Tax incentives: E-cars are now even more attractive for companies!

Tax incentives: E-cars are now even more attractive for companies!

The federal government is planning a comprehensive reform to promote electric vehicles, which will primarily benefit companies. Finance Minister Lars Klingbeil has introduced a bill that provides for declining depreciation for electric cars. This measure comes in response to the significant decline in registration numbers after state funding expires at the end of 2023.

Companies that purchase electric vehicles between June 30, 2025 and January 1, 2028 can deduct 75% of the costs in the first year. In the second year, 10% is deductible, followed by 5% in the third and fourth years and 3% in the fifth and 2% in the sixth year. This regulation corresponds to the average service life of the vehicles and is intended to increase the willingness of companies to invest, reports Mercury.

Goals of the reform

The goal behind this reform is clear: the market for electric cars should be stimulated and companies should be motivated to invest in electric vehicles. This is necessary because sales of pure electric cars accounted for only 3% of the private vehicle fleet in the first quarter of 2025 and growth in this sector only increased by 0.1% compared to the previous quarter.
During the same period, registrations of electric company cars increased by 45% compared to the previous year. 64% of newly registered electric company cars come from German manufacturers such as VW, BMW and Mercedes, while the proportion with foreign subsidiaries is 83%. The VW ID.7 is the best-selling electric company car model with over 6,000 registrations.

In addition, the federal government is planning to increase the assessment base for electric vehicles from 70,000 euros to 100,000 euros, so that company cars with a higher gross list price can also benefit from the more attractive “0.25 percent rule”. Only 0.5% of the gross list price is charged for emission-free vehicles, which significantly reduces the burden on private use.

The political context

The draft law must now be discussed and passed in the Bundestag and Bundesrat. The aim is to reach a resolution before the summer break in mid-July so that the tax advantages can come into force as quickly as possible. However, a new edition of the purchase bonus for private buyers is unlikely. Instead, with the increased supply of used cars by companies, there will also be indirect benefits for private consumers, reports electrive.

While a “social leasing” for electric cars in the private market has not currently been decided, there are efforts by the SPD to implement such a program for people with lower incomes, perhaps by 2027. These reforms are intended not only to stimulate the economy, but also to protect the climate by encouraging a switch to zero-emission vehicles.