From 1 August 2025, there will be a significant change in the tax depreciation of photovoltaic power plants (PV plants). The amendment to the Income Tax Act abolishes the special regime of Section 30b of the Income Tax Act, which since 2010 specifically regulated the tax depreciation of equipment for the production of electricity from solar radiation. The PV plants will now be classified and depreciated in accordance with the general system of tangible assets. This change brings more flexibility for investors, but also new challenges in terms of correct classification and tax optimisation.
The abolition of Section 30b of the ITA removes the obligation for a uniform 20-year depreciation of PV plants, regardless of their actual composition. The new regime will allow the power plant to be divided into individual components and each of them to be classified separately into the appropriate depreciation group according to the CZ-CPA and CZ-CC classification.
The building elements of the PV plant (e.g. load-bearing structures, foundations, fencing, connections fixed to the ground) will be newly classified according to the CZ-CC classification (Classification of Construction Works). These elements will be depreciated as separate buildings within depreciation groups 4 to 6, depending on the specific nature and use of the building. It will be important to correctly identify whether the building is a separate building or merely a structural alteration to another building.
The technological part of the PV plant includes photovoltaic panels, inverters, converters, cabling, meters, switchboards, and other equipment directly related to the production and distribution of electricity. These components are classified according to the CZ-CPA (Classification of Production) and depreciated as separate movable assets - typically in depreciation group 2 or 3, which allows for significantly faster tax depreciation compared to the previous 20-year regime.
Battery systems used for energy storage will be classified separately (e.g. CZ-CPA code 27.20). They are usually classified in depreciation group 2.
PV plants implemented as temporary structures (e.g. mobile PV systems, temporary energy solutions) will be depreciated according to the useful life determined by the building authority. The technology will also be classified separately and depreciated as movable property.
For assets acquired in the period from 1 July 2024 to 31 July 2025, the amendment allows for a choice of regime: either the use of the existing § 30b or the transition to the general regime according to the normal depreciation groups. This choice will be crucial for the investor's tax strategy - in many cases it will be more advantageous to choose the new regime due to the shorter depreciation period of the technological part.
The change places greater demands on the correct accounting and tax classification of the various components of the plant. Incorrect differentiation between the construction and technology parts may lead to incorrect application of depreciation, risk of overcharges or disputes with the tax administration.
We therefore recommend:
Do you need to assess what impact the amendment will have on your PV investment? We can help you set up the right tax regime, assess the optimal asset classification and avoid risks from a tax and accounting perspective.
Autor: Lucie Pečenková
The abolition of Section 30b of the ITA removes the obligation for a uniform 20-year depreciation of PV plants, regardless of their actual composition. The new regime will allow the power plant to be divided into individual components and each of them to be classified separately into the appropriate depreciation group according to the CZ-CPA and CZ-CC classification.
The building elements of the PV plant (e.g. load-bearing structures, foundations, fencing, connections fixed to the ground) will be newly classified according to the CZ-CC classification (Classification of Construction Works). These elements will be depreciated as separate buildings within depreciation groups 4 to 6, depending on the specific nature and use of the building. It will be important to correctly identify whether the building is a separate building or merely a structural alteration to another building.
The technological part of the PV plant includes photovoltaic panels, inverters, converters, cabling, meters, switchboards, and other equipment directly related to the production and distribution of electricity. These components are classified according to the CZ-CPA (Classification of Production) and depreciated as separate movable assets - typically in depreciation group 2 or 3, which allows for significantly faster tax depreciation compared to the previous 20-year regime.
Battery systems used for energy storage will be classified separately (e.g. CZ-CPA code 27.20). They are usually classified in depreciation group 2.
PV power plants as part of a building
If the PV plant is an integral part of another building and serves exclusively its operation (e.g. a PV plant installed on the roof of an office building for its own consumption), this technology will be depreciated as part of the building - i.e. according to its depreciation group. This can lead to a significant slowdown in tax depreciation.PV plants implemented as temporary structures (e.g. mobile PV systems, temporary energy solutions) will be depreciated according to the useful life determined by the building authority. The technology will also be classified separately and depreciated as movable property.
Transitional provisions
Taxpayers who put assets into use before 1 August 2025 and applied the provisions of Section 30b of the ITA may continue to depreciate under this regime.For assets acquired in the period from 1 July 2024 to 31 July 2025, the amendment allows for a choice of regime: either the use of the existing § 30b or the transition to the general regime according to the normal depreciation groups. This choice will be crucial for the investor's tax strategy - in many cases it will be more advantageous to choose the new regime due to the shorter depreciation period of the technological part.
The change places greater demands on the correct accounting and tax classification of the various components of the plant. Incorrect differentiation between the construction and technology parts may lead to incorrect application of depreciation, risk of overcharges or disputes with the tax administration.
We therefore recommend:
- Perform a technical analysis of the assets - a professional analysis of the physical components and their function within the PV plant.
- Ensure consistency between accounting and tax records - including the link to valuation, classification and accrual of costs.
- Consider the mode split of the investment at acquisition between 1 July 2024 and 31 July 2025 - the choice of mode may affect the return on investment.
- Set up internal methodology and record keeping - including the basis for CZ-CPA and CZ-CC classification and link to project documentation.
Do you need to assess what impact the amendment will have on your PV investment? We can help you set up the right tax regime, assess the optimal asset classification and avoid risks from a tax and accounting perspective.
Autor: Lucie Pečenková