Response to interpellation 2023/24:456 on green deduction for home batteries
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns the Swedish Tax Agency's new interpretation of the tax reduction for home batteries, where batteries may only be used to store self-produced electricity. S argues that this does not follow the legislation's intent to promote the green transition and that it harms the electricity system since batteries can provide important system services. S considers it unfortunate that the Swedish Tax Agency is changing the interpretation and requests clarified legislation to secure investments and the industry's conditions. M argues that it is important to wait for legal guidance from the Tax Court before the legislation is adjusted, but acknowledges that the deduction is important for the transition.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Monica Haider has asked me if I and the government are prepared to amend the legislation so that home batteries can be used for support services, peak shaving, or other purposes than solely the storage of self-produced electricity.
The question is posed against the background that the Swedish Tax Agency on 25 January published a position regarding the agency's interpretation of the provisions on tax reduction for the installation of systems for storage of self-produced electricity within the framework of the tax reduction for green technology. The Swedish Tax Agency's view is that it is required that a battery must be used exclusively or almost exclusively to store self-produced electricity in order for the tax reduction for green technology to be granted. The position applies to preliminary tax reductions requested for the income year 2024 or later.
As I have noted in previous answers to Monica Haider and also in the interpellation debate on 6 February, it is the Swedish Tax Agency (Skatteverket) as the implementing authority and ultimately the administrative courts that interpret the meaning of the current legislation. The consequences of the Swedish Tax Agency's position are currently being analyzed within the Ministry of Finance.
Monica Haider (S)
Mr. Speaker! I thank the Minister for Finance for the answer. Unfortunately, it was not the answer I wanted to have, but sometimes that is the case in interpellation debates - or rather, almost always.
Why is this then an important issue? The first thing I want to say is that it is unfortunate that the Swedish Tax Agency is changing its interpretation - which happens more and more often, it feels like. We have another example that is equally highly topical, namely the Swedish Tax Agency's interpretation of the tax on compensation for denied logging in forest areas near mountains and compensation upon the formation of nature reserves. There, the Swedish Tax Agency is now making a new interpretation that these compensations should be taxed differently, which has not been the case previously. That is also very unfortunate, but it is a separate debate. Perhaps an interpellation will come regarding that matter.
The Swedish Tax Agency changed its interpretation at the turn of the year, and it means that battery storage may only be used to store own electricity to be entitled to the tax reduction. It is extremely few batteries that are used so unilaterally. The batteries will likely not even be used during the winter, but we all know that batteries benefit from being used. The sudden change does not follow the intent of the legislation: to promote the green transition and strengthen homeowners' resilience against high electricity prices. Neither in the legislation nor in the preparatory works do the legislators express that they want to limit what benefits the batteries should be able to provide.
The system services that batteries can provide to the power grid are important in order to be able to utilize the power grid to a greater extent. Buying a battery just to store electricity does not become as attractive, and we lose many benefits that we really need in the power system. It also puts an entire industry in a difficult situation in a recession, as well as private individuals who do not quite know how they are to use their batteries. Everyone wants stable rules of the game and not to be punished. It is also difficult to control that the batteries are only used for own storage, and who is to do that?
Mr. Speaker! We are spending large amounts of tax money on the green deduction, but with the new interpretation, we are losing great benefits that we truly need. It does not really promote the green transition, nor does it promote resilience against the high electricity prices. Is it the case that it has become too expensive for the state? Has the deduction become too popular?
According to information, the Swedish Tax Agency apparently thinks so. The cost has gone from 45 million in 2021 to 1.3 billion in 2023, according to the Swedish Tax Agency's own statistics. The green deduction cost a total of preliminarily 5.55 billion in 2023 instead of 2.14 billion, which was the calculation when it was introduced.
To then make a new interpretation can be perceived as a bit strange – should Skatteverket really do that? We all want to promote the green transition and the electrification in society, but this reinterpretation definitely does not do that.
My question remains, then: Is the Minister for Finance prepared to clarify the legislation?
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Thank you, member, also for this question! The same question was raised in a debate in the chamber exactly three weeks ago. I say now as I believe I said then, quite exactly.
First and foremost: This has happened quite recently. The Swedish Tax Agency has submitted a petition, and we have just now been informed that the Tax Court has received applications for preliminary rulings in this matter. It is fundamentally good if this issue is examined. That was my basic position then, and it is also now. This can provide us with legal guidance on the issue. I believe it would be foolish of the government to rush ahead, but we will have to see what happens when this issue is examined at different levels. This is of fundamental importance.
With this said, we nevertheless believe fundamentally that this is an important tax reduction. It is important for green technology and for the green transition. In order for us to manage the climate transition, we need to include everyone, the whole society. It is very important, we believe - and I believe you agree - that households also get the opportunity to invest in solar cells, charging points, storage of electricity and other things. Then this tax reduction truly has an important task to fulfill.
Then one might wonder why it turned out this way. It is not actually I who should say why the Swedish Tax Agency ends up where it does. But obviously it is, which I also said in the previous debate, an effect of the fact that technological development has gone very fast. The previous legislation, which came into place in 2021, I believe, does not quite keep up. I do not blame any previous government for this, because technological development goes fast. The Swedish Tax Agency has then made this assessment.
What, then, is my closing remark and the point of all this? The tax deduction is important. It is important for the transition that more people can participate in both producing and storing electricity. Now, the Swedish Tax Agency has given its clear statement; that is why we have this debate. But I mean that it is good that the Tax Appeals Board now, before we move forward and see exactly what we are to do, handles the issue; we shall see if this provides legal guidance.
I am therefore excluding nothing – that would be very foolish. This is fundamentally a good deduction. It may very well happen that it will need to be adjusted legislatively, but I do not draw that conclusion until it has been tested.
Monica Haider (S)
Mr. Speaker! Thank you very much for the answer, Minister for Finance! I had, of course, hoped that the Minister for Finance would not wait for a court ruling to be finalized. The Minister for Finance said in his statement that the Tax Appeals Tribunal will also issue a preliminary ruling on the issue; we hope that it will come soon. If we wait, it will mean missed investments in home batteries, which will also result in a more strained electricity grid.
Batteries have, just as the Minister for Finance said, many benefits, not only to store electricity for own use. They also contribute to maintaining the frequency, counteracting bottlenecks, increasing self-consumption, cutting peak loads and enabling zero-operation. Many of these benefits are lost if one uses the green deduction because one is then only permitted to store own electricity, according to the Swedish Tax Agency's new interpretation.
Then we also miss out on the benefit for the entire electricity system. An electricity grid company that has problems during a small number of hours per year can, for example, postpone its investment costs or completely replace them by instead purchasing battery services for these hours, for a fraction of the cost of investing in a new line. There are many benefits to using batteries for what they are needed for in the electricity system.
It can also be read that the Swedish Tax Agency on 5 February made a request to the Ministry of Finance for an investigation of the tax reduction for the installation of green technology in order to adapt the current rules to the technological developments that have occurred in the area. The Swedish Tax Agency also wants to look at whether the tax reduction should be granted with the same percentage regardless of which installation has been performed.
The latter, regarding the same tax reduction regardless of installation, is perhaps something to look at over time, if it happens predictably and planned. We all know what applies and when. It is important that it is the order date that applies for the tax reduction so that those who invest know what applies when the order is placed.
A reduction to 20 percent, which applies to solar cells, should be done in stages so that it does not become an abrupt end. I know that Svensk Solenergi has submitted a proposal for three different steps: first 40, then 30, and then down to 20 percent. According to information, different percentages for the tax deduction open up for unserious actors if batteries become very expensive and solar cells very cheap. I know that neither the Finance Minister nor I like cheating and unserious actors.
What is problematic is that the Swedish Tax Agency changes its interpretation in the middle of it, and it is not the first time.
Mr. Speaker! Several in the industry have requested preliminary decisions, just as the Minister for Finance said. This shall be examined, and we will have to wait for that. The best thing is if the government clarifies the legislation so that the benefits that batteries provide in the electricity system are replaced. This is not just a tax issue but an issue for our entire electricity system. That it becomes expensive for the state should not mean that new interpretations are made. I have never heard the government complain about the high costs for rot and rut, which have also risen over time.
My question is: Is the Minister for Finance prepared to resolve this issue both for private individuals and for an industry that needs long-term conditions?
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Thank you again, Monica Haider, for the question! It is important. As I mentioned, technological development sometimes moves fast, and the legislation does not quite keep up. My point is, as I have said before, that I believe it is important that the legislation is tested in different instances. But of course, this deduction is important and good. If, after testing, we land in the same conclusion as the Swedish Tax Agency, we will truly have to decide what we should do in the next step.
Right now, I think it is important to analyze and follow this. That we now get this legal review in the Tax Court, I believe is very important.
Monica Haider (S)
Mr. Speaker! Thank you, the Minister for Finance, for further answers! Yes, the question is important and engages many, as the Minister for Finance surely knows. At the same time, it is good that so many want to be involved and contribute to transforming society. We in Sweden have led the way when it comes to the transition within industry, and now Swedish households also want to be involved and contribute. That is where the green deduction is important; that we are in complete agreement on. It is also important for the industry, which is under pressure. And it is also about the trust in us in politics – that there won't be back-and-forth blows.
We need to transform the entire society, and more people need to invest in solar cells, charging stations, and storage. Energy efficiency is also an important part here, and there we have much more to do. We Social Democrats propose a reformed ROT deduction for services that contribute to energy efficiency, for example, installation of geothermal heating, water-borne heating, doors and windows, and insulation.
But with the new interpretation from Skatteverket, there is actually a risk that the installation of batteries will stall, and that is not good, because they are needed in the system. I would therefore like to ask the Minister for Finance how it is going with the analysis that the Minister for Finance refers to, which is ongoing in the ministry.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! I am simply repeating that I actually have nothing to add.
We had a debate about this in the chamber quite recently. Since then, the matter has been taken to the Tax Court.
I will continue to say what I have said previously, namely that we are following the developments and analyzing the issue. But everyone, including Monica Haider, should know that this is an important issue. One must find out what applies. But let us first wait for a judicial review.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.