EIA - Energy Investment Allowance for LED lighting in 2020

What is the EIA?

The EIA - Energy Investment Allowance for LED lighting in 2020 is a tax incentive for businesses that invest in energy saving equipment. This can be LED lighting, renewable energy or solar panels.

If you are using the EIA, it cuts both ways: you will save on fixed costs by using LED lighting and solar panels. But you can also get tax benefits because of investing in sustainable resources.

How does the EIA work?

If you invest in energy saving equipment than you are eligible for this tax deduction. Your company then is allowed to deduct 45% of the investment from your fiscal profit. You will pay less income tax. The net subsidy benefit at 25% income tax is 11,25%.

What are the terms of the EIA?

There are of course a number of conditions set by the Dutch government to qualify for the EIA:

• Your company is taxable in the Netherlands
• The minimal amount invested is 2500 euros
• The invested products are within the product groups of the Energy List that year. Energy list 2020
• You must send your application within 3 months via the eLoket.

In 2020, the EIA for LED lighting is extended for five years until at least 2025. The total budget in 2020 for the EIA is € 147.000.000 (147 million euros).

Requirements for LED TL lighting

• LED TL tubes must be at least 130 Lumen per Watt
• They must use an external driver
• Powerfactor must be at least 0,90

For the LED TL lights above, € 20 per LED tube will be eligible for EIA.

 

Requirements for other LED lighting

Of course there are a number of requirements that the new LED lighting must meet:

• Lumen per Watt is higher than 125
• Powerfactor must be at least 0,90

For all the above LED lights, € 25 per 1,000 lumens will be eligible for EIA.

Example

Your fiscal profit in 2020 is € 1.000.000. Income tax is 20% till € 200.000 and 25% above € 200.000. The income tax then is:

• € 200.000 x 20% = € 40.000
• € 800.000 x 25% = € 200.000

Total of € 240.000 income tax.

Now you invest € 400,000 in energy saving devices. 45% of that investment can be deducted from your taxable income. € 400,000 x 45% = € 180,000

Your taxable income is only: € 1,000,000 - € 180,000 = € 820,000. The income tax is:

• € 200.000 x 20% = € 40.000
• € 620.000 x 25% = € 155.000

Total of € 195.000 income tax.

The net benefit is € 45.000, which is 11,25% in this example.