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Solar and agrivoltaics on Italian farms: how they are taxed

Agricultural income up to 260,000 kWh, 25% flat rate, ground-mounted plants from 2026, no reverse charge in the field, compendio unico: current rules.

Up to 260,000 kWh a year, photovoltaic energy sold by a farmer (imprenditore agricolo) remains within agricultural income (reddito agrario, the cadastral-based income of farming activities), even where the installation is agrivoltaic. Above that threshold, income equals 25% of the consideration received for the energy, but only if the installation is connected with the agricultural activity; for installations with ground-mounted modules completed after 31 December 2025, the excess is ordinary business income (reddito d’impresa). According to the Italian Revenue Agency (Agenzia delle entrate), installation in an open field is invoiced with VAT charged, without the reverse charge.

The framework

Article 1, paragraph 423, of Law no. 266 of 23 December 2005 (as amended by Law no. 208 of 28 December 2015) treats the production and sale of photovoltaic energy by a farmer, up to 260,000 kWh a year, as a related activity (attività connessa) within the meaning of Article 2135 of the Italian Civil Code (codice civile, c.c.) and generating agricultural income. Above the limit, for individuals, simple partnerships (società semplici) and the agricultural companies referred to in Article 1, paragraph 1093, of Law no. 296 of 27 December 2006 (on the prudent reading, only if they have elected to be taxed on agricultural income), income is 25% of the consideration recorded for VAT purposes for the “energy sold” component alone, excluding the incentive portion. The option to determine income under the ordinary rules remains available, to be exercised in the manner laid down by Presidential Decree (d.P.R.) no. 442 of 10 November 1997 (conduct consistent with the option and notification in the tax return). Agricultural companies that have not made the election determine their income, including income from energy, under the ordinary business income rules (Articles 55 and 81 of the Consolidated Income Tax Act, Testo unico delle imposte sui redditi, TUIR).

The flat-rate treatment of the excess is available only if at least one of the alternative requirements set out in Revenue Agency Circular no. 32/E of 6 July 2009, section 4, is met; these requirements are still confirmed (among others, by ruling no. 11/2024): a) an installation integrated or partially integrated into existing farm structures; b) agricultural turnover exceeding turnover from the excess energy, excluding incentives; c) up to 1 MW per farm, at least one hectare of land used for the agricultural activity for every 10 kW of installed capacity above the first 200 kW (a parameter set by the circular when the exemption threshold was expressed in terms of capacity). If none of them is met, the excess is business income.

According to ruling no. 61 of 4 March 2025, agrivoltaics, including “advanced” agrivoltaics, is photovoltaics: purpose-built poles do not satisfy requirement a); requirement b) is measured across all of the farm’s photovoltaic installations and is checked at the end of each year, and in the Agency’s view, as a matter of principle, a fall in agricultural turnover caused by natural disasters or other exceptional events does not allow any derogation; requirement c) does not apply above 1 MW.

Paragraph 423-bis, inserted by Article 5, paragraph 2-ter, of Decree-Law (d.l.) no. 63 of 15 May 2024 (converted by Law no. 101 of 12 July 2024), brings the excess energy from installations with ground-mounted modules within ordinary business income. Under paragraph 2-quater of the same article, as amended by Article 1, paragraph 16, of Law no. 199 of 30 December 2025, the rule applies to installations whose installation works were completed after 31 December 2025 (before the amendment, the date of entry into operation was decisive); registration as an “impianto realizzato” (completed installation) in the GAUDI system, the national register of generation plants, constitutes evidence. From 1 January 2027 the same rules move to Article 288 of the consolidated income tax code (Legislative Decree, d.lgs., no. 117 of 19 June 2026).

For VAT purposes, the reverse charge under Article 17, sixth paragraph, letter a-ter), of Presidential Decree no. 633/1972 covers installation services “relating to buildings” supplied to a customer who is a taxable person; it does not cover sales of the installation in which fitting is ancillary to the supply. Ruling no. 156/2025, referring to Circulars no. 14/E and no. 37/E of 2015, excludes the reverse charge for an installation on agricultural land. From 1 January 2027 the VAT provisions cited also move into the consolidated VAT code (Legislative Decree no. 10/2026); for 2026 the articles of Presidential Decree no. 633/1972 apply. As regards registration tax, ruling no. 205/2025 concerns land acquired with the exemption for the single farm holding (compendio unico) (Article 5-bis of Legislative Decree no. 228 of 18 May 2001, and Article 5-bis of Law no. 97 of 31 January 1994).

What changes in concrete terms

An individual fruit grower with agricultural turnover of 180,000 euros has an installation on the roof of his warehouse, in operation since 2023, from which 360,000 kWh a year are sold; assume 0.11 euros/kWh for the energy, with the incentive paid separately. The first 260,000 kWh remain within agricultural income. The excess is worth 100,000 x 0.11 = 11,000 euros; requirements a) and b) are met and income is 11,000 x 25% = 2,750 euros.

If the same excess came from a ground-mounted installation completed in 2026, assumed to receive no incentives, the 11,000 euros would be business income: with 4,000 euros of costs attributable to that portion, income would rise to 7,000 euros. If the installation received incentives, business income would also include the portion of the incentive attributable to the excess energy, which the 25% flat rate instead excludes. For agrivoltaic installations completed before 2026 the flat rate remains available, but it can usually rely only on requirement b): in a year in which agricultural turnover falls below turnover from the excess energy, the excess becomes business income.

On the invoice, if the contract is an installation contract (appalto) performed for a customer who is a taxable person, an installation on the roof or on the area appurtenant to the building, not separately registered in the land registry, is invoiced under the reverse charge. An installation in an open field, a power plant registered in cadastral category D/1 or D/10 and a supply with fitting are invoiced with VAT charged. If VAT is accounted for under the wrong regime, in either direction, the right of deduction is as a rule not lost, but the penalty of 250 to 10,000 euros under Article 6, paragraphs 9-bis.1 and 9-bis.2, of Legislative Decree no. 471 of 18 December 1997 applies (from 2027 in the consolidated code of tax penalties, Legislative Decree no. 173/2024), for which customer and supplier are jointly and severally liable; this more favourable treatment does not apply if the error stems from an intention to evade tax or commit fraud, where awareness of it has been proven.

For land benefiting from the single farm holding relief, according to the Agency (ruling no. 205/2025), granting a surface right (diritto di superficie) over part of it for an agrivoltaic installation within the ten-year period does not cause forfeiture of the exemption if cultivation continues and profitability remains above the minimum set by the region. Under the same ruling, a partial sale within the ten years causes forfeiture only for the part sold if the remainder maintains that level; otherwise forfeiture is total, with taxes, interest and a 50% surcharge. The ruling concerns taxes only. Under civil law, Article 5-bis, paragraph 4, of Legislative Decree no. 228/2001 renders null and void any inter vivos transactions that split up the holding within the ten-year period: before selling, even in part, a check with the notary is required.

In practice

• Before the contract: classify the installation with your adviser (roof, appurtenance, land, cadastral registration) together with the type of contract (installation contract or supply with fitting), and check the applicable VAT regime with the installer.
• On completion of the works: keep the GAUDI registration showing the “impianto realizzato” date, which proves when the works were completed.
• In the income tax return: separate, using the statements from the GSE (Gestore dei servizi energetici, the state energy services operator) or the trader, kWh within the threshold from excess kWh, and energy from incentive.
• At the close of each year: compare, on the basis of the VAT return data, agricultural turnover with turnover from the excess energy.
• Before granting a surface right over land benefiting from the relief: commission an agronomic appraisal of residual profitability and keep it with the deed.
• Before selling land forming part of the single farm holding within the ten-year period, even in part: check with the notary the validity of the deed under civil law, as well as forfeiture of the reliefs.
• Agricultural companies: check that the paragraph 1093 election is in force.

Mistakes to avoid

• Treating agrivoltaics as “always agricultural”.
• Calculating the 25% on the incentive as well.
• Accepting a reverse-charge invoice for an installation in an open field or for a supply with fitting.
• Applying the flat rate to a ground-mounted installation completed in 2026 merely because a connection requirement is met.
• Assuming that the single farm holding exemption is preserved merely because cultivation continues: minimum profitability is also required.

References

Article 2135 c.c.

Article 1, paragraphs 423 and 423-bis, Law no. 266/2005

Article 1, paragraph 910, Law no. 208/2015

Article 1, paragraph 1093, Law no. 296/2006

Article 5, paragraphs 2-ter and 2-quater, Decree-Law no. 63/2024, converted by Law no. 101/2024

Article 1, paragraph 16, Law no. 199 of 30 December 2025

Article 1, Presidential Decree no. 442/1997

Articles 17, sixth paragraph, letter a-ter), and 34, Presidential Decree no. 633/1972

Article 6, paragraphs 9-bis.1 and 9-bis.2, Legislative Decree no. 471/1997

Legislative Decree no. 173/2024

Articles 55 and 81 TUIR

Article 5-bis, paragraph 4, Legislative Decree no. 228/2001

Article 5-bis, Law no. 97/1994

Article 288, Legislative Decree no. 117/2026

Legislative Decree no. 10/2026

Revenue Agency Circulars no. 32/E/2009, no. 14/E/2015 and no. 37/E/2015

rulings (risposte a interpello) no. 11/2024, no. 61/2025, no. 156/2025 and no. 205/2025