EU countries use various methods to incentivize the purchase of eco-friendly vehicles.

European Union countries incentivize the purchase of eco-friendly vehicles in various ways. At first glance, subsidizing the purchase of electric vehicles by the state may seem like a significant burden on the budget. However, the benefits achieved (especially the impact on the environment, which directly affects the nation's health) show that the savings realized, for example, in the healthcare budget, are enormous and far exceed the cost of direct subsidies or exemptions from certain taxes, fees, or other levies for electric vehicle buyers.

Therefore, it's not surprising that the governments of almost all European countries, including Serbia, have decided in recent years that the transition to electric mobility is an agenda they will not deviate from, supporting it through subsidized purchases or other benefits. EU countries have also committed through various laws to ban the sale of vehicles with internal combustion engines at a given moment (2035), which is also a way to facilitate this transition for their citizens.

As of this year, Serbia provides subsidies of up to 5,000 euros (depending on the vehicle category) for the purchase of electric vehicles, with announcements from authorities that other forms of incentives will also be introduced.

The European Automobile Manufacturers' Association (ACEA) conducted an analysis of all benefits and state incentives for each of the 27 EU member states, which it provided to the Serbian Association of Vehicle and Parts Importers. ACEA categorized these types of subsidies into two groups: Tax Benefits and Incentives.


For example, Austria completely exempts buyers of hybrid and electric vehicles from taxes (VAT), including a 20% tax on air pollution, for vehicles up to 40,000 euros. Vehicles costing up to 80,000 euros are taxed only on the amount exceeding 40,000 euros. Owners of these vehicles are exempt from annual taxes and pollution taxes. Depending on the purpose, vehicles owned by legal entities are also partially or completely exempt from taxes and fees. Austria provides a subsidy of 5,000 euros (2,000 euros from importers and a 3,000 euro federal bonus) for the purchase of new vehicles (only for individuals) capable of traveling at least 50 km on electricity alone, provided they are not more expensive than 60,000 euros. Austria also subsidizes the purchase of home chargers, from smart cables for charging to wall boxes, ranging from 600 to 1,800 euros.


Unlike Austria, Belgium does not offer direct cash incentives for purchases, but it provides many tax benefits during the purchase and use of eco-friendly vehicles. Belgians can fully exempt vehicles emitting less than 50 grams of CO2 per km or with a battery capacity greater than 0.5 kWh per 100 kg from taxes.


There is no exemption from taxes for purchases in Bulgaria, but owners of solely electric vehicles do not pay annual taxes, although this applies only to individuals, not legal entities. There are no cash subsidies either.


In Croatia, owners of solely electric vehicles are exempt from paying only the special pollution tax. They receive a subsidy of 9,000 euros for purchasing electric vehicles and 5,000 euros for plug-in hybrids. The vehicle must not cost more than 50,000 euros and cannot be sold for at least two years.


In Cyprus, vehicles emitting less than 120 grams of CO2 per kilometer do not pay VAT upon purchase. The annual tax is minimal if the vehicle meets this condition. The Cypriot government subsidizes the replacement of old vehicles with new ones emitting less than 50 g/km of CO2 with 12,000 euros. Purchasing a purely electric vehicle, not exceeding 80,000 euros, is subsidized with up to 19,000 euros, with an additional 1,000 euros if an old vehicle is traded in.

Czech Republic

The Czech Republic has its own approach to this issue. Electric and plug-in vehicles emitting up to 50 g CO2 per km are registered free of charge and have a special number on their plates. Owners of electric vehicles do not pay tolls, while plug-in vehicles emitting up to 50 g CO2 per km pay 25% of tolls. The depreciation period for chargers (stations and wall boxes) has been reduced from 10 to five years. The Czech Republic has allocated 1.9 billion Czech crowns for incentives for purchasing electric and plug-in hybrid vehicles (including chargers) in state and local authorities. The Ministry of Transport's support for electric chargers (stations) and hydrogen infrastructure will amount to 6.0 billion Czech crowns in 2024 (100 crowns - 4.02 euros).


In Denmark this year, there are no subsidies for purchasing electric and hybrid vehicles. Only discounts on registration for electric vehicles of 60%. For hybrids emitting less than 50 g/km of CO2, there's a 45% discount. The annual tax for zero-emission vehicles and those with a maximum emission of 50 g/km is 390 Danish crowns semi-annually (100 crowns - 13.4 euros).


Estonia does not offer any tax benefits but provides subsidies for vehicle purchases. The subsidy for purchasing electric vehicles and plug-in hybrids is 5,000 euros for individuals and 4,000 euros for legal entities.


In Finland, zero-emission vehicles do not pay a registration fee since October 2021. Individuals do not pay any taxes on these vehicles, while companies using these vehicles for revenue pay reduced taxes depending on the category and whether they use company chargers or not.


In France, alternative fuel vehicles (including electric and hybrid, CNG, and hydrogen vehicles) receive a VAT reduction of 50-100% depending on the region. Electric and hybrid vehicles with a range of over 50 km on electricity alone are exempt from insurance penalties. France has a somewhat complicated way of subsidizing the purchase of electric and plug-in hybrid vehicles, taking into account numerous parameters such as vehicle weight (maximum of 2.4 tons), price (not exceeding 47,000 euros), minimum environmental impact, and buyer's income. Those with low incomes, meeting other conditions, receive 7,000 euros in subsidies, while others receive 4,000 euros. There's also a strong emphasis on vehicle replacement and recycling, with buyers of electric and plug-in hybrid vehicles with low incomes receiving 5,000 euros and those with higher incomes receiving 1,500 euros.


Germany does not exempt purchases from value-added tax (Mwst - German VAT), but buyers of electric and plug-in hybrid vehicles are exempt from registration for 10 years (applies to all purchases until December 31, 2025). This exemption will last until December 31, 2030, at most. Special reductions in taxes apply to company vehicles with electric and plug-in hybrid drives depending on their catalog value. However, discussions about these incentives are still ongoing, as stated in ACEA's analysis. Subsidies for purchasing eco-friendly vehicles in Germany ended on December 31, 2023.


Greece offers incentives for the registration of electric and hybrid vehicles that emit up to 50 grams of CO2 per kilometer. These incentives can reach up to 75% for vehicles within this emission range. Hybrid vehicles emitting more than 50 g/km of CO2 are eligible for a 50% discount. Vehicle owners in Greece pay reduced vehicle tax based on their CO2 emissions, engine displacement (below or above 1,550 cc), and the purchase date (before or after October 31, 2010). If vehicles emit less than 90 grams of CO2 per km (NEDC) or 122 g/km (WLTP), they are exempt from this tax. Owners of electric vehicles are also exempt from a portion of the personal income tax (assumed personal income system). Greeks can receive a subsidy for purchasing electric vehicles, receiving a 30% refund of the vehicle's value, up to 8,000 euros, and an additional 1,000 euros for recycling a vehicle older than 10 years or if the buyer is under 29 years old. Taxi drivers can get a 40% refund, up to 17,500 euros for an electric vehicle, and an additional 5,000 euros for recycling an old taxi (optional).


In Hungary, there is no VAT (value-added tax) when purchasing an electric or plug-in hybrid vehicle. Annual tax is also exempted, including for companies. From June 15, 2020, the government offers subsidies for purchasing electric vehicles. For vehicles priced up to 32,000 euros, a subsidy of 7,350 euros is provided, while for vehicles priced between 32,000 and 44,000 euros, the subsidy is 1,500 euro.


In Ireland, there is a tax incentive of 5,000 euros for the purchase of exclusively electric vehicles priced up to 40,000 euros. This incentive decreases as the vehicle price increases and ends at the 50,000 euro threshold. Electric vehicles are also exempt from NOx (Nitrogen Oxides) taxes, measured in milligrams per kilometer. The annual taxes for vehicle owners are reduced for both electric and plug-in hybrid vehicles. Ireland provides a subsidy of 5,000 euros for the purchase of electric vehicles and hybrids with CO2 emissions lower than 50 g/km or an electric range exceeding 50 kilometers.


In Italy, there is no tax exemption for vehicle purchases. Owners of electric vehicles are exempt from paying annual usage tax for five years from the date of first registration. After that, there's a 75% reduction compared to vehicles with conventional engines. Italians have a rather complicated system for subsidizing the purchase of electric vehicles. Depending on the price of the new electric vehicle with or without trading in an old one, taking into account the EURO standard of the old vehicle's engine, and calculating the "economic situation indicator" of the buyer, the subsidy amount ranges from 6,000 to 13,750 euros. Italy also subsidizes the installation of home chargers up to 80% of their value, with a maximum of 1,500 euros.


Latvia does not provide cash subsidies for purchasing eco-friendly vehicles. Only the first registration of an electric vehicle is exempt from payment. Owners of vehicles emitting less than 50 g/km of CO2 do not pay an annual vehicle tax, and companies pay a minimal fee of only 10 euros, but exclusively for electric vehicles.


Lithuania, besides offering free first registration for electric vehicles, also incentivizes companies to replace their fleets through tax policies, with a total amount reaching a maximum of 400,000 euros per company. The purchase of exclusively electric vehicles is subsidized for individuals, with 2,500 euros for used electric vehicles first registered after April 2, 2016, and 5,000 euros for new electric vehicles or used ones first registered no more than six months ago. An additional 1,000 euros is given for recycling, trading old vehicles for new ones, vehicles with internal combustion engine subject to ownership of at least 12 months and registration.


Luxembourg exempts buyers of electric vehicles from 50% of administrative fees. Owners of zero-emission vehicles pay a minimum annual tax of 30 euros.
Subsidies for purchasing electric vehicles are 8,000 euros for those with a capacity of up to 18 kWh and 3,000 euros for those above 18 kWh. Plug-in hybrids emitting less than 50 g CO2 per km are eligible for a subsidy of 2,500 euros.


Malta provides tax exemptions for vehicles emitting less than 100 grams of CO2 per km and also offers significant cash subsidies for purchasing electric vehicles. Individuals receive 11,000 euros, while legal entities can receive up to 20,000 euros depending on the administrative unit. There are also incentives for recycling old vehicles and replacing them based on various parameters.

The Netherlands

The Netherlands does not levy any taxes on electric vehicles, and owners of plug-in hybrids pay 50% of the annual tax. There are incentives for purchasing small and compact electric vehicles, whether new or used, based on numerous parameters ranging from the vehicle's purpose to having a solar roof.


In Poland, electric and hydrogen vehicles are exempt from value-added tax, while plug-in hybrid vehicles enjoy the same benefit under the condition that they have internal combustion engines of less than 2,000 cubic centimeters, but only until 2029. There are also reductions in annual vehicle taxes depending on the emissions of harmful gases. When purchasing electric and hydrogen vehicles in Poland, individuals and businesses can receive subsidies ranging from 18,750 to 27,000 zlotys, depending on the maximum vehicle price of 225,000 zlotys.


Portugal has exempted electric vehicles from automobile tax. Plug-in hybrid vehicles with a range of over 50 km on electricity receive a 75% exemption, while those with a shorter range receive a 40% exemption. Owners of electric vehicles in Portugal do not pay annual taxes, and companies are exempt if the vehicle costs less than 62,500 euros plus VAT. Individuals receive a subsidy of 3,000 euros for purchasing a new electric vehicle costing less than 62,500 euros, limited to one vehicle per person.


Romania does not impose annual taxes on electric vehicles. By trading in a vehicle that is at least eight years old and receiving 3,300 euros for it, individuals can also get an additional 2,500 euros subsidy for purchasing a plug-in hybrid or 5,000 euros for an electric car.


Slovakia does not provide subsidies for purchasing eco-friendly vehicles. The only benefits are lower registration fees and toll-free travel for electric cars. Owners of plug-in vehicles also receive a 50% discount on tolls.


Slovenia, in addition to a 0.5% tax on the purchase of electric vehicles, also offers a subsidy of 4,500 euros for their purchase.


In Spain, for 2023-24, there is expected to be an exemption from a special tax for vehicles emitting less than 120 grams of CO2 per kilometer. During this period, owners of these eco-friendly vehicles will also receive a 15% reduction in personal income tax based on the vehicle's purchase price, provided it does not exceed 45,000 euros excluding taxes. The maximum reduction can be 3,000 euros. Similar rules apply to infrastructure projects. In the Canary Islands, no VAT is charged on vehicles emitting less than 110 g/km of CO2. Until July 31, 2024, the purchase of electric and fuel cell vehicles for individuals is subsidized from 4,500 to 7,000 euros depending on trading in old vehicles for new ones, and plug-in hybrids receive subsidies from 2,500 to 5,000 euros, again depending on the trade-in and recycling of the old vehicle.


In Sweden, owners of electric and plug-in hybrid vehicles are charged a minimum toll of 360 kronor annually. (100 kronor is approximately 8.53 euros). Companies are encouraged with one-time low taxes on eco-friendly vehicles, and a system for subsidizing the purchase of eco-friendly vehicles and trading old for new ones will be established in the second half of 2024, as announced.

Source: ACEA
Photo: Freepik