8 Aug 18

Germany wants to halve BIK on EVs and PHEVs

To promote the sales of low-emission vehicles, the Bundesregierung wants to cut the tax on private use of electric and plug-in hybrid company cars by 50 percent. In practice, that means the so-called Dienstwagensteuer would drop to 0.5 percent of the list price starting in 2019. Or, to put it differently, benefit in kind (BIK) will amount to 1 percent of half the list price.

The new 0.5-percent rule for EVs and PHEVs should not apply retroactively, but only for cars with initial registration between 1 January 2019 and 31 December 2021.

How much difference?

Today, the Benefit in Kind is calculated on the basis of the battery size. For electric cars and plug-in hybrids, you can deduct €250 per kWh from the gross list price – with a maximum of €7,500. The monthly Benefit in Kind amounts to 1 percent of the result.

For a car that costs €36,000 and has a battery capacity of 26 kWh, the calculation results in €296 per month (see below). Under the new rule, the BIK would drop to just €180. At a personal tax income rate of 35 percent, the employee would only pay €63 net.


Gross list price € 36.000
Battery capacity 26 kWh
Discount (250 x 26) € 6.500
Calculation basis € 29.500
Monthly BIK € 295
Monthly net cost at 35% tax rate € 103,25
Gross list price € 36.000
Calculation basis 50% € 18.000
Monthly BIK € 180
Monthly net cost at 35% tax rate € 63


Especially PHEVs to benefit

Today, plug-in hybrids offer little advantage over regular diesel and petrol vehicles from a BIK point of view because of their relatively small batteries. With just 10-odd kWh times €250 to deduct from the list price, they are only €25 per month cheaper. At a 35-percent personal income tax rate, that translates to a net advantage of not even €9 per month.

If the 0.5 percent-rule is implemented, a 10-kWh €36.000-plug-in hybrid would represent a gross benefit in kind of €180, or €63 in ‘real’ money, instead of €335 and €117.25, respectively. The net result for the company car driver would be a saving of €54.25 per month.

The fleet association (Fuhrparkverband) welcomes the tax benefit for e-cars. However, Managing Director Axel Schäfer calls for all alternative drives to be promoted. He reckons subsidies should not be one-sided, but favour all alternatives which reduce emissions.

Source: Auto, Motor & Sport

Authored by: Dieter Quartier