Tax Benefits, Subsidies, and Application Process for Purchasing Electric Vehicles

Tax benefits and new subsidy program for private households

Buyers of electric vehicles can not only benefit from the direct subsidies, but also take advantage of various tax advantages. On the one hand, electric vehicles registered by 2025 are exempt from vehicle tax for 10 years. However, this does not apply to hybrid vehicles. E-cars that are used as company cars also receive a tax break: under certain conditions, employees only have to pay tax on a quarter of the list price.

The Federal Ministry of Transport has announced a new funding program for the combined construction of charging stations, photovoltaic systems and battery storage in private residential buildings for autumn 2023 (total volume: 500 million euros). For this, an electric car must be available or ordered in the household. The amount of the funding is not yet known, the application process is to run through the state-owned KfW bank.

What you have to do to receive the e-car subsidy

In order to benefit from the e-car subsidy, you must submit a special, fully electronic subsidy application to the Federal Office of Economics and Export Control (BAFA). You can only apply for the subsidy after purchasing the e-car. After the new admission you have one year to submit the application for funding. The funding amounts can therefore only be claimed retrospectively. Important: From September 1, 2023, only private individuals are eligible to apply. In addition:

• You can only submit the application if you can prove that you are the owner of the vehicle.
• The manufacturer’s share of the subsidy must be clearly stated in the binding order or in the purchase or leasing contract.
• As an applicant, the vehicle must have been registered in your name for at least 12 months. In the case of a leased vehicle, the minimum holding period is 24 months (with a contract period of 24 months or more). A shorter holding period must be reported immediately.

Lower funding rates will apply from 2024

From January 1, 2024, the amounts of the e-car subsidy will be reduced. In addition, you only receive grants for the purchase of electric cars with a net list price of the basic model of up to 45,000 euros.

Table: Federal share of the environmental bonus including innovation premium as a non-repayable subsidy and manufacturer share (for applications from January 1, 2024 up to and including December 31, 2024)