Electric Vehicles Could Be Exempt From VAT In Europe

Now that restrictions in many European Union countries are being lifted, as the coronavirus pandemic begins to loosen its grasp on the continent, those in charge are now looking for ways to include electric vehicles in economic recovery plans. The plan is to boost their popularity by providing even more incentives for car buyers to choose an EV over a gasoline or diesel car.

Europeans are quite privileged when it comes to this as they have quite substantial incentives and tax deductions when purchasing EVs. Yes, they do vary from country to country, but they are still significant enough to steer car buyers to go electric and the prospect of buying an EV could become even more enticing.

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Bloomberg cites a document draft about the fact that

‘ EU executive is considering incentives for car makers to produce and sell clean cars and investment in charging infrastructure for electric vehicles. ‘

The draft states that

‘ Massive support for the automotive industry will put significant debt on future generations. That support must respect our youth’s expectations on climate change and for a healthier and cleaner future. ‘

The possibility of eliminating VAT altogether for EVs is being considered. This value added tax for all purchases varies from country to country, like many things in Europe, but it’s around the 20 percent mark (although as high as 27 percent in Hungary and as low as 17 percent in Luxembourg).

In some countries, the VAT is lower for basic food items and some essentials are even fully exempt, as are some services. It doesn’t currently apply to any vehicles, but making EVs VAT-exempt does make sense to help make them more popular.

This measure would help both the automakers and the buyers and it would make choosing between a conventional car and an EV a harder choice than before, especially if the latter’s higher purchase cost was the reason some went down the conventional road. It isn’t the only measure, though, but we’ll have to wait for the EU to make this official in order to discover what else is planned.