Change in depreciation of photovoltaic power plants awaits approval
The amendment to the Energy Act also includes an amendment to the Income Tax Act, specifically a change in the depreciation of photovoltaic power plants. The amendment proposes to abolish the special method of depreciation of photovoltaic power plants (i.e., their technological parts).
Under the amendment, photovoltaic power plants (their technological parts) will be treated in the same way as other assets, i.e., classified into depreciation groups and depreciated for tax purposes accordingly. The senate returned the amendment to the chamber of deputies with amending proposals that do not concern the tax area. Whether deputies approve their or the senate’s version, the amendment is expected to take effect after its promulgation in the Collection of Laws.
Current status
The technological part of a photovoltaic power plant used to generate electricity from solar radiation is depreciated on a straight-line basis over 240 months, without the possibility of accelerated depreciation. This treatment also applies to the technological parts of photovoltaic power plants for which depreciation started before 1 January 2011.
Status after the amendment
After the amendment becomes effective, the assets used to generate electricity from solar radiation, for which depreciation commences after the amendment becomes effective or after 30 June 2024, will be depreciated according to the relevant depreciation group with the option of straight-line or accelerated depreciation. Technological parts of photovoltaic power plants will now be depreciated depending on the characteristics of the individual technological parts of the asset in the second, third, or fourth depreciation group. The construction part will be depreciated according to whether it is a technical improvement to an existing structure or a new construction.
This amendment restores the legal situation that existed before 1 January 2011.
According to the proposed transitional provisions, for the assets for which depreciation (on a straight-line basis over 240 months) has already commenced, the existing method of their depreciation will continue to apply. An exception is made for the assets for which depreciation commenced after 30 June 2024 until the amendment comes into effect; for these, the taxpayer will be able to choose whether to use depreciation over the set time or the now proposed method of depreciation in traditional depreciation groups.