Italian Solar PV and BESS Taxation in 2026: VAT, Reverse Charge, Energy Efficiency Certificates and Investment Planning

ENGLISH VERSION | OCTOBER 20, 2026

Tax and accounting guidance for international renewable energy investors, EPC contractors, solar developers and companies operating in Italy.

Is a Battery Energy Storage System subject to 10% or 22% Italian VAT?

A Battery Energy Storage System (BESS) installed alongside an existing solar photovoltaic plant may be subject to Italy's standard 22% VAT rate rather than the reduced 10% rate.

This position was confirmed by the Italian Revenue Agency in Ruling No. 181 of October 15, 2026.

The ruling concerns a turnkey battery storage system connected to an already operational photovoltaic plant. The battery could be charged using both solar electricity and electricity purchased from the grid.

The Revenue Agency concluded that an energy storage system is technically and functionally different from an electricity generation plant.

Consequently, the reduced VAT provisions applicable to the construction of renewable electricity generation plants could not be extended to the specific BESS installation under examination.

For foreign investors, this distinction can materially affect project cash flow, construction contracts and VAT recovery planning.

Italian VAT and reverse charge for solar installations

Different VAT treatments may apply depending on the transaction.

Transaction	Potential VAT treatment
Construction of a new qualifying solar PV plant	10% VAT
Supply of qualifying components for constructing a new PV plant	10% VAT
Installation services relating to buildings, supplied B2B	Domestic reverse charge may apply
Turnkey BESS added to an existing PV plant, as described in Ruling 181/2026	22% VAT
Maintenance of building-related solar installations	Reverse charge may apply, subject to conditions

The distinction between a works contract, an installation service and a supply of goods with installation is particularly important.

Foreign EPC contractors and developers should review contractual provisions before issuing invoices or establishing an Italian VAT compliance procedure.

White Certificates and Green Certificates in Italy

Italy provides a regulatory framework for energy efficiency projects through White Certificates, also known as Energy Efficiency Certificates or Titoli di Efficienza Energetica (TEE).

These certificates are linked to qualifying additional energy savings and require compliance with technical eligibility, measurement and verification rules.

The framework was updated by the Ministerial Decree of July 21, 2025.

Green Certificates, by contrast, were historically associated with renewable electricity generation. The original scheme was replaced in 2016 by the former Green Certificate incentive mechanism administered through GRIN for eligible plants.

International investors should also distinguish these mechanisms from Guarantees of Origin, renewable electricity incentive schemes and capacity-market arrangements.

Tax planning for renewable energy investments in Italy

A renewable energy project requires more than technical and financial feasibility.

Foreign investors should consider the Italian tax implications of the entire investment structure, including:

• Establishing an Italian company, subsidiary or branch.

• VAT registration, domestic reverse charge and VAT recovery.

• Corporate income tax and applicable regional taxation.

• Depreciation of solar plants and battery storage assets.

• Leasing arrangements and project financing.

• Accounting for energy sales, GSE incentives and certificate-related revenues.

• Financial forecasts, cash flow modelling and debt servicing.

• Tax implications of future project sales or restructuring.

Agricultural photovoltaic and agrivoltaic projects may require additional consideration of the specific tax rules governing agricultural activities.

For larger investments, the choice between owning the plant directly and operating through a dedicated Italian special-purpose vehicle can also influence financing, risk management and tax administration.

Specialist Italian tax advice for renewable energy businesses

Studio Cavallari – Italian Tax Advisor, based in the Padua area, provides tax, accounting and corporate advisory services to Italian and international businesses.

Our renewable energy advisory approach combines tax compliance, financial planning and investment analysis, coordinating with qualified engineering and regulatory specialists where necessary.

We assist businesses involved in solar photovoltaic installations, battery storage, renewable electricity generation, energy efficiency projects and related incentive schemes.

Frequently asked questions

Can a foreign company recover Italian VAT paid on a BESS installation?

Potentially, yes. Recovery depends on the company's VAT position, the use of the asset, the applicable registration or refund procedure and the relevant deduction rules.

Does reverse charge automatically apply to commercial solar installations?

No. The application of reverse charge depends on the type of service, contractual arrangements and whether the installation falls within the relevant building-related provisions.

Can solar projects receive Italian White Certificates?

Solar electricity generation alone does not automatically qualify. The White Certificate mechanism concerns eligible additional energy efficiency savings.

Should foreign investors establish an Italian SPV?

An Italian SPV may be appropriate for certain renewable energy investments, but the decision should follow a review of financing requirements, regulatory obligations, taxation and operational risks.

Planning a renewable energy investment in Italy?

Before signing an EPC agreement, incorporating a project company or making a major battery storage investment, obtain professional advice on Italian taxation and financial structuring.

Dr. Massimo Cavallari Italian Chartered Accountant with over 25 years of professional experience, registered with the Padua Chartered Accountants Association under No. 932/A and Expert Contributor to Il Sole 24 Ore.

Studio Cavallari – Italian Tax Advisor

Phone: +39 049 613584 Email: Questo indirizzo email è protetto dagli spambots. È necessario abilitare JavaScript per vederlo.

👉 Prenota una call ora su Google Calendar

Book an initial complimentary information call to discuss your project and identify the appropriate scope of professional assistance.