Tax regulation mechanism (Energy Investment Allowance, EIA scheme)

Updated: 09.01.2019

Author: Stijn Anciaux

This tax benefit enables entrepreneurs based in the Netherlands to write off investments in renewable energy plants against tax (Article 3.42 Wet IB 2001). The eligibility criteria are extensively described in the Energy List. The level of funding depends, among other things, on the source of energy and the type of plant used. Investments of less than € 450 are ineligible (Article 3.45 (1) (a) Wet IB 2001). Furthermore, a total of maximum € 121 million can be invested in eligible projects within one year (Article 3.42 Wet IB 2001).

Eligible technologies

Many technologies are eligible. Published by the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland) the Energy List provides an overview of eligible investments in renewable energy.

Aerothermal energy

Eligible

Eligible for tax deduction in the framework of EIA are aerothermal heat pumps (air-side heat pumps) for the heating of commercial buildings or the collective heating of homes (Energy List 2018):

  • electrically driven air/water heat pump with a COP ≥ 4.5 or a gas-fired adsorption or absorption heat pump with a gas utilisation efficiency of ≥ 1.8, a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed), or
  • electrically driven air/water and air (combined) heat pump with a COP ≥ 4.5 or a gas-fired adsorption or absorption heat pump with a gas utilisation efficiency of ≥ 1.8, a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed), or 
  • electrically driven air/air heat pump (air-conditioning systems) with a COP ≥ 4.0 or a gas-fired adsorption or absorption heat pump with a gas utilisation efficiency of ≥ 1.6, or 
  • adsorption or absorption air/air or air/water heat pump in which the regenerator is driven by waste heat or sustainable heat, a geothermal heat exchanger or groundwater well (when installed), a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed).
  • Heat pump for existing trains intended for the heating of existing trains, and consisting of heat pump or conversion kit for the modification of existing air conditioning plants for use for heating purposes.

Hydrothermal energy

Eligible

Eligible for tax deduction in the framework of EIA are (geothermal)

heat pumps for the heating of commercial buildings or the collective heating of homes (Energy List 2018):

  • electrically driven brine/water heat pump with a COP ≥ 4.5 or a gas-fired adsorption or absorption heat pump with a gas utilisation efficiency of ≥ 1.8 , a geothermal heat exchanger or groundwater well (when installed), a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed), or
  • electrically driven heat pump with a direct expansion (DX) geothermal heat exchanger with a COP ≥ 5.0, a geothermal heat exchanger or groundwater well (when installed), a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed), or 
  • electrically driven water/water heat pump with a COP ≥ 5.0 or gas-fired adsorption or absorption heat pump with a gas utilisation efficiency of ≥ 2.0 , a or groundwater well (when installed), a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed), or
  • electrically driven brine/air heat pump with a COP ≥ 3.0 or a gas-fired adsorption or absorption brine/air heat pump with a gas utilisation efficiency of ≥ 1.2, a geothermal heat exchanger or groundwater well (when installed), a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed), or
  • electrically driven water/air heat pump with a COP ≥ 4.5 or an electrically driven propelled heat pump with a COP ≥ 5.0 or a gas-fired adsorption or absorption water/air heat pump with a gas utilisation efficiency of ≥ 1.8 , a geothermal heat exchanger or groundwater well (when installed), a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed), or 
  • adsorption or absorption water/water or water/air heat pump in which the regenerator is heated by waste heat or sustainable heat, a geothermal heat exchanger or groundwater well (when installed), a residual heat storage tank (when installed), a connection to the heating network (when installed) and a heating network (when installed).

Biogas

Eligible

Eligible for tax deduction in the framework of EIA are (Energy List 2018): 

  • Aerobic biomass fermenter intended for the heating of buildings or processes using heat released by the biological conversion of ligneous biomass into compost, consisting of aerobic biomass fermenter, heat exchanger, heat transport pipe, residual heat storage tank (when installed), excluding heat distribution networks and heating networks.
  • Fermentation installation for dry biomass intended for the production of biogas by the fermentation of biomass with a dry matter content of at least 25%, and consisting of installation for the aerobic fermentation of biomass.

Biomass

Eligible

Eligible for tax deduction in the framework of EIA is the following category (Energy List 2018): 

  • Biomass-fired boiler intended for the heating of buildings or processes by the combustion of gas or liquid energy carriers obtained from biomass, subject to the condition that the average annual heat efficiency is at least 80%, and consisting of boiler, flue gas condenser (when installed), residual heat storage tank (when installed), flue gas scrubber (when installed), heat transport pipe (when installed), excluding heat distribution networks and heating networks.

Geothermal energy

Eligible

Eligible for tax deduction in the framework of EIA are (Energy List 2018):

  • Geothermal heat or cold storage (aquifer) intended for the storing of heat or cold in the ground using groundwater as the storage medium and for use in cooling or heating commercial buildings or processes or for the collective cooling or heating of homes; and consisting of a closed plant with groundwater sources/wells used for extraction and injection and whereby the net quantities of geothermal heat and cold supplied per annum are virtually in balance, groundwater pumps, heat exchanger that connected directly to the groundwater source (when installed), heat exchanger for the regeneration of the groundwater source with cold or heat from the outdoor air or surface water (when installed), heat transport pipe (when installed); and 
  • Geothermal heat exchanger: - Intended for the cooling or heating of water for use in commercial buildings, processes or collective plants for homes using a heat exchanger located in the groundwater, and consisting of geothermal heat exchanger, pump, water-air heat exchanger in sheds that releases the heat or cold in the groundwater directly into the space (when installed), residual heat storage tank (when installed). - Intended for the heating of water for use in commercial buildings, processes or collective plants for homes using a heat exchanger located in the road paving, and consisting of pump(s), geothermal heat exchanger or heat-conducting pipes in the road paving but excluding the actual road paving, residual heat storage tank (when installed). - Intended for the precooling or preheating of outside air for use in commercial buildings using underground tubes as a heat exchanger, and consisting of air/ground pipes with a diameter of a maximum of 40 cm, air plenum (when installed), automatically-controlled central bypass (when installed). - Intended for the cooling of electronic facilities and consisting of geothermal heat exchanger, pump (when installed), water/air heat exchanger that releases the cold in the groundwater directly into the space, fan (when installed).

Solar thermal energy

Eligible

Eligible for tax deduction in the framework of EIA is (Energy List 2018):

Solar collector installation intended for the heating of water or air, and consisting of solar collector, residual heat storage tank (when installed), heat exchanger (when installed), re-heater integrated in the tank (when installed), photovoltaic solar cells integrated in the air heater (when installed), absorption or adsorption cooling machine that is primarily operated by solar energy (when installed).

Amount

The amount of tax credit may be up to 54.5% of the total investments made in renewable energy or energy-efficiency technologies within one year (art. 3.42 (3) Wet IB 2001). The eligible technologies are published in the Energy List, which is updated on an annual basis. The maximum project costs per company are € 121 million per calendar year (art. 3.42 (4) Wet IB 2001). Investments of less than € 450 are not eligible for the tax credit (art. 3.45 (1) (a) Wet IB 2001). The total sum of investments in eligible projects shall reach € 2,300 within one year (art. 3.42 (3) Wet IB 2001). The Minister of Finance may reduce the amount of tax credit or reject applications if the expenses threaten to exceed the budget provided. His decisions are published and do not affect tax credits already granted.

Addressees

Entitled party. The entitled parties are enterprises that invest in renewable energy plants, energy-saving projects or technologies improving energy efficiency (Article 3.42 in conjunction with Article 3.43 Wet IB 2001). Private individuals are not entitled to tax benefits.

Procedure

Process flow

As confirmed by the Netherlands Enterprise Agency, tax credits are awarded according to the following procedure: 

  • Application through web portal of Rijksdienst voor Ondernemend Nederland Companies. Applicants have to apply for a tax reduction to the Netherlands Enterprise Agency, Rijksdienst voor Ondernemend Nederland. 
  • Evaluation and award. The Netherlands Enterprise Agency evaluates the application and – if necessary – makes inquiries to the applicant, the energy agency approves the application. 
  • Final decision. The tax authority has the last say, i.e. it may decide to authorise the tax credit awarded by the energy agency in full or only in part.

Competent authority

Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland) and the tax authority.

Distribution of costs

State

The costs arising from the tax credit scheme are borne by the state, as it receives lower tax revenue.

Netherlands

Further information

  • Rijksdienst voor Ondernemend Nederland (RVO) - Netherlands Enterprise Agency
  • +31 88 042 42 42
  • Agency's website

Basic information on legal sources