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Electric cars will no longer be tax-exempt in Switzerland from 2024

  • By The Swiss Times
  • 8 November 2023

From next year, electric cars will be subject to automobile tax, just like other cars. The Federal Council has decided to abolish the tax exemption for electrically powered cars that has been in place since 1997.

Electric cars will no longer be tax-exempt in Switzerland from 2024

On Wednesday, the state government decided to amend the automobile tax ordinance accordingly, as it announced on Wednesday. It justifies the change in three ways: firstly, it is necessary to counteract tax losses. This is because the number of electric cars on Swiss roads has increased significantly.

Secondly, it is important to secure the deposits for the National Roads and Agglomeration Transport Fund (NAF). Thirdly, the Federal Council wants to improve the state budget. The amendment to the Automobile Tax Ordinance is part of an adjustment concept for the state budget, which the Federal Council decided on in January of this year.

With the abolition of the tax exemption, electric cars will in future be subject to the normal tax rate of four percent on cars used for the transportation of people or goods. The tax will be levied on the import price, not the retail price.

“Noticeable tax shortfall”

Electric cars were previously exempt from automobile tax because the federal government wanted to create market-based incentives for the development of electromobility in 1997. According to the Federal Council, the number of electric cars imported each year increased from around 8,000 in 2018 to over 45,000 last year.

Around 30,400 electric cars were imported in the first half of 2023. The share of electric cars in total imports reached around 23% in the first half of 2023.

According to the state government, this increase will lead to a noticeable decrease in income from the automobile tax: for 2022, the tax shortfall will amount to around 78 million francs, while a shortfall of around 100 to 150 million francs is expected in the current year.

If the tax exemption had been continued, the cumulative tax losses for the years 2024 to 2030 would have amounted to an estimated two to three billion francs, says the Federal Council.

According to the Federal Council, special treatment for electric cars in terms of automobile tax is no longer necessary because, according to the industry, electric cars will no longer be more expensive than normal petrol cars from 2025. This is due to lower production costs.

If the contributions from the automobile tax to the NAF increase again, the contributions from the mineral oil tax to the NAF could be reduced, at least temporarily. This would relieve the general federal budget by up to CHF 150 million per year.

Majority of parties in favor of change

In the consultation, all parties except the SVP supported the amendment to the Automobile Tax Ordinance. However, the SP, Greens and Green Liberals expressed reservations. For example, the SP did not want the proceeds from the e-car tax to be used for the national roads, but only for the agglomeration program. The SVP called for the car tax to be abolished for all vehicles.

The business umbrella organization Economiesuisse argued that the tax exemption should not be introduced until 2026. The trade association proposed a gradual taxation of e-cars, with a full rate of four percent only from 2028. According to the Federal Council, around a third of the consultation participants were in favor of a later entry into force.

Incidentally, the automobile tax should not be confused with the motor vehicle tax levied by the cantons. According to the Federal Council’s report, there are reductions or exemptions for electric vehicles in various cantons.

©Keystone/SDA

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