Switching to solar: Grants, tax breaks and other help with the cost of 'green power'
14/02/2021
WHEREVER you've made your home or set up a pied à terre in Spain, you're not going to be short of sunlight.
It's virtually guaranteed every day for at least two months in the coldest parts and five or so in the warmest parts, and whether you get the mild winters of the Mediterranean, south coast or Canary Islands where a coat over a single layer is enough to feel comfortable in a pavement café or whether you're in those inland, northern or high-altitude areas where thick snow is a given for about two months of the year, the earth's biggest star will usually be keeping your surroundings glowing. Even when temperatures drop below zero or close to it (which does happen, even on the Med, and is standard in winter in Aragón, Castilla y León and their neighbouring regions), you'll usually be able to expect the sun to be glaring brightly even as you freeze your fingers and toes off.
So it stands to reason that Spain is in an ideal position to power itself from solar energy and ditch the fossil fuel, and is attempting to head in that direction, even though it'll take years, if not decades.
And it's perfectly feasible for you to have enough solar panels fitted to make yourself completely immune to electricity bills and price fluctuations – sunlight is free, after all.
High outlay, but a sound long-term investment
Many do so, but it involves a very hefty initial investment; depending upon whether mains electricity is going through a 'cheap phase', as is the case at the moment, or an 'expensive phase', as it did in 2012 when bills were typically two to three times what they are now, it could take you between five and 10 years before you start seeing the financial benefit. Once this time has passed and you have covered your outlay, then you'll start getting your household power for free, but it means either having a few thousands of euros to spare in the first place, or being able and willing to borrow it.
As a long-term project, or to add value to your property, solar panels are certainly worth considering. Perhaps, for example, you're currently letting out your villa or apartment in Spain to holidaymakers, meaning you're comfortably covering the cost involved in a home loan or personal loan for renewable energy infrastructure now, and will have paid it off and be in pocket in time to move into your property when you retire, meaning you'll never have to pay any electricity bills out of your pension.
And although the initial outlay is high, grants, discounts and rebates are out there to help you reduce it, meaning the time it takes to start capitalising on your investment may well be reduced – possibly, quite significantly.
Financial assistance or bonuses, either to aid with the cost of installation or ongoing discounts purely for having solar panels, broadly fall into three categories – reductions in annual property tax, or IBI, and in construction tax, or ICIO; rebates on your annual income tax return; and grants from regional governments or local councils.
Council tax deductions
Payable annually, but sometimes with the option to split into anything from two to 10 instalments, council tax in Spain is charged to homeowners, landowners and premises-owners in the case of business venues, not to tenants. IBI (Impuesto sobre Bienes Inmuebles, or 'fixed-asset tax') is calculated as a percentage of the basic land, bricks and mortar value of your property or plot, and makes up the bulk of your yearly local authority tax bill; you'll also pay a set fee per calendar year on your vehicle – in Spain, car tax is paid to the council, not to the national government licensing, transport or highways department, meaning sums charged differ from town to town – and also a set figure is charged annually per household for rubbish collection and which, again, is paid by the property owner, not tenants.
These are the three taxes paid to the local council by everyone who has a home and a car, and it is your building tax, or IBI, where you can get money off for having solar panels and taking yourself off-grid.
According to various research by renewable energy installation specialists Otovo, the consumer organisation OCU, and the national Renewable Energy Foundation, up to 60% of the population in Spain may be eligible for reductions on their IBI for having solar panels.
How much depends upon where you live, and what your property is for. As an example, the OCU says, in the capital, Madrid, you can reduce your IBI by up to 50% on a main residence or up to 25% on a second or holiday home or one you rent out to others.
Construction tax (ICIO)
A direct levy charged for any new structure being built, from an outhouse or fixed barbecue in your garden through to an entire villa, housing estate or apartment block, ICIO applies to any structure for which planning permission is required.
Always check with your town hall or the construction company you employ, or both, whether or not you'll require planning permission for any work you intend to carry out, since in Spain, the need for this is not always obvious to the layperson and it is often necessary for works you would not dream of seeking it for in your home country.
The percentage charged in ICIO varies from town to town, as does the reduction in the bill for solar panel installation – where this is offered.
As an example, according to Otovo, the Renewable Energy Foundation and the OCU, fitting solar panels can attract up to 95% off your ICIO bill in Barcelona city, up to 50% off in the city of Albacete, and in some regions, one of which is Cantabria in the far north, no such deduction is available. But check this out before you go ahead, to ensure you do not miss out on a golden opportunity to cut your costs.
Income tax (IRPF)
Practically everyone who is tax-resident in Spain, whether or not they are working, is required to file an annual tax declaration (Declaración de la Renta) between April and June, for earnings in the previous calendar year; there are exceptions, such as where annual earnings do not reach the minimum threshold for paying tax, or where all income is from a single source, such as one full-time job, and below a given amount – but always check with an accountant, known as an asesor or gestor, whether any of these exceptions applies to you.
Some time before the end of June, if you have not paid enough IRPF (impuesto sobre la renta de personas físicas, or 'tax on income for physical persons'), you will need to either pay the shortfall or arrange with the tax authority, Hacienda, to divide the bill into instalments; if you have overpaid in the previous year, you'll get a rebate paid to you as a lump sum between filing your declaration and the end of the year.
A gestor or asesor will be able to advise you what you need to declare, and what you should include to offset against it – typically, paying a mortgage or personal loan, paying into a private pension fund, and charity donations are able to be offset, and deductions may be made if you have dependants or if you or any member of your household has a registered disability; if you are self-employed, any expenses incurred in carrying out your trade or profession can also be offset.
Installing solar panels may also, it turns out, reduce your IRPF bill for you.
Discounts on your tax can be up to 20% of the amount you paid out to have them fitted, but you will need to meet a series of criteria laid down by Hacienda.
These include, but are not limited to, the fact that you must be the owner of the property you fitted the panels to – you cannot claim a tax deduction if you have them installed to a home, office, bar or shop you are renting, for example – and they need to have been set up by a registered, authorised solar-panel fitter, so keep your receipts from the company involved.
Regional government and local council grants
In addition to any of the above you may qualify for, some (but not all) regional governments offer grants towards the cost of installation – normally after this is completed and paid for – although in many cases, these may not be available year-round, only within a specific 'renewable energy installation season', perhaps a set window of a few weeks or months of the year.
Although Spain is 'run' by a central government based in the capital city the way most countries in the world are, the nation is split into 19 federal-type regions which have their own devolved governments – 15 of these on the mainland, one for the Balearic and one for the Canary Islands, and one each for the cities of Ceuta and Melilla on the northern Moroccan coast.
Some of the regions whose governments offer grants towards the cost of renewable energy systems set up on homes or business premises, including solar panels, are Andalucía – the southern strip of the mainland – the Greater Madrid region, the Balearic Islands, the Canary Islands, the land-locked region of Extremadura in the west, which borders Portugal, the Comunidad Valenciana along the Mediterranean seaboard and which is made up of the provinces of Alicante, Valencia and Castellón (the first of these is where you find the Costa Blanca), Aragón, the tongue-shaped inland region towards the east running from the Pyrénées to about a third of the way down the country, and Navarra, in the far north next to the Basque Country.
The Comunidad Valenciana, according to Otovo, offers one-off payments of up to €8,000 per residential property, with the amount given depending upon various factors – never, of course, covering 100% of the cost of installation.
In the Greater Madrid region, up to 30% towards the cost can be obtained, to a maximum of €15,000.
The central region of Castilla-La Mancha, via its regional ministry of sustainable development (Consejería de Desarrollo Sostenible) launched a programme for solar-panel installations involving an initial outlay of at least €3,000, with up to 30% of the costs claimable, to a maximum of €6,000.
Local councils may also help towards costs – either refunding a percentage upon sight of the invoice and official plans once the system is set up and paid for, or as a reduction in or exemption from the planning permission costs, or both – not all of them do so, and the amounts and criteria vary, but anyone considering going off-grid is strongly recommended to make inquiries.
It sounds complicated...
You're not alone. Don't worry about missing out on grants or reductions through not knowing where to turn, what paperwork to fill out, whom to ask, or what questions to put to them. If you have a gestor or asesor handling your financial and legal affairs in Spain, or a property management company or letting agency acting as keyholder and dealing with tenancy and holiday rental bookings, they may be able to tell you what you need to do and what rebates or funding you may be entitled to.
Otherwise, any company specialising in renewable energy installations, including solar panels, and based in your region – even if not specifically your town or province – will be able to advise you in full, and their fees for the job might even include filing for these discounts and funding options.
Practically all companies of this nature will give you a no-obligations quotation, free advice, and help you decide how many panels and other infrastructure you'll need, how they work, and the best part of your building to fit them to.
That way, once you have all the information to hand, you can then make a decision to go ahead, or have some firm guidance to turn back to at a later date if you opt to do so further down the line.
Related Topics
WHEREVER you've made your home or set up a pied à terre in Spain, you're not going to be short of sunlight.
It's virtually guaranteed every day for at least two months in the coldest parts and five or so in the warmest parts, and whether you get the mild winters of the Mediterranean, south coast or Canary Islands where a coat over a single layer is enough to feel comfortable in a pavement café or whether you're in those inland, northern or high-altitude areas where thick snow is a given for about two months of the year, the earth's biggest star will usually be keeping your surroundings glowing. Even when temperatures drop below zero or close to it (which does happen, even on the Med, and is standard in winter in Aragón, Castilla y León and their neighbouring regions), you'll usually be able to expect the sun to be glaring brightly even as you freeze your fingers and toes off.
So it stands to reason that Spain is in an ideal position to power itself from solar energy and ditch the fossil fuel, and is attempting to head in that direction, even though it'll take years, if not decades.
And it's perfectly feasible for you to have enough solar panels fitted to make yourself completely immune to electricity bills and price fluctuations – sunlight is free, after all.
High outlay, but a sound long-term investment
Many do so, but it involves a very hefty initial investment; depending upon whether mains electricity is going through a 'cheap phase', as is the case at the moment, or an 'expensive phase', as it did in 2012 when bills were typically two to three times what they are now, it could take you between five and 10 years before you start seeing the financial benefit. Once this time has passed and you have covered your outlay, then you'll start getting your household power for free, but it means either having a few thousands of euros to spare in the first place, or being able and willing to borrow it.
As a long-term project, or to add value to your property, solar panels are certainly worth considering. Perhaps, for example, you're currently letting out your villa or apartment in Spain to holidaymakers, meaning you're comfortably covering the cost involved in a home loan or personal loan for renewable energy infrastructure now, and will have paid it off and be in pocket in time to move into your property when you retire, meaning you'll never have to pay any electricity bills out of your pension.
And although the initial outlay is high, grants, discounts and rebates are out there to help you reduce it, meaning the time it takes to start capitalising on your investment may well be reduced – possibly, quite significantly.
Financial assistance or bonuses, either to aid with the cost of installation or ongoing discounts purely for having solar panels, broadly fall into three categories – reductions in annual property tax, or IBI, and in construction tax, or ICIO; rebates on your annual income tax return; and grants from regional governments or local councils.
Council tax deductions
Payable annually, but sometimes with the option to split into anything from two to 10 instalments, council tax in Spain is charged to homeowners, landowners and premises-owners in the case of business venues, not to tenants. IBI (Impuesto sobre Bienes Inmuebles, or 'fixed-asset tax') is calculated as a percentage of the basic land, bricks and mortar value of your property or plot, and makes up the bulk of your yearly local authority tax bill; you'll also pay a set fee per calendar year on your vehicle – in Spain, car tax is paid to the council, not to the national government licensing, transport or highways department, meaning sums charged differ from town to town – and also a set figure is charged annually per household for rubbish collection and which, again, is paid by the property owner, not tenants.
These are the three taxes paid to the local council by everyone who has a home and a car, and it is your building tax, or IBI, where you can get money off for having solar panels and taking yourself off-grid.
According to various research by renewable energy installation specialists Otovo, the consumer organisation OCU, and the national Renewable Energy Foundation, up to 60% of the population in Spain may be eligible for reductions on their IBI for having solar panels.
How much depends upon where you live, and what your property is for. As an example, the OCU says, in the capital, Madrid, you can reduce your IBI by up to 50% on a main residence or up to 25% on a second or holiday home or one you rent out to others.
Construction tax (ICIO)
A direct levy charged for any new structure being built, from an outhouse or fixed barbecue in your garden through to an entire villa, housing estate or apartment block, ICIO applies to any structure for which planning permission is required.
Always check with your town hall or the construction company you employ, or both, whether or not you'll require planning permission for any work you intend to carry out, since in Spain, the need for this is not always obvious to the layperson and it is often necessary for works you would not dream of seeking it for in your home country.
The percentage charged in ICIO varies from town to town, as does the reduction in the bill for solar panel installation – where this is offered.
As an example, according to Otovo, the Renewable Energy Foundation and the OCU, fitting solar panels can attract up to 95% off your ICIO bill in Barcelona city, up to 50% off in the city of Albacete, and in some regions, one of which is Cantabria in the far north, no such deduction is available. But check this out before you go ahead, to ensure you do not miss out on a golden opportunity to cut your costs.
Income tax (IRPF)
Practically everyone who is tax-resident in Spain, whether or not they are working, is required to file an annual tax declaration (Declaración de la Renta) between April and June, for earnings in the previous calendar year; there are exceptions, such as where annual earnings do not reach the minimum threshold for paying tax, or where all income is from a single source, such as one full-time job, and below a given amount – but always check with an accountant, known as an asesor or gestor, whether any of these exceptions applies to you.
Some time before the end of June, if you have not paid enough IRPF (impuesto sobre la renta de personas físicas, or 'tax on income for physical persons'), you will need to either pay the shortfall or arrange with the tax authority, Hacienda, to divide the bill into instalments; if you have overpaid in the previous year, you'll get a rebate paid to you as a lump sum between filing your declaration and the end of the year.
A gestor or asesor will be able to advise you what you need to declare, and what you should include to offset against it – typically, paying a mortgage or personal loan, paying into a private pension fund, and charity donations are able to be offset, and deductions may be made if you have dependants or if you or any member of your household has a registered disability; if you are self-employed, any expenses incurred in carrying out your trade or profession can also be offset.
Installing solar panels may also, it turns out, reduce your IRPF bill for you.
Discounts on your tax can be up to 20% of the amount you paid out to have them fitted, but you will need to meet a series of criteria laid down by Hacienda.
These include, but are not limited to, the fact that you must be the owner of the property you fitted the panels to – you cannot claim a tax deduction if you have them installed to a home, office, bar or shop you are renting, for example – and they need to have been set up by a registered, authorised solar-panel fitter, so keep your receipts from the company involved.
Regional government and local council grants
In addition to any of the above you may qualify for, some (but not all) regional governments offer grants towards the cost of installation – normally after this is completed and paid for – although in many cases, these may not be available year-round, only within a specific 'renewable energy installation season', perhaps a set window of a few weeks or months of the year.
Although Spain is 'run' by a central government based in the capital city the way most countries in the world are, the nation is split into 19 federal-type regions which have their own devolved governments – 15 of these on the mainland, one for the Balearic and one for the Canary Islands, and one each for the cities of Ceuta and Melilla on the northern Moroccan coast.
Some of the regions whose governments offer grants towards the cost of renewable energy systems set up on homes or business premises, including solar panels, are Andalucía – the southern strip of the mainland – the Greater Madrid region, the Balearic Islands, the Canary Islands, the land-locked region of Extremadura in the west, which borders Portugal, the Comunidad Valenciana along the Mediterranean seaboard and which is made up of the provinces of Alicante, Valencia and Castellón (the first of these is where you find the Costa Blanca), Aragón, the tongue-shaped inland region towards the east running from the Pyrénées to about a third of the way down the country, and Navarra, in the far north next to the Basque Country.
The Comunidad Valenciana, according to Otovo, offers one-off payments of up to €8,000 per residential property, with the amount given depending upon various factors – never, of course, covering 100% of the cost of installation.
In the Greater Madrid region, up to 30% towards the cost can be obtained, to a maximum of €15,000.
The central region of Castilla-La Mancha, via its regional ministry of sustainable development (Consejería de Desarrollo Sostenible) launched a programme for solar-panel installations involving an initial outlay of at least €3,000, with up to 30% of the costs claimable, to a maximum of €6,000.
Local councils may also help towards costs – either refunding a percentage upon sight of the invoice and official plans once the system is set up and paid for, or as a reduction in or exemption from the planning permission costs, or both – not all of them do so, and the amounts and criteria vary, but anyone considering going off-grid is strongly recommended to make inquiries.
It sounds complicated...
You're not alone. Don't worry about missing out on grants or reductions through not knowing where to turn, what paperwork to fill out, whom to ask, or what questions to put to them. If you have a gestor or asesor handling your financial and legal affairs in Spain, or a property management company or letting agency acting as keyholder and dealing with tenancy and holiday rental bookings, they may be able to tell you what you need to do and what rebates or funding you may be entitled to.
Otherwise, any company specialising in renewable energy installations, including solar panels, and based in your region – even if not specifically your town or province – will be able to advise you in full, and their fees for the job might even include filing for these discounts and funding options.
Practically all companies of this nature will give you a no-obligations quotation, free advice, and help you decide how many panels and other infrastructure you'll need, how they work, and the best part of your building to fit them to.
That way, once you have all the information to hand, you can then make a decision to go ahead, or have some firm guidance to turn back to at a later date if you opt to do so further down the line.