Danish Government Proposes Prolongation of Tax Exemption on Electric Vehicles

Having seen an increase in the sale of electric vehicles following the enforcement of the current tax exemption, the Danish government has now suggested extending the tax exemption period for electric vehicles until the end of 2016, thus prolonging the current legislation with a year. This was made clear as the Danish Minister of Taxation, Benny Engelbrecht in the end of April expressed that the government wished to maintain the green development of the Danish car sales and create a sense of security for the industry.

The government proposal follows months of lobbying from the Danish industry, as the current legislation efficiently ends the tax exemption on electric vehicles by the end of 2015, which in some cases will cause an overnight tax increase of 180%. Seeing that the municipalities purchase 70% of all electric vehicles sold in Denmark, a group of municipalities have recently called for legislative action in the fear that increased taxation would effectively put an end to the rising sales of electric vehicles.

Despite the government proposal, the industry is still not satisfied. According to the proposal, a prolongation of the tax exemption will not be enacted until the 2015 negotiations on the annual budget for Danish economy falls into place – meaning that no legislative actions will be taken before after the upcoming parliamentary elections. According to the Danish Electric Vehicle Alliance, this means continued uncertainty within the industry and they therefore call upon the government to take action before the election. Simultaneously, the Alliance is not satisfied with the scope of the agreement as it only provides a short-term solution.

The proposed prolongation of the tax exemption is estimated to cost between 50-60 million € and after 2016 a gradual phasing in of taxes on electric vehicles is planned. 


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