With the Renewables Act, including its corporation tax provisions, being very imprecise, doubts continue to abound about whether and when taxable income should be recognised for corporation tax purposes by prosumers who generate electricity from renewable sources (PV) for their own needs while applying the net billing process.

Recent private tax rulings suggest that the amount of prosumer deposit (the surplus electricity fed (exported) into the grid above that actually taken off the grid), which is what is deducted from prosumer’s debt owed to the electricity supplier, is not taxable income for the prosumer under the Corporate Income Tax Act. Yet, those same rulings indicate that the surplus electricity fed into the grid will constitute prosumer’s taxable income, which means the ruling authority makes a distinction between such surplus and the prosumer deposit.

Some of those rulings have been appealed by the taxpayers to a first-level administrative court, which reversed them on procedural grounds. The court held that the ruling authority failed to provide reasons for its treatment of prosumers’ taxable income, and in particular did not specifically explain why it distinguishes between a prosumer deposit and what it considered to be taxable income.

The court’s judgments are not conclusive, having been appealed to the Supreme Administrative Court (SAC). Thus, taxpayers will need to wait for the matter to be finally resolved by SAC.

All in all, it continues to be unclear whether and at what point in time corporate taxpayers should recognise taxable income in respect of electricity they feed into the grid in accordance with the net billing mechanism.

If this issue pertains to your business and you are interested in our assistance, please contact us.

This blog post is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.