,000 UK installation, zero-rating instead of 20% saves £2,000 outright — comparable to a mid-sized continental grant, and it arrives automatically in the quoted price rather than months later. See when does a heat pump grant actually get paid? for the contrast in cash-flow terms.
VAT relief also reaches technologies that grants skip. The United Kingdom funds no solar thermal grant at all under the Boiler Upgrade Scheme, yet solar water heating is zero-rated as an energy-saving material — so in England and Wales the tax system is currently the main national support mechanism for the technology. The same asymmetry appears in Ireland, where solar panels are zero-rated while heat pumps carry 9%.
What condition catches people out?
One rule dominates across every market: the reduced rate attaches to a single supply-and-install contract, not to hardware. Buy a collector, a cylinder or a heat pump on its own and it is standard-rated almost everywhere. Have the installer supply and fit it as one job and the reduced rate covers the equipment and the ancillary work with it.
The practical consequences:
- Do not buy the kit yourself to save money. A self-supplied panel at 20% or 23% usually costs more than the same panel inside a zero-rated or reduced-rate contract.
- Keep it on one invoice. Splitting equipment and labour between two companies can push the equipment to the standard rate.
- Watch the property test. Belgium requires a dwelling over ten years old for solar (heat pumps qualify in all homes since 1 January 2026); Poland caps the reduced rate at 300 m² of usable floor area; British zero-rating is residential only.
- Commercial buildings are usually excluded. Hotels, factories and offices normally pay the standard rate and recover it as input tax instead, which changes the arithmetic in commercial solar thermal payback.
How does VAT interact with grants?
Grants are almost always calculated on the VAT-inclusive price for consumers, so a reduced rate lowers the base and the net cost together rather than cancelling the grant. There is one sequencing trap worth naming: where a grant is deducted from the quote before payment, as under the UK scheme, the customer pays the net figure and the VAT treatment must already be correct on the original quotation. A quote issued at 20% cannot be quietly re-rated afterwards.
Businesses see the opposite picture. A VAT-registered company recovers input tax anyway, so a reduced rate is worth little to it, while a direct grant such as Italy's Conto Termico 3.0 — up to 65% of eligible cost, paid in a single instalment below €15,000 — is worth a great deal. That is why the same product can have a completely different net price for a household and for a hotel.
What is changing next?
The British zero rate is the dated one: it runs to 31 March 2027 and then reverts to 5%. On a £12,000 job that step is worth £600, which is a real reason not to defer a 2026 project into 2027 without cause.
Elsewhere the direction of travel is set by EU policy rather than by budgets. Since 1 January 2025 the recast EPBD bars public financial incentives for stand-alone fossil-fuel boilers, and several member states have already moved gas boilers to the standard rate while holding renewables at the reduced one — France did exactly that in March 2025. Solimpeks sees the effect across its export markets: the gap between the taxed and the relieved technology is widening every year.
Frequently asked questions
Can I claim 0% VAT if I buy the panels myself?
No. In Great Britain and in most other markets the relief applies only when the installer supplies and fits the materials as a single job. Materials bought separately by the customer are standard-rated at 20%.
Does 0% VAT apply to a new build?
New-build construction has its own zero-rating rules in the UK, so renewable equipment installed during construction is normally covered by the main contract rather than by the energy-saving materials relief. Ireland's 0% rate on solar panels applies to new builds like any other home.
Is a hot water cylinder covered by the reduced rate?
Generally yes when it is installed as part of the qualifying system, because ancillary work carried out within the same job takes the same rate. A cylinder replaced on its own, with no renewable heat source, usually does not qualify.
What VAT applies to servicing and repairs?
Usually the standard rate. Reliefs are written for installation of energy-saving materials, not for maintenance, so annual service visits and spare parts are normally taxed at the full rate even where the original installation was zero-rated.