5 Sep 18

WLTP taxation: hardly any member state is ready

The clear majority of EU member states stick to the NEDC CO2 values as a taxation basis. Not until 2019, not even till 2020, but all the way through to 2021, Autovista Group believes. Only Germany and Finland have made the complete switch to WLTP on September 1st – D-day for OEMs to type-approve their vehicles – with very different effects on the respective markets.

We asked Samuel Keates, Director of Specifications at Autovista Group, for his view on this complex matter.

A stricter test cycle means higher official CO2 values. How does that effect German and Finnish vehicle buyers?

Samuel Keates: “In Germany, the impact of switching to WLTP values is rather limited. Only €2 is payable for each g/km of CO2 over 95g/km. If WLTP increases the CO2 rating by 20 g/km vis-à-vis NEDC, the registration tax goes up by a mere €40. In Finland, the cost implications are significantly higher. CO2 emissions are used to determine the percentage of the list price, including 24 percent VAT, that is payable as the registration tax. Implementing WLTP figures without adapting the tax system would have added thousands of Euros to the cost of some model variants."

How has Finland solved this NEDC-WLTP issue?

Samuel Keates: “Finland has introduced a lower tax table to calculate the registration tax of WLTP approved cars and vans from 1 September. It must have been a difficult exercise, because there are a variety of quirks in the WLTP system that must be accounted for. For example, data shows that powerful, less efficient cars are getting better WLTP scores when compared to their NEDC results. The opposite is true for emissions-friendly vehicles. You have to compensate this effect by adapting the tax formula, unless you want to encourage the sale and use of less environmentally friendly vehicles.”

Why are other countries postponing the transition to WLTP taxation?

Samuel Keates: “Germany and Finland are going all in on WLTP immediately, several other markets, such as the Netherlands, are expected to follow in January 2019. The UK is expected to wait until April 2020. There is no great rush to make the switch. It could be best to wait and see how schemes play out in the rest of Europe before implementing their own. I think many member states will be looking to Finland to see how WLTP implementation works.”

Will WLTP have a larger impact in countries with CO2 bands than in countries without?

Samuel Keates: “That could definitely be the case. Look at Spain, for instance. Just a gram of CO2 can mean the difference between a low taxation band and a higher one, making the car less attractive or even uncompetitive on that market. Finland does not work with tax bands, but with a formula that creates a taxation continuum, so to speak. Therefore, as the ratio between NEDC and WLTP stretches and squeezes depending on absolute CO2 level, the countries trying to convert their existing bands will expose their arbitrary nature, making it more of a political than a scientific issue.”

Watch Fleet Europe's  video "WLTP: 7 questions and 7 answers" and "WLTP, NEDC, NEDC correlated, RDE: what's it all about" to find out how WLTP impacts company car drivers, fleet managers, OEMs and leasing companies.


Samuel Keates, Director of Specifications at Autovista Group.

Authored by: Dieter Quartier