How EVs and low emission vehicles are taxed in Europe
Taxes are a fact of life but we know that keeping up with taxation regulations isn't a hobby for everyone. Keeping up with taxes and legislation in one country can be tricky enough but when it comes to running an international company and fleet, staying on top of taxes across multiple countries can seem like a never-ending task.
We’ve put together a guide of basic vehicle taxation in European countries. At LeasePlan International we combine global experience with local expertise to make sure our international clients receive the best international fleet advice.
For EVs with a purchase price of up to €40,000 there are VAT deductions and partial deductions on the purchase of EVs up to €80,000. For vehicles over €80,000 there are no VAT deductions possible.
EV tax benefits:
Electric vehicles are exempt from motor related insurance tax. This only applies to battery electric vehicles and not hybrids or plug in hybrids. For low emission vehicles the tax is calculated on the internal combustion part of the vehicle.
There is no registration tax for battery electric vehicles as the tax is based on CO2 emissions, which electric vehicles don’t have,
There are a lot of vehicle taxation changes coming up in Belgium over the next 5-10 years to help Belgium meet their 203 climate objectives. You can read all about the coming changes here and below is a roundup of currently applicable taxes.
CO2 tax Employers must pay a monthly CO2 tax for any company cars that are used for private use. This tax depends on the vehicle’s CO2 emissions and fuel type. The formula for calculating the CO2 contribution (as of July 2022) = [(CO2 emission in g/km x € 9) – 600 (diesel) or 768 (petrol) or 990 (LPG)] x 1.3525. The monthly contribution cannot be less than € 28.17.
Government incentives for installing charging stations (September 2021 – August 2024)
Companies can deduct up to 200% of the costs of installing charging stations available to the public before the 31st of December 2022. Companies that install charging stations between 1 January 2023 and 31 August 2024 will receive a 150% deduction.
Individuals who have a smart charging station installed at home between 1 September 2021 and 31 August 2024 at their own expense can include these costs as tax-deductible expenses up to a maximum of €1,500.
In the Czech Republic, battery electric vehicles, plug in hybrids (PHEVs) and compressed natural gas vehicles (CNG) are exempt from road tax. The private use of a company car is treated as taxable income, no matter the vehicle type. This is measured at a flat monthly rate of 1% of the vehicle’s gross purchase price.
All cars are assigned a basic deduction of 21.700 DKK. This is indexed accordingly to the personal income tax act §20.
Deductions for low emission cars (plug-in hybrids): There is a basic deduction of an additional 50.000 DKK. This amount decreases by 1.250 DKK per year until 2025 and by 2.000 DKK per year until 2030. Hence, the extra basic deduction for low emission cars is 45.000 DKK in 2025 and 35.000 DKK in 2030.
Deductions zero emission cars (100 % electric): There is a basic deduction of an additional 144,188 DKK. This deduction has a maximum of 170,000 DKK. The amount decreases by 2.500 DKK per year until 2025 and by 4.600 DKK per year until 2030. Hence, the extra basic deduction for zero emission cars is 160.000 DKK in 2025 and 137.000 DKK in 2030.
CO2 surcharge: All cars, except electric cars, are subject to a CO2 surcharge based on CO2 consumption while driving. For petrol and diesel cars with high CO2 emissions, CO2 surcharge will make the car more expensive.
For plug-in hybrid cars, it can go both ways. The key figure is 50 grams of CO2 per kilometre. If your plug-in hybrid car is placed below this limit, it will be cheaper. Above this limit, the 50,000 DKK exemption no longer applies making the car more expensive.
Tax exemptions for low emission vehicles Passenger vehicles are taxed based on CO2 emissions and environmental impact (fuel type, Nox emissions) but electric vehicles and plug in hybrids (PHEVs) are exempt from this tax. EVs and PHEVs are also exempt from registration fees.
Purchase subsidies This purchase incentive for EVs is €5,000 for cars under €45,000, a bonus of €3,000 for a price between €45,000 and €60,000, and those whose price is over €60,000 will not receive any bonus. Some PHEVs can also benefit from a new purchase bonus of €2,000 under the following conditions (CO2 < 50G, minimum range in electric 50 km and purchase price < €50,000). The amounts will gradually decrease each year by €1,000. (Amounts had been revalued upwards during the Covid-19 period (in May 2021). For private consumers, the amount is increased by €1,000 except for PHEV.
Vehicle taxation based on emissions and engine size Vehicle taxes are calculated based on: the vehicle’s CO2 emissions (€2 per gram, per kilometre) and the engine size (petrol: €2 per 100cm3 & diesel: €9.5 per 100cm3) Use the German Federal Ministry of Finance’s calculator to work out how much tax you will pay for a certain vehicle.
Exemptions from vehicle taxation Battery electric vehicles are exempt from tax if they are registered before the 31st of December 2025 and the exemption will last until the end of 2030.
Purchase subsidies For pure electric cars with a list price under €40,000, the grant increases to €6,000, for hybrids to €4,500. For pure electric cars with a list price between €40,000 and €65,000, the grant decreases to €5,000, for hybrids to €3,750. List price applies on the base model). The promotion lasts for a maximum of 400,000 cars. The federal government promotes a total of 650,000 to 700,000 cars. The promotion has been extended and ends in 2025.
In Ireland there are some tax benefits to choosing a low emission vehicle. There is a purchase grant of €5,000 for private buyers but not grant for corporate buyers. There are reduced motor taxes based on zero CO2 emission vehicles, however for a company car driver there is zero benefit in kind.
Electric vehicles are exempt from the annual circulation tax (ownership tax) for a period of five years from the date of their first registration. After this five-year period, they benefit from a 75% reduction of the tax rate applied to equivalent petrol vehicles in many regions.
From 2023 benefit in kind will be calculated based on engine type and emissions. For vehicles with CO2 emissions above 80 g/km, the rate increases by 0.2% and the maximum rate (1.8%) will apply to vehicles with emissions above 130 g/km. Battery electric vehicles will be taxes at 0.5%.
The registration tax is based on CO2 emissions, and zero-emission cars are exempt from paying registration tax. Due to low WLTP CO2 -emission for PHEVs the registration tax is low.
Company tax benefits The Netherlands has a system of facilitating investments in clean technology by providing an additional deduction from corporate and business income taxes. EVs were included on the 2021 list.
Fringe benefits tax is levied on the private use of company cars, and this benefit is valued at 22% of the total catalogue value of the vehicle.
Fully electric vehicles, with the first registration in 2022, have a reduced tax. The benefit in kind taxation is based on 16% for the first €35,000 of the catalogue price. Above this cap 22% of the remainder of the catalogue price is taken into the tax calculation.
Zero-emission hydrogen cars have a benefit in kind taxation of 16% based on the whole purchase price.
Currently there is no VAT on the purchase of a battery electric vehicle. This incentive is expected to be phased out by 2023. The political parties in charge after elections in September 2021 are considering VAT on the purchase price that exceeds NOK 600.
There is an incentive scheme in place to support the acquisition of eLCV. The support is from NOK 10.000 to NOK 50.000 based on several cost element comparisons with ICE LCVs.
Battery electric vehicles are exempt from road tax and BEVs have no registration tax. Plug in hybrids (PHEVs) receive a 60% reduction in registration tax if they emit less than 50g CO2/km.
Purchase subsidies Subsidy of €3.000 for fully electric passenger vehicles for private individuals. The incentive is capped at €2.100.000 or 700 applications.
Subsidy of €6.000 for fully electric. The incentive is capped at €900.000 or 150 applications.
Plan Moves III was launched in April 2021 with a budget amount of €400M expandable to €800M for 2021-2023. The Spanish Regions manage these funds. This Plan encourages the purchase of alternative vehicles and the installation of charging infrastructure. Details include:
- Up to €4.500 for passenger vehicles (or €7.000 in combination with scrappage)
- Up to €7.000 for LCV (or €9.000 in combination with scrappage)
There is no registration tax for battery electric vehicles.
Battery electric vehicles pay no registration tax, ownership tax and are exempt from the luxury tax.
Purchase subsidies The maximum subsidy for cars was reduced to £2.500. Cars valued at more than £35.000 are no longer eligible for the subsidy. Small Vans <2.5T & travel at least 60 miles with Zero Emissions = 35% of the purchase price up to £3.000. Large Vans<2.5T to 3.5T & travel at least 60 miles with Zero Emissions = 35% of the purchase price up to £6.000.