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ENERGY

EXPLAINED: Is it worth switching to solar power in Austria?

Thinking about installing solar panels on your home in Austria? Interested in the benefits of solar energy? Here’s what you need to know.

A cottage in the middle of a field with solar panels on the roof. How do you convert to solar in Austria? Photo by Alex Bierwagen on Unsplash
A cottage in the middle of a field with solar panels on the roof. How do you convert to solar in Austria? Photo by Alex Bierwagen on Unsplash

As countries around the world turn to renewable energy sources to protect the climate, the Austrian Federal Government has set its sights on solar energy.

Not only is the use of solar panels environmentally friendly, but it could also save households money on rising energy bills, which makes the switch to renewable energy an attractive option for many people.

But what exactly is solar energy? And what incentives are available from the Austrian Federal Government for installing photovoltaic panels on your home? 

Here’s what you need to know.

What is solar energy?

Solar energy is the conversion of sunlight into energy, primarily through the use of a photovoltaic (PV) system, which is then used to power thermal electricity, heating and cooling systems.

Globally, solar PV generation increased by 22 percent in 2019. This represented the second largest growth of an energy source behind wind power and ahead of hydropower.

The International Energy Agency (IEA) predicts that the United States, China and the European Union will add an extra capacity of 125 GW of solar energy per year between 2021 and 2025.

What is the attitude towards solar energy in Austria?

In July, the Austrian parliament voted in favour of the Renewable Expansion Law, which set a goal of switching to 100 percent renewable electricity production by 2030.

But for this to happen Austria has to invest in capacity expansion to create an additional 27 TWh of electricity generation.

According to Austria Solar, fossil fuels will be replaced by solar energy for heat production in the near future in Austria, with the potential for every second building in the country to be supplied with solar heat.

Currently, domestic solar heat production is around 100 GWh per year, but an IEA study says Austria could produce more than three times as much with investment into facilities.

FOR MEMBERS: Rising energy prices: How to save money on bills in Austria

To boost the number of solar panels, the City of Vienna last year introduced an amendment to planning laws that states all new residential buildings in the capital have to be built with photovoltaic panels. Previously, the rule only applied to industrial buildings.

In cases where it would be impractical to install solar panels on a building, contractors have to provide an alternative option for generating renewable energy instead.

In 2020, the Austrian Federal Government also announced it will equip one million homes with solar panels by 2030. 

How to switch to solar power in Austria

There are a few different ways to switch to solar energy in Austria, depending on where you live.

For example, Wien Energie in Vienna runs a citizen solar power project which involves people investing in a solar power plant in return for carbon-free energy.

Investors then receive interest every year which can be used towards the electricity bill or paid out as supermarket vouchers. 

The Wien Energie system is especially popular with residents that live in rented apartments in the city and don’t have the option to buy a PV system for their own home.

On a national level, a combination of state and municipal funding is available for people to install PV systems through the Climate and Energy Fund.

The fund provides one-off subsidies of between €150 and €250 per kWp for the installation of PV systems of up to 50 kW.

READ ALSO: Austria’s nationwide public transport ‘climate ticket’ now available

The investment aims to help more small and medium sized businesses, as well as individuals, switch to renewable energy.

There is also a one-time investment grant of €700 towards the installation of thermal solar systems for heating and hot water.

The application process for the subsidy starts by registering at the website and installing a PV system.

Approval of the grant will depend on the availability of the budget, which currently runs until 31 December 2022.

The Austrian Federal Government recently pledged to provide a further €20 million to the Climate and Energy Fund. 

The argument for solar power generation in Austria

While recent announcements and financial incentives by the government to encourage the installation of PV systems have been widely welcomed by environmental campaigners, there are concerns it doesn’t go far enough.

Vera Immitzer, CEO for Photovoltaic Austria, told Power Technology that photovoltaic power will have to be increased by tenfold to provide the levels of electricity generation cited by the government.

READ MORE: How will climate change impact Austria?

Immitzer said larger systems could also be installed in parking lots and open spaces, as well as on residential roofs to increase overall power generation.

The concern is that renewable energy systems currently provide 1.4 terrawatt-hours (TWh) of power, which covers just 2.5 percent of the country’s energy demand.

The government plans to generate 11 TWh of electricity via solar energy by 2030.

How much energy do Austrian households use?

According to the latest figures from Statistik Austria, the most commonly used energy source in Austria is electricity at 24.3 per cent.

This is followed by fuel wood (19.3 percent), natural gas (18.6 percent) and district heating (13.5 percent). 

Natural gas is also the second most popular energy source nationwide for heating after fuel wood. This means a significant rise in gas prices will have an impact on household budgets this winter.

However, switching to solar panels to generate electricity could help consumers save some money on energy bills.

READ MORE: Austrian government unveils ‘eco’ tax reform

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TAXES

EXPLAINED: The main Austrian ‘tax traps’ foreigners should be aware of

Moving to a new country results in a series of adaptations, and getting used to a different tax system is definitely one of them. Here's what you need to know.

EXPLAINED: The main Austrian 'tax traps' foreigners should be aware of

When you move into a new country, there are many things to learn and get used to.

But, unfortunately, there are also many “traps”, those differences in systems and cultures that can catch a foreigner entirely off guard while seeming normal to all native or long-time residents of a country.

In Austria, there are many particularities, not only when it comes to culture – how many times are immigrants surprised with Freikörperkultur, for example? – but also with bureaucratic and day-to-day issues.

For example, foreigners are often surprised to learn that the alpine country has a mandatory public health system with several insurers, and each person is legally required to be insured by one of them.

Which one? It depends mainly on your profession.

READ ALSO: Everything foreigners need to know about the Austrian healthcare system

When it comes to taxes, several specificities could be confusing to non-Austrians or people who have recently moved to the country. The Local spoke with Dr Rainer Kratochwill, a tax adviser, owner and CEO of steuerexperten.at, to help foreigners avoid the typical “tax traps” one may find when moving to Austria.

Documentation is key

In some countries, it may be common practice to call tax authorities directly or send letters to them trying to explain or rectify issues they might have had.

“We sometimes have to overcome the expats’ desire to explain something to the tax office over the phone or appeal to common sense. In Austria, this will probably not work.”, says Dr Kratochwill.

Austria is a very formal country in many ways. Titles and official papers (literal papers, mailed and stamped, not emails) matter.

In many circumstances, expats end up needing to draw up a cover letter with the help of a tax advisor to follow specific Austrian standards.

READ ALSO: Will inflation force tax changes in Austria from 2023?

Documentation is also absolutely essential to support the origin of funds, Kratochwill highlights.

One thing many immigrants are surprised to learn is that large gifted sums or properties need to be registered with the tax office – and it is mandatory to provide the documentation of the origin of the funds from the giver.

“This point has to be further explained to expats because they often do not understand why the donor has to be verified and what documents can be provided”, he says.

So, don’t fall into the trap of taking a laissez-faire approach to Austrian authorities and documentation.

Taxes are high – but so is the standard of living

Kratochwill noted how many of their immigrant clients are used to paying fewer taxes in their home countries. That is another trap incomers might set up for themselves: “be prepared to pay high taxes in Austria”, he says.

“But for this, you have a lot: security, good public transport, good schools and universities and much more”, he added.

READ ALSO: How to prepare for your Austrian tax return if you’re self-employed

Austria works with a bracket system for income tax. So the higher you earn, the higher the taxes – up to 55 per cent for those making a whopping €1 million after expenses.

Up to €11,000 annual income, there is no income tax. However, whatever surpasses that falls into the next bracket (from €11,000 to €18,000) and is taxed at 20 per cent.

This means that if you earn, for example, €12,000 a year netto (after expenses and deductions), € 11,000 would be tax-free, and the remaining €1,000 would be taxed at 20 per cent – you’d pay € 200 income tax for the year.

The income tax is after other social contributions that pay for compulsory health insurance, social payments, and pension funds.

Many Austrians have tax advisors

A tax advisor is not the same as an accountant. For many people, the thought of paying someone to assist with their tax return may be strange – it might seem like something only millionaires do.

READ ALSO: Everything you need to know about paying tax in Austria

But it is relatively common practice in Austria, as advisors support their clients to pay according to the law, but no more than what they need to.

“An important rule is to consult in advance so that there is time to make adjustments. It is often too late, but even in these situations, we help reduce the tax burden a bit through, for example, tax refunds.” Kratochwill says.

Taxes can be filed in three years

And audited even later than that.

In Austria, you have from one to five years to file your income tax (even longer if you do it through a tax advisor or in exceptional cases like during the pandemic), depending on your case. However, Dr Kratochwill advises against taking advantage of the long filing periods.

“The main thing an expat should keep in mind is to do it the right way from the beginning on and not start thinking about it after three years”.

In a country with a complex tax system, knowing your earnings and expenses, having your finances documented, and storing those files is crucial. And because tax audits can happen up to ten years after the filing (tax advisors will tell you to keep your documents for at least that long), Austrians know to keep their files for a very long time.

READ ALSO: Five things you will find in (almost) every Austrian home

This is why you will often see shelves full of binders in your local friend’s house – they are storing that receipt for that English class they took five years ago.

Do as your Austrian friend and save yourself some trouble in future years by saving your papers now.

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