Advantages and Disadvantages of Hobby Photovoltaic System

Hello everyone, can someone explain the pros and cons of hobbyism with photovoltaic systems? We have had a system with 9.92 kWp since the middle of last year.

I have read up on it myself and so far I see the following:

Advantage:
- No more quarterly reporting to the tax office.

Disadvantage:
- I cannot reclaim taxes on repairs. Since an inverter will probably break down after 20 years, this wouldn’t be ideal. However, one could probably be exempted from hobbyism for the tax year?

Is that really all the significant changes? What else should be considered and what would/have you done?

Have a look at finanzamt dot bayern dot de/Informationen/Steuerinfos/Weitere_Themen/Photovoltaikanlagen/Merkblatt_Liebhabereiwahlrecht%20.pdf

Everything you want to know is there.

The topic of taxes can initially seem intimidating if you have no prior experience with it. It is also not advisable to hire a tax advisor for this unless they handle it "for a small fee" within the scope of an already existing mandate – profit killer! On closer inspection, the topic is not that complex, and there are plenty of tools to support you. Many tax tools for private users also come with a photovoltaic module and guide you through it.

Advantage:
- No more quarterly reports to the tax office.

That is a typical misconception. You probably mean the advance VAT return, provided you do not opt for the small business regulation. You do that monthly for one year after "founding." But to be honest, that is a piece of cake if you are supported by a tool. For the following year, you simply submit an informal application (unless the tax office informs you actively) stating that you want to report only annually due to the low VAT collected – and that's it. Then you only do the annual return. In general, I can only recommend not opting for the small business regulation just because you are 'afraid' of the tax topic. You give up the 19% VAT on the purchase of the entire system – so before you do that, it's better to treat yourself to a tax advisor, who costs only a fraction in comparison.

I currently have to submit the VAT advance return once a quarter. I use the Elster program for this and submit it electronically. Since I can copy the data from the previous form, it only takes about two minutes. Therefore, the effort does not discourage me. I just thought that the hobby activity with the photovoltaic system might generate further advantages besides being able to avoid this small effort. At that time, I also reclaimed the tax for the purchase of the system. I think I did very well with that.

It is basically very simple:

Buy a photovoltaic system, waive the small business regulation, claim input tax deduction (currently still possible for the photovoltaic storage, even though it is used purely privately).
After five years, apply the small business regulation.

In income tax, I would never voluntarily enter into a hobby loss.
You can nicely generate a loss here that reduces other income, since it is ultimately generated from income from a commercial enterprise and is therefore fully offsettable.

At the moment, the photovoltaic system in connection with hobby loss is coming increasingly into the focus of the tax authorities.
In the past, questions about personal consumption were often not asked, nowadays only with some luck with the person in charge at the tax office.

Hobby activities can also have advantages. Work performance can be deducted as craft work on taxes. At the same time, the allowance for other income can still be used. Potentially, one might not even have to submit the tax return and can thus wait 4 years and let the credit earn substantial interest. The money must initially be made at a loss. And you don’t have to submit an income and expenditure statement for 20 years. I am also currently considering this but am not yet sure what I will do.