Tax incentives for installing solar power in your business

Installing solar self-consumption in a company does give access to real tax advantages in Spain in 2026, but it is worth being precise about which ones, because some misconceptions circulate. The most important is free depreciation (accelerated capital allowances) under corporate income tax; to this are added local reliefs on the IBI (property tax) and the ICIO (construction tax) and direct grants from European funds. What no longer exists is the old deduction for environmental investments under corporate income tax, repealed in 2015.

We review the legal framework in force and how to fit each incentive into your investment. For the general context, start with our guide to green taxation in Spain.

Solar power in the energy transition

The push for self-consumption sits within Spanish and European policies to decarbonise the economy. Royal Decree 244/2019 regulated electricity self-consumption and simplified the procedures, and the Climate Change and Energy Transition Law set the medium and long-term targets. The tax incentives that lower the cost of the investment are built on that base.

Corporate income tax: free depreciation

This is the main benefit for companies. It is not a tax-liability deduction, but the free depreciation in the seventeenth additional provision of the Corporate Income Tax Act, introduced by Royal Decree-Law 18/2022 and extended since (Royal Decree-Law 9/2024, 16/2025 and, for 2026, 7/2026).

• It applies to renewable electricity self-consumption installations (and certain own-use thermal installations that replace fossil fuels) that enter into service in 2023, 2024, 2025 or 2026.
• It allows the investment to be depreciated freely, with a cap of 500,000 euros qualifying for the benefit.
• It requires maintaining the average workforce for the following 24 months.

Bringing depreciation forward reduces the year's taxable base and frees up cash, shortening the payback period. Importantly, the old deduction for environmental investments under corporate income tax has been repealed since 2015, so you should not count on a percentage deduction on the investment under that heading.

Personal income tax (IRPF): only for sole traders and individuals

If you are taxed under the direct assessment regime in personal income tax (a sole trader), an installation linked to your business can likewise use free depreciation. For homes, individuals have the deduction for energy-efficiency improvement works (20%, 40% or 60% depending on the saving achieved, extended to the end of 2026, and to 2027 for buildings). It is not a business deduction: it applies to dwellings, not to warehouses or offices.

Some autonomous communities add their own deductions in the regional tranche of personal income tax for renewables investment; it is worth checking each territory's rules.

Local reliefs: IBI and ICIO

The Local Finances Act (Royal Legislative Decree 2/2004) allows municipalities to grant relief for solar self-consumption, but does not require them to: it depends on each tax bylaw and always has to be applied for.

Property tax (IBI)

Municipalities may grant relief of up to 50% of the IBI charge for properties with solar systems, usually for a limited number of years. According to the Spanish Photovoltaic Union (UNEF), around 67% of municipalities apply it.

Construction tax (ICIO)

When applying for the works permit, many municipalities grant relief of up to 95% of the ICIO for self-consumption installations. It is worth confirming the percentage and the requirements in the local bylaw before applying for the permit.

Complementary grants and subsidies

On top of the tax advantages come grants from the autonomous communities and from the Institute for Energy Diversification and Saving (IDAE), financed largely by Next Generation EU funds through the national recovery plan (PRTR). They usually cover part of the investment in self-consumption and storage. In our article on green taxation in Spain we set out how the wider framework fits together. Remember that each grant is governed by its own call and that the grant received may limit the base of the tax benefit, so as not to duplicate the incentive.

Benefits beyond tax

• Lower energy cost: self-consumption steadily reduces the electricity bill.
• Reputation and investors: it strengthens environmental commitment, increasingly valued.
• Compliance: it helps meet decarbonisation targets as regulation tightens.

Keys to making the most of the reliefs

1. Study your case: analyse sizing and profitability before investing.
2. Check the municipal bylaw: see whether your town grants IBI and ICIO relief.
3. Consult a tax adviser: free depreciation and its compatibility with grants have precise rules.
4. Combine incentives: tax advantage, local relief and grant can stack while respecting each one's limits.

Frequently asked questions

Can my company deduct a percentage of the solar investment under corporate income tax?

Not through the old environmental deduction, which has been repealed. The incentive in force is free depreciation, which lets you depreciate the investment early.

Is the IBI relief automatic?

No. It is optional for each municipality and always has to be applied for, submitting the installation documentation.

If you also want to quantify the emissions saved by your solar installation, with Manglai you can measure and report your carbon footprint with real data.