The government will consider introducing a reduced VAT rate of 3% for photovoltaic installations, said Minister of Energy Claude Turmes and finance minister Yuriko Backes on Monday.

Turmes and Backes confirmed the potential plans in a parliamentary response to a question put forward by Pirate MP Marc Goergen.

The reduced tax rate could come into effect as early as 1 January 2023. However, the ministers clarified that it would not be retroactive, due to the extreme administrative burden for the administration.

If customers have already ordered an installation and paid a deposit at the normal rate of 17%, then after the first of January a lower rate can be applied to the rest of the system, if installation would only be completed next year.

Interest in solar panels remains high, the ministers said , with citizens frequently using the energy produced by the systems themselves.

In July 2022, Luxembourg produced more solar energy than ever before, the Ministry of Energy announced last month.