Tax benefits of electric cars
Electric cars are an important building block for achieving environmental protection goals. To this end, the federal and state governments not only subsidise the purchase of electric cars, but also offer tax benefits. Companies in particular can benefit from these tax advantages. Some employers have already recognised this fact and have begun to electrify their vehicle fleets and offer employees charging options as an additional benefit. We explain which benefits are available and how to make the best use of them.
What tax benefits are available?
Vehicle tax exemption for 10 years
Since 17 November 2019, electric cars registered by 31 December 2020 are exempt from vehicle tax for the first 10 years. This means that buyers who register their electric car in 2020 will not have to pay vehicle tax on their eCar until 2030! Even if the vehicle is sold in the meantime, this regulation continues to apply, i.e. the tax exemption also applies to the purchase of a used electric car. An amendment to the rule provides for an extension for first-time registrations and conversions until 2025, with the tax exemption being granted until 2030 at the latest.
Special regulation on imputed income – taxation of electric company cars
0.25% regulation for purely electric cars
For privately used company cars, the taxation of the imputed income for electric cars with a gross list price of up to €40,000 was reduced from 1% to 0.25%. Plug-in hybrids were reduced from 1% to 0.5%.
Update for the Corona stimulus package: the 0.25% rule now also applies to vehicles with a gross list price of up to €60,000.
This makes a big difference compared to the current 1% for internal combustion vehicles. At an acquisition cost of €20,000, for example, a combustion car owner would have to pay €200 in taxes, whereas an electric car would only cost €50. That’s a difference of €150 per month. With a whole fleet of company cars, this adds up to quite a lot.
Special regulation on imputed income – taxation of charging current given away
While the taxation of imputed income for privately used company cars was reduced from 1% to 0.5% or 0.25%, giving away charging current to employees is not considered an imputed income. This means that, as long as this regulation is in place, employees can charge their private, electric car for free at the workplace without having to pay tax on it.
Apart from the tax benefits, the federal government also offers other subsidies for purchasing electric cars and constructing charging infrastructure. You can find out which subsidies are available here in our overview of subsidies for eMobility.