- The administration intends to offer tax advantages for electronic cars utilized in the service sector.
The government is planning to offer more state assistance to boost sales of electric vehicles, focusing on more generous tax incentives for electric cars used as company cars. This move is set to be announced on Wednesday, as reported in a draft bill obtained by news agencies.
As per the draft bill, the government aims to significantly enhance the adoption of electric vehicles in Germany. Harnessing substantial tax measures is seen as crucial for achieving this goal.
The appeal for electric cars dwindled after state subsidies were withdrawn. The government ceased the so-called environmental bonus, which it had implemented in December, due to financial constraints.
Measures from the Economic Growth Plan
During budget discussions in July, the coalition government agreed on an 'Economic Growth Plan.' One of the measures included tax incentives for electric cars used as company cars.
Specifically, this involves introducing special depreciation for newly registered fully electric and similar zero-emission vehicles for businesses from July 1, 2024. Plus, the tax cap for the net list price of electric vehicles in the company car tax will be raised from 70,000 euros to 95,000 euros.
The government backs e-mobility growth
Economy Minister Robert Habeck (Greens) has previously expressed his intention to boost demand for electric vehicles. He anticipates a "demand surge." Company cars are significant, particularly for the used car market, given their relatively short usage periods.
The draft bill suggests that these new measures will establish "clear tax incentives" especially for the swift market entry of electric vehicles in the corporate sector. Only newly-purchased purely electrically driven vehicles are covered by the regulation, which is expected to be in place temporarily for purchases between July 2024 and December 2028. "The temporary limit encourages prompt investment decisions."
State expenditure
The draft bill indicates that the projected tax revenue loss for 2024 is negligible. For 2025, the tax revenue loss is estimated at 480 million euros, rising to 540 million euros by 2028.
The draft bill aims to boost electric vehicle adoption in Germany, specifically focusing on company cars. Under the Economic Growth Plan, the government will offer tax incentives for electric cars used in this capacity, including special depreciation and a raised tax cap for their net list price.
Given the temporary nature of these incentives, which are valid from July 2024 to December 2028, the government hopes to encourage prompt investment decisions in electric vehicles within the corporate sector in Germany, led by Economy Minister Robert Habeck.
