October 3, 2022

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Electric cars, electric car association |  The Electric Vehicle Association says yes to VAT, but fears the government will now avoid a big surprise

Electric cars, electric car association | The Electric Vehicle Association says yes to VAT, but fears the government will now avoid a big surprise

On Thursday, the government will present a revised state budget, and all indications are that one of the important news will be the government’s announcement that the full exemption from value-added tax for electric vehicles will disappear from January 1, 2023.

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The government wrote in its government program that a so-called “higher value-added tax” will be introduced on the portion of the selling price over NOK 600,000. When the state budget was introduced last fall, The biggest surprise was that the scheme was not actually implemented after that.

Electric Vehicle Association: We say yes to value-added tax

Now the Electric Vehicle Association is also warning that time is up as they fight for a full exemption from VAT when buying an electric car:

The Electric Vehicle Association approves value-added tax on electric vehicles. We believe that when electric cars reach an 80 percent market share of new car sales, we can start implementing VAT in phases. We’re likely to achieve that in 2022, says Kristina Boe of the Nettavisen Electric Vehicle Association.

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– It should be done wisely. This should be done gradually and cautiously, and the government should also ensure that electric vehicles are competitive against polluting vehicles. Plus, a stronger lotion is needed to speed up sales of electric trucks, because it’s very slow there. So far this year, it’s only 20 percent, and the target is the same for passenger cars: 100 percent in 2025, she says.

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Electric cars also compete less well in the rental market, and here the Electric Vehicle Association also expects the government to honor its promises with new measures.

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Fear of the government has changed the solution

The main reason the additional VAT was not introduced early in the new year was that a similar solution did not exist before, and there were no solutions for how to calculate this from a technical point of view. According to the auto industry, there are several ways in which this can technically be done, and the most important thing is that they have plenty of time to prepare.

But Poe says they have received signals that when the VAT exemption is now removed, it will happen in a different way than previously defined. The worst case scenario is that the full VAT of the first kroner will be introduced.

– We’re concerned that the government is more interested in raising taxes and cutting costs, and not thinking much about the climate, says Poe.

Electric cars are still more expensive to produce than gasoline cars, and a full VAT on electric cars would make all electric cars much more expensive than fossil cars. The reason is that the import price is much lower than the price of electric cars.

I hope the government understands what’s at stake

The important thing is that we have had several decades of VAT exemption, and the government must be very careful with the gradual implementation. They really need to make sure that electric cars are competitive. Electric cars are one of the most important climate metrics, and the goal is 100% electric cars in 2025. Norway will not achieve its climate goals without successfully investing in electric cars.

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– What is the exact gradient in?

– One must either enter a very low VAT rate on the entire purchase. We suggest starting with a maximum of 5 percent, and thinking carefully about how things are going. If you do it this way, it is critical to have a completely new VAT rate, because today’s low rate is very high. Bo says.

It also assumes that in the event of an imbalance in the budget, the ability to predict what the car tax system will be in the future is ensured, so that consumers have the opportunity to adapt.

The revised state budget will be presented on Thursday at 10.45. The Ministry of Finance does not comment on speculation in advance.