What You Need To Know: Germany Halves EV Company Car Tax 

Germany's federal government is pumping millions into a scheme that allows company car EVs to be tax-privileged

Germany’s federal government is pumping millions into a scheme that allows company car EVs to be tax-privileged

In a move to increase the number of electric vehicles (EVs) on Germany’s roads, the federal government is about to bring out a directive that halves the monthly rate on EVs and hybrid company cars.

Previously an employee who used his/her company car privately was subjected to a monthly tax of one per cent of the list price as a non-cash benefit, however for electric and hybrid vehicles this rate is soon to be halved to 0.5 per cent.

Previously an employee who used his/her company car privately was subjected to a monthly tax of one per cent of the list price as a non-cash benefit, however for electric and hybrid vehicles this rate is soon to be halved to 0.5 per cent.

The new bill, which is expected to be approved by the cabinet this week, is backed by one billion euros worth of subsidies.

The new directive will apply to electric and hybrid vehicles purchased or leased between 1 January 2019 and 31 December 2021. Hybrid cars combine an electric drive with an internal combustion engine.

According to the latest government figures, registrations of electric cars have recently increased in Germany.

Around 17,000 all-electric vehicles were registered in the first half of the year – almost 70 per cent more than a year ago. However, electric cars still only have a market share of 0.9 per cent. Some experts think the government needs to do more meet German Chancellor’s Angela Merkel’s original target of ‘getting one million electric cars on the country’s roads by 2020’.

FDP transport politician Oliver Luksic, for one, criticised the government’s planned step: “Instead of further subsidies for a few, we would need more investment in a nationwide charging infrastructure,” he told local reporters.

Saving taxes with electric cars

The German state is promoting the purchase of general electric cars with massive tax breaks. Not only is the motor vehicle tax for EVs and hybrids omitted for ten years, employees can also recharge their electric cars at the employer without having to pay tax on this advantage.

Since January 1 2017, employees have not had to pay either money or taxes for driving to work in the morning, plugging the car into the power outlet and driving home in the evening with the charged car.

What’s more, most buyers of electric cars have been able to apply for a premium since July 2016: 4000 euros for purely electric vehicles and 3000 euros for plug-in hybrids. These premiums are tax-free. The Federal Office of Economics and Export Control (Bafa) pays this subsidy, which is shared between the federal government and industry. The corresponding online application can be submitted to Bafa. The Bafa will continue to grant funding until the federal funds of 600 million euros have been used up; the programme will expire in 2019 at the latest.

The government’s imminent move to halve the taxes on company EVs and hybrids represents just the latest in a line of ambitious moves to fast-track the nation’s e-mobility sector.

 

 

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