Germany halving tax rate for corporate electric cars

The German federal cabinet has decided to give the 0.5% tax ruling for corporate electric and hybrid vehicles purchased between 2019 and 2021. This effectively halves the tax rate for corporate EVs. The government hopes to increase demand for electrified vehicles, and is taking potentially 1.96 billion euro loss in taxes for it. Leading German parties CDU and SPD had already announced their plan to improve e-mobility in the nation.

German transport minister Andreas Scheuer said: “This will also enable an active second hand car market to establish itself. This makes e-vehicles cheaper and more interesting for a broad customer group.

Environmental groups have criticized the tax gift as misguided, saying that it most benefits the least environmentally friendly NEVs, particularly heavy hybrids. Also environmentally friendly forms of transport, such as bicycles, would not benefit at all under the tax programme.