Tax Guide 2012 – incentives increase further

This year’s edition of the ACEA Tax Guide shows that CO2 taxation is now well established across the European Union. Nineteen EU Member States currently apply some form of CO2 tax to the registration and/or ownership of passenger cars, up from seventeen in 2010. Finland and Greece both changed their annual circulation tax to a CO2 basis recently. 

The other key trend is that an increasing number of countries – 16 EU Member States at present – provide purchase incentives and/or tax benefits for electric and/or hybrid electric vehicles. Luxembourg, Portugal, the Netherlands and the UK were amongst the latest countries to adopt measures of this kind. The ACEA Tax Guide provides a detailed overview of all motor vehicle related taxes in 31 European countries and other major markets such as China, Japan, the USA, Russia, South Korea, India and Brazil.

Information regarding vehicle-related taxation can be found in the European Automobile Manufacturers’ Association Tax Guide 2012, available here

• A detailed overview of CO2 taxation in the EU can be found here
• A detailed overview of tax incentives for electric vehicles in the EU can be found here

CO2 taxation

The nineteen EU countries that levy passenger car taxes partially or totally based on the car’s carbon dioxide (CO2) emissions and/or fuel consumption are: Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Romania, Slovenia, Spain, Sweden and the United Kingdom. By April last year, seventeen Member States had CO2-related taxation, up from sixteen in 2009, fourteen in 2008 and eleven in 2007. The European automobile industry welcomes this trend towards CO2-related car taxation. However, it regrets the lack of uniformity in the implementation of these taxes. Some countries use CO2 emissions as the only tax parameter while others use it in combination with other factors. Some tax systems are technologically neutral while others have different rates for petrol and diesel cars. Some CO2 taxes are linear while others are not. All this creates market inefficiencies and confuses consumers. A harmonised CO2-based tax regime for cars should be a priority. It would maximize emission reductions, support manufacturers and maintain the integrity of the single market.

European auto makers therefore support taxation for passenger cars that is:

• Exclusively based on CO2 emissions
• Technologically neutral
• Linear and
• Budget neutral

Tax incentives

Incentives for electrically chargeable vehicles are now applied in all western European countries. The incentives mainly consist of tax reductions and exemptions as in countries such as Belgium and the Netherlands, as well as of bonus payments and premiums in Spain, Luxembourg and Portugal for the buyers of electric vehicles. The European car industry supports the further introduction of fiscal incentives for fuel efficiency. Tax measures are an important tool in shaping consumer demand towards fuel-efficient cars, and help create a market for breakthrough technologies, notably during the introduction phase. Innovations generally first enter the market in low volumes and at a significant cost premium, and this needs to be offset by a positive policy framework. Electric mobility will make an important contribution towards ensuring sustainable mobility. However, advanced conventional technologies, engines and fuels will further play a predominant role for years to come. Governments must continue to include these CO2-efficient technologies and solutions in their overall sustainable mobility policy approach.