France's tax administration (DGFiP) published updated guidance on June 10, 2026, finalizing rules on the reduced 5.5% VAT rate for the supply and installation of residential solar electricity equipment, following a public consultation launched in October 2025. The guidance (BOI-TVA-LIQ-30-20-97) implements Article 42 of the 2025 Finance Law (Law No. 2025-127 of February 14, 2025).
Scope of the reduced rate
The 5.5% rate applies to equipment generating electricity from solar radiation with a capacity of 9 kilowatts-peak (kWp) or less, delivered and/or installed in residential dwellings—regardless of the building's age. The capacity threshold is assessed per individual installation operation; if a 6 kWp system is added to a home that already has solar panels, pushing combined capacity above 9 kWp, the new installation still qualifies for the reduced rate.
To qualify, equipment must also meet environmental criteria set by a September 8, 2025 decree: module carbon footprint under 530 kgCO2-eq/kWp, silver content under 14 mg/W, lead content under 0.1%, and cadmium content under 0.01%. Additionally, the equipment must be paired with an energy management system capable of continuously and autonomously monitoring and synchronizing at least two electrical uses (such as heating or hot water) with solar production—simple timers or manual programming don't qualify.
Effective date and transition rules
The reduced rate took effect October 1, 2025, replacing prior administrative positions that had allowed a 10% rate for photovoltaic installation work on homes over two years old. However, a transitional measure preserves the old 10% treatment for installations where a dated, mutually-accepted quote led to a deposit or financing offer before January 1, 2026—even if the actual work occurs later, including during 2026.
Bundled transactions and applicable rates
The guidance also clarifies how VAT rates apply when solar equipment is sold alongside other components (batteries, inverters, energy management systems) at different rate levels. Under Article 257 ter and Article 278-0 of the General Tax Code, a bundled offer is taxed at a single rate—the highest rate among its non-incidental elements—unless components are genuinely separable.
Three examples illustrate the principle: a solar panel sold with an energy management system as one package qualifies entirely for 5.5%, since the management system is incidental and low-value relative to the panel. A solar panel bundled with a battery, however, falls entirely under the standard 20% rate, because the battery's value isn't marginal and doesn't itself qualify for any reduced rate. Similarly, a fixed bundle of panel, inverter, and battery sold as a single non-separable package falls under 20%, even though the inverter alone would be treated as incidental to the panel.
What's still pending
The guidance notes that a separate requirement—introduced by Article 94 of the 2026 Finance Law (Law No. 2026-103 of February 19, 2026)—mandating that photovoltaic equipment be installed by a certified or qualified installer to qualify for the 5.5% rate, will be addressed in a future BOFiP publication.
