Tax regulation mechanisms I (Crédit d´impôt pour la transition énergétique)

Updated: 07.02.2019

Author: Helena Vidalic

Natural persons may deduce from income tax a certain percentage of investments in renewable energy plants. The tax credit (“crédit d'impôt”) for renewable energy plants, which was supposed to apply until the end of 2012 (art. 200 quater, Code Général des Impôts, referred to and specified in Instruction fiscale 5 B-22-09 N° 65) has been extended until the end of 2018 for installations carried out in buildings completed since more than two years (Art 23, Loi de finances 2017; Art. 200 quater, Code Général des Impôts; Art. 23 Loi de Fiannces 2018). 

Please note: Expenditures in solar energy installations for the sole production of electricity paid after 1 January 2014 are no longer eligible to the tax credit. However, the Finance Act for 2016 enlarged the eligibility of the tax credit to hybrid solar systems producing both electricity and heat or hot water (art.106, loi de finances 2016). Moreover, the eligibility conditions for hydraulic and biomass plants for the production of electricity are modified. 

Eligible technologies

The tax credit applies to the building-integration or purchase of the following renewable electricity generation technologies: solar energy, wind energy, hydro-energy and biomass energy generation (art.18 bis, Annex IV of the Code Général des Impôts).

Wind energy

Eligible (art.18 bis, Annex IV of the Code Général des Impôts).

Solar energy

Expenditures in hybrid installations using solar panels for the production of electricity and heat are eligible to the tax credit, provided they meet the following conditions (Arrêté du 30 décembre 2015, in conjunction with art.18 bis, Annex IV of the Code Général des Impôts):

  • According to the European regulation (UE) n° 811/2013, the installation shall reach an energy performance of at least  90%
  • The solar collectors shall hold the certification CSTBat or Solar Keymark

Hydro-power

Eligible (art.18 bis, Annex IV of the Code Général des Impôts).

Biomass

Eligible (art.18 bis, Annex IV of the Code Général des Impôts).

Amount

  • Persons that install renewable energy plants at their principal residence may deduce 30 % of the net hardware costs from income tax (art. 200 quater par. 1 c, 5 Code Général des Impôts).
  • For solar energy installations, the tax credit applies under the following conditions:
    • For hybrid liquid circulation systems, the expenses eligible for the tax credit shall not exceed € 400 per m² of solar collectors, with a maximum surface of 10 m².
    • For hybrid air circulation systems, the expenses eligible for the tax credit shall not exceed € 200 per m² of solar collectors, with a maximum surface of 20 m².
  • Caps for the period from 1 January 2005 to 31 December 2019 per principal residence: € 8,000 for individuals, € 16,000 for married or cohabiting couples (PACS) + € 400 per child; if they both have the duty of care: € 200 per child) (art. 200 quater par. 4 Code Général des Impôts).
  • In multi-family houses, every resident may claim the money he invested (Tit. 28, chap. 1, sec. 1, BOI-IR-RICI-280-20180706).
  • The capacity of the eligible plant shall not exceed 3 kWp. Plants that generate more than 3 kWp are eligible only if the electricity consumption of the building is higher than half of the nominal installed capacity (Tit. 28, chapitre 1, sec. 2, BOI-IR-RICI-280-10-20-20120912). 

Addressees

Entitlement to the credit is guaranteed by law. The tax credit may be claimed for investments in the main residence (Art. 200 quater Code Général des Impôts). All natural persons that are owners, tenants or rent-free tenants of their main residence are eligible (tit. 28, chap. 1, sec. 1, BOI-IR-RICI-280-20180706).

Procedure

Process flow

The tax credit is granted on income tax, after the eligible person has submitted the invoice for the investments and after other tax benefits and subsidies (except for subsidies for the installation of the plant) have been deducted. If the amount of the tax payable is lower than the tax credit, the difference will be paid out. If the applicant is not subject to tax, the total amount is paid out (Art. 200 quater Code Général des Impôts,  tit. 28, chap. 3, sec. 1 BOI-IR-RICI-280-20180706).

Competent authority

Tax office ("Direction Générale des Finances Publiques")

Distribution of costs

State

The tax credit results in lower state revenues. Payments of the difference between the tax payable and the amount of tax credit are funded from the federal budget.

France

Further information

  • Ministère de la Tansition écologique et solidaire - Ministry of the Ecological and Inclusive Transition
  • +33 14 081 212 2
  • website