Electromobility: current tax incentives and subsidies

Electromobility is one of the keys to climate-friendly mobility. The federal government, states, and municipalities are increasingly promoting the development and scaling up of electromobility through numerous measures. In this blog post, we take a look at current tax incentives and subsidy programs for electromobility, covering not only electric cars and charging stations but also e-bikes, which are becoming increasingly popular as company bikes and offer tax advantages.

Current Tax Regulations for Electric Vehicles and Charging Stations

The purchase of electric cars is supported by various subsidy measures and tax incentives, such as the exemption from vehicle tax for electric cars. Employers benefit from tax advantages when providing company cars with electric drive for their employees. These regulations offer clear advantages over conventional combustion engine company cars.

Companies that engage in electromobility by providing charging infrastructure or offering e-bikes as company bikes can also benefit from tax incentives, making the switch to electric mobility attractive. The tax support and subsidies contribute to electric vehicles playing an increasingly significant role in road traffic, leading to more sustainable mobility in the long term.

Subsidy Measures for the Purchase of Electric Cars

Vehicle Tax Exemption for Electric Cars

Owners of electric cars first registered between May 18, 2011, and December 31, 2025, do not have to pay vehicle tax for up to ten years. As this tax exemption is limited until December 31, 2030, current buyers of electric cars can no longer utilize the full ten-year period. Furthermore, the tax exemption is transferable upon a change of ownership until the end of the ten-year period or until the end of 2030.

Plug-in hybrids, however, are not exempt from vehicle tax. Their tax is calculated similarly to combustion engines based on engine displacement and CO2 emissions. However, taxes for plug-in hybrids are generally lower because their CO2 emissions are usually less than those of standard gasoline or diesel cars. Additionally, they typically benefit from an annual tax exemption of 30 euros for low-emission vehicles with a maximum CO2 emission of 95 grams per kilometer. This tax relief applies to vehicles newly registered by the end of 2024 and lasts until the end of 2025 at the latest.

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End of the Environmental Bonus

The environmental bonus was intended as a purchase premium for electric cars to promote the sale of electric vehicles. However, in the context of negotiations on the Climate and Transformation Fund (KTF), the federal government decided to end the environmental bonus. Consequently, no new applications for the environmental bonus have been accepted since December 18, 2023.

The reason for the end of the environmental bonus: Due to a ruling by the Federal Constitutional Court, 60 billion euros are missing from the Climate and Transformation Fund. The federal government had to make short-term budget cuts for 2024, resulting in fewer available subsidies.

Some car manufacturers have already responded to this decision by covering the government’s share of the purchase premium for customers who ordered their cars by the end of 2023. Others are extending the coverage of the environmental bonus until mid-2024 or continue paying only the manufacturer’s share in 2024.

Electromobility: Tax Benefits for Companies

Electric Cars as Company Cars

Employers benefit from tax incentives when acquiring electric cars as company cars for their employees. For purely electric cars with a gross list price of up to 60,000 euros, the taxable benefit is only 0.25% of the gross list price per month - compared to the 1% rule for conventional combustion engine company cars. For electric cars with a gross list price over 60,000 euros, it is 0.5%.

Plug-in hybrids can also benefit from the 0.5% rule if they emit a maximum of 50 grams of CO2 per kilometer or have an electric range of at least 60 kilometers. Starting January 1, 2025, this range requirement will increase to 80 kilometers. For all other plug-in hybrids, the current discount, known as the compensation for disadvantages, remains in effect.

These regulations for electric cars and plug-in hybrids apply not only to new cars but also to used cars if they were first provided as company cars to employees starting January 2019. As of now, this regulation for electric cars is set to expire at the end of 2030.

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Employer Charging and Charging Stations

The taxable benefit for free or discounted charging electricity at the company site and for provided company charging facilities is tax-free.

Monthly employer subsidies for charging electricity costs are state-supported. Up to a certain amount, they are tax-exempt. For such a charging electricity flat rate, there are two options: If employees can use a free or discounted charging facility at the employer’s site or if the employer provides a charging card, up to 30 euros per month for electric cars and 15 euros per month for plug-in hybrids are tax-free. Without an employer-provided charging facility, the tax-free amount increases to 70 euros per month for electric cars and 35 euros per month for plug-in hybrids.

Additionally, some federal states, such as Baden-Württemberg and North Rhine-Westphalia, financially support companies and electric car drivers in setting up a charging infrastructure. Some municipalities and utility companies also offer subsidies for a wallbox. Furthermore, the KfW provides funding for wallboxes and private charging stations.

Tax Incentives for E-Bikes Used as Company Bikes

E-bikes used as company bikes also benefit from tax relief. Since 2020, the 0.25% rule applies to the private use of company bikes and e-bikes - analogous to the taxation of electric cars as company cars. Employees can also tax S-pedelecs at the 0.25% rate if they use them as company bikes. Company bikes have a tax advantage over company cars: Unlike company cars, employees do not have to tax the commute when using company bikes.

If the employer fully covers the cost of an e-bike as a company bike, it is entirely tax-free for employees.

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Stefan Wendering
Stefan is a freelance author and editor at NAVIT. Previously, he worked for startups and in the mobility sphere. He is an expert in urban and sustainable mobility, employee benefits, and New Work. In addition to creating blog content, he also produces marketing materials, taglines, and website content, as well as case studies.
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