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    Economic policies

    Vehicle tax: Which rules apply

    Taxes can steer consumers in a desired direction. What you need to know about vehicle tax.

    Taxes can steer consumers in a desired direction. What you need to know about vehicle tax.

    2020 vehicle tax reform: Continued ecological direction welcome

    Vehicle tax was reformed in 2020 so as to be more closely aligned with vehicle CO₂ emissions.

    The reform of vehicle tax that came into force in 2021 is a fair compromise that has demanded concessions from all parties involved and allows the tax to have a greater guiding effect, especially with regard to the impact of vehicles on the environment and climate. The VDA welcomes the fact that this continues the existing system and ecological orientation of the vehicle tax.

    The reform implements the German government's announcement, from the 2030 climate package, according to which the vehicle tax for newly registered passenger cars from January 1, 2021, is based much more strongly on CO₂ emissions, providing an additional incentive to purchase low-emission vehicles. This approach is fundamentally positive. In the future, it could also make sense to replace outdated engine capacity with consideration of a vehicle's pollutant class. This would provide an additional incentive to purchase new vehicles with low emission levels over and above the mere consideration of CO₂.

    The annual tax is made up of a basic amount based on the vehicle's engine capacity plus a CO2-oriented amount. In addition to the date of first registration, the following parameters are also decisive: Type of drive (gasoline, diesel, Wankel engine), engine capacity (in cc), CO2 value (box V.7 in part I of the registration certificate).

    The tax is:

    1) Engine capacity

    • Gasoline vehicles (cars with gasoline and Wankel engines)
      • 2.00 euros basic amount per 100cc engine capacity (or part thereof)
    • Diesel vehicles (cars with diesel engines)
      • 9.50 euros basic amount per 100cc engine capacity (or part thereof)

    2) Additional CO2-based amount per g/km

    • - Tax-free basic allowance: 95g/km
    • - Above the tax-free allowance: Tariff depends on the car's emissions (WLTP)
      • over 95g/km lower than 115g/km €2.00
      • over 115g/km lower than 135g/km €2.20
      • over 135g/km lower than 155g/km €2.50
      • over 155g/km lower than 175g/km €2.90
      • over 175g/km lower than 195g/km €3.40
      • over 195g/km 4.00€

     

    Temporary tax exemption for electric vehicles

    There is a vehicle tax exemption of up to 10 years for electric vehicles (pure electric or fuel cell vehicles, not hybrid vehicles) first registered between January 1, 2016, and December 31, 2025. This will be granted until December 31, 2030, at the latest. Following this exemption, the vehicle tax is 50% of €11.25 (up to 2,000kg), €12.02 (up to 3,000kg) or €12.78 (up to 3,500kg) per 100cc or part thereof.

    Special regulation for particularly low-emission passenger cars

    The tax to the amount of €30 per year for owning especially low-emission passenger cars with spark-ignition or compression-ignition engines and carbon dioxide emissions of up to 95 grams per kilometer will not be levied for five years following the first registration if the vehicle is registered for the first time in the period between June 12, 2020, and December 31, 2024.

    Tax relief for light commercial vehicles

    As of 2021, the weight-based tax rates for commercial vehicles apply to the ownership of light commercial vehicles with a total weight of up to 3.5 tons instead of the higher, emissions-based rates for passenger cars. -> Link: Siebtes Gesetz zur Änderung des Kraftfahrzeugsteuergesetzes vom 16.10.2020

    To take account of environmental concerns, CO2-based taxation applies to passenger cars first registered after July 1, 2009. In this way, cars with low CO2 emissions are taxed more favorably than those with high emissions. The annual tax is made up of a basic amount based on the vehicle's engine capacity plus a CO2-oriented amount. In addition to the date of first registration, the following parameters are also decisive: Type of drive (gasoline, diesel, Wankel engine), engine capacity (in cc), CO2 value (box V.7 in part I of the registration certificate).

    The tax is:

    Gasoline vehicles (cars with gasoline and Wankel engines)

    • 2.00 euros basic amount per 100cc engine capacity (or part thereof)
    • 2.00 euros CO2-based amount per g/km.

    Diesel vehicles (cars with diesel engines)

    • 9.50 euros basic amount per 100cc engine capacity (or part thereof)
    • 2.00 euros CO2-based amount per g/km.

    The first 95g/km are tax-free (for cars first registered after 1.1.2014).

    There is no registration tax when buying a new vehicle in Germany.

    Additional tax regulations currently in force

    For first-time registrations from January 1, 2016 until December 31, 2025, there is a tax exemption of up to ten years for electric vehicles (pure electric or fuel cell vehicles, no hybrid vehicles). It will be granted until December 31, 2030 at the longest. After the exemption, the vehicle tax is 50 percent of 11.25 euros (up to 2,000 kilograms), 12.02 euros (up to 3,000 kilograms) or 12.78 euros (up to 3,500 kilograms) per 100 cubic centimeters or part thereof.

    As of 2021, the weight-based tax rates for commercial vehicles apply to the ownership of light commercial vehicles with a total weight of up to 3.5 tons, instead of the higher, emissions-based rates for passenger cars.

    Seventh Act Amending the Motor Vehicle Tax Act of October 16, 2020

    The tax on keeping especially low-emission passenger cars with spark-ignition or compression-ignition engines and carbon dioxide emissions of up to 95 grams per kilometer will not be levied for five years from the first registration in the amount of 30 euros per year if the vehicle is registered for the first time in the period from June 12, 2020 to December 31, 2024.

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    Dr. Karoline Kampermann
    Contact person

    Dr. Karoline Kampermann

    Head of the Economic Policy and Taxes Department

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