France launches new solar VAT reduction scheme: Strict carbon thresholds reshape Europe’s compliance landscape

Effective October 1, 2025, France officially implemented a new value-added tax (VAT) reduction scheme for solar PV products. According to the decree of September 8, 2025 (Arrêté du 8 septembre 2025), residential PV systems with a capacity below 9 kW are eligible for a reduced 5.5% VAT rate, provided they meet strict environmental and technical criteria. Systems that do not meet these requirements are subject to the standard 20% VAT rate. The previous 10% intermediate rate has been fully eliminated, signaling a clear policy shift toward high-quality, low-carbon manufacturing.


 

Strict VAT reduction eligibility: Five cumulative environmental and performance requirements

Under the new scheme, PV modules must meet all five criteria to qualify for the reduced VAT rate:

1. Silver content in in cells below 14 mg/W;

2. Lead content in modules below 0.1%;

3. Cadmium content in modules below 0.01%;

4. Carbon footprint of modules below 530 kgCO₂eq/kWc;

5. Integration of an energy management system (EMS).

Among these criteria, the carbon footprint threshold is considered the most challenging. According to data from Certisolis, the official carbon assessment body in France, only two European manufacturers—Meyer Burger and Voltec Solar—have successfully obtained formal certification for meeting the carbon footprint requirement of below 530 kgCO₂eq/kWc. Other companies are still in the application or improvement phase.
 

Decarbonization focus: The critical role of polysilicon and cell manufacturing 

According to the Simplified Carbon Assessment (Évaluation Carbone Simplifiée, ECS), a methodology issued by the French Energy Regulatory Commission (Commission de Régulation de l'Énergie, CRE), the main sources of carbon emissions in the PV manufacturing process are polysilicon production, the Siemens process, and cell manufacturing—which together account for over 60% of total emissions. For companies aiming to meet the VAT reduction threshold, priority must be given to reducing carbon intensity in these high-energy-consuming stages, such as by sourcing low-carbon electricity or using materials from non-Chinese suppliers.

As shown by InfoLink’s simulation results, if a company manufactures entirely within the Chinese supply chain, the carbon footprint would be approximately 574 kgCO₂eq/kWc, which does not meet the threshold for VAT reduction. Switching to German polysilicon, however, can lower the footprint to around 495 kgCO₂eq/kWc, making it compliant. Another viable pathway is to establish a fully integrated production line in Southeast Asia (e.g., Vietnam), where the entire process—from ingot pulling to module assembly—is completed locally. This approach could potentially meet the 530 kgCO₂eq/kWc threshold even without relying on non-Chinese material inputs.  
 

Technology differentiation: Thin-film modules showing inherent low-carbon advantage 

In a single-origin comparison, cadmium telluride (CdTe) thin-film modules have a 36–53% lower carbon footprint than crystalline silicon modules, primarily due to lower process energy consumption and a simplified structure. As carbon footprint regulations tighten across Europe, thin-film technology is expected to become a strong competitor in the residential and distributed PV markets.
 

Market outlook: Clear policy signal, but limited short-term impact

France’s residential PV market adds only about 1 GW of new capacity per year, accounting for roughly 20% of the total market; as a result, the impact of the policy incentive is limited in the short term. In the long run, however, this VAT reform clearly establishes low-carbon manufacturing as a market entry threshold and is therefore likely to drive a broader and faster transformation across the European solar supply chain.

According InfoLink, the French model may serve as a reference for other EU countries in developing carbon footprint–based tax regimes, while also presenting new compliance challenges and strategic implications for Chinese and other Asian manufacturers seeking to enter the European market.
 

For a deeper analysis of policy details, carbon footprint simulations across different technology scenarios, and supply chain strategy recommendations, refer to InfoLink’s member-exclusive report, In-Depth Analysis: France’s 2025 VAT Reduction for Residential PV and Carbon Footprint Compliance, or contact us for the full report.