The federal government wants the sale of Electric cars boost with tax relief. On the one hand, tax advantages for fully electric company cars should be extended to cars worth up to 95,000 euros, according to the draft law, which the cabinet wants to approve on Wednesday and which was available to several news agencies. In the future, owners of such electric luxury company cars will benefit from the tax rate reduced to 0.25 percent up to this price. So far, this lower monthly tariff only applies to cars up to 70,000 euros. For comparison: For petrol engines, 1.0 percent of the monetary benefit must be taxed each month.
The government also wants to decide on a special depreciation for electric cars, which will apply retroactively from July to 2028. This means that 40 percent can be claimed for tax purposes in the year of purchase, 24 percent can be deducted from taxes in the following year and 14 percent in the second following year. After that it’s 9 percent, 7 percent and then 6 percent in the fifth following year. According to estimates by the Ministry of Finance, both instruments together will each cost the state around 600 million euros over the next few years.
Criticism from environmental and social associations
The government hopes that both instruments will improve sales of electric vehicles, which have recently been weak. The plans were part of the so-called Growth Opportunities Act and were sometimes met with harsh criticism. Environmental and social associations had doubted whether this would trigger a sales boost.
“The money primarily benefits top earners,” it said in a joint paper. There are better and fairer instruments to promote cheap and climate-friendly e-mobiles. Above all, there are still too strong tax advantages for combustion engine company cars. In addition, the future of the nationwide Germany ticket in local transport for 49 euros remains open. But it is already benefiting twelve million people and connecting cities and rural areas in a climate-friendly way.
The federal government had that Purchase bonus of 6,000 euros abolished at the end of 2023, which applied to all electric cars up to 65,000 euros. According to government calculations, the owner of a 90,000 euro electric car could save around 9,000 euros over three years if he switched from a combustion engine and had a tax rate of 40 percent. This would be 50 percent more than the previous purchase bonus of 6,000 euros if a top earner drove a luxury car.