Article

Taxation
Article
of Electric Vehicles in Europe: A
Taxation of Electric Vehicles in Europe:
Methodology for Comparison
A Methodology for Comparison
Karin Hauff *, Stefan Pfahl and Rolf Degenkolb
Karin Hauff *, Stefan Pfahl and Rolf Degenkolb
Daimler AG, Benzstr., 71063 Sindelfingen, Germany; stefan.pfahl@daimler.com (S.P.);
Daimler AG, Benzstr., 71063 (R.D.)
rolf.degenkolb@daimler.com Sindelfingen, Germany
* Correspondence: karin.hauff@daimler.com; Tel.: +49-176-30936012
* Correspondence: karin.hauff@daimler.com; Tel.: +49-176-30936012

Received: 11 May 2018; Accepted: 29 July 2018; Published: date



Received: 11 May 2018; Accepted: 29 July 2018; Published: 8 August 2018


Abstract:
Abstract:InInEurope,
Europe,aaheterogeneous
heterogeneousrangerangeofofnational
nationalvehicle
vehicletaxation
taxationsystems
systemsexists
existsininparallel,
parallel,
so
so that a simple comparison of electric vehicle (xEV) tax advantages is not straightforward.InInthis
that a simple comparison of electric vehicle (xEV) tax advantages is not straightforward. this
contribution,
contribution,various
variousEuropean
Europeanvehicle
vehicletaxation
taxationsystems
systemsare
areexamined
examinedand andaamethodology
methodologyisis
introduced
introducedwhich
whichallows
allowsaacomprehensible
comprehensiblecomparison
comparisonand andoverview
overviewby bycalculating
calculatingCOCO2 2based
based
taxation step curves. This methodology provides a powerful tool for benchmarking
taxation step curves. This methodology provides a powerful tool for benchmarking xEV technologies xEV
technologies
and analyzing and analyzing
consumer consumerofacceptance
acceptance of xEVsfurthermore
xEVs and enables and enablesthefurthermore
discussionthe discussion
about possible
about possible future taxation and incentive
future taxation and incentive schemes. schemes.

Keywords:
Keywords:BEV
BEV(battery
(batteryelectric
electricvehicle);
vehicle);PHEV
PHEV(plug
(plugininhybrid
hybridelectric
electricvehicle);
vehicle);taxation;
taxation;subsidy
subsidy

1.1.Introduction
Introduction

1.1.
1.1.Total
TotalCost
CostofofOwnership
Ownership
The
Thepurchase
purchasedecision
decisionofofvehicle
vehiclecustomers
customersstrongly
stronglydepends
dependson onthe thetotal
totalcost
costofofownership
ownership
(TCO)
(TCO)[1]
[1] which comprise the
which comprise theloss
lossofofvalue,
value,taxes,
taxes,insurance,
insurance, maintenance,
maintenance, interests
interests andand
fuelfuel
costscosts
[2,3].
[2,3].
Among Among
these, these,
the lossthe loss of
of value value is the
is typically typically
biggestthecostbiggest cost Figure
component. component.1 showsFigure 1 shows
exemplarily the
exemplarily
TCO shares the
of aTCO shares
typical of a typical
E-segment E-segment
diesel vehicle ofdiesel vehicle
a business of a business
customer customer
in the United in the United
Kingdom in 2016
Kingdom in 2016holding
over three-year over three-year
time. Companyholding cartime. Company
taxation car taxation
is included which isispaid
included
by thewhich
employeeis paid
for by
the
the employee
benefit in kindfor
ofthe benefitusing
privately in kind of privately
a company car. using
It can bea company
seen that car.
taxesIt hold
can betheseen thatlargest
second taxes hold
share
the second
adding up largest
to 25% inshare adding example.
the shown up to 25% in the shown
Compared example.
to this, Compared
fuel costs, maintenance,to this, fuel costs,
insurance and
maintenance,
interest have insurance and interest have minor shares.
minor shares.

Figure
Figure1.1.Total
Totalcost
costof
ofownership
ownership shares
shares of
of aa typical
typical E-segment
E-segment diesel
dieselvehicle
vehicleofofaabusiness
businesscustomer
customerin
inthe
theUnited
UnitedKingdom
Kingdominin2016
2016based
basedononthree-year
three-yearholding
holding time.
time.

World Electr. Veh. J. 2018, 9, x; doi: FOR PEER REVIEW www.mdpi.com/journal/wevj

World Electric Vehicle Journal 2018, 9, 30; doi:10.3390/wevj9020030 www.mdpi.com/journal/wevj

World Electric Vehicle Journal 2018, 9, 30 2 of 11

Hence, the consumer acceptance of electric vehicles is strongly influenced by vehicle taxation in
specific countries [4,5]. The aim of this paper is to identify these countries and to give a comparison of
electric vehicles (xEV) versus conventional vehicle taxation by calculating CO2 based taxation step
curves. In this contribution, xEV refers to an electric vehicle with an external plug that is either a
battery electric vehicle (BEV) or a plug-in hybrid electric vehicle (PHEV). Fuel cell electric vehicles are
not included in this study.
Vehicle taxation systems differ not only in their taxation levels but also in terms of their structural
principles [6]. Due to the wide range of calculation schemes, a direct comparison of tax levels is
not expedient. In the following, six European vehicle taxation systems are examined (Germany,
the Netherlands (NL), Italy, Norway, the United Kingdom (UK) and France) and a methodology is
introduced that allows a comparison of different systems by looking at their CO2 dependency in a
range between 0 and 150 gCO2 /km in 1 gCO2 /km steps. Germany, UK, France and Italy are chosen
as they have the highest new registration numbers of passenger vehicles in total in Europe [7] and
are hence the four largest European vehicle markets. In addition, we consider two countries with
above-average xEV sales: The Netherlands had an xEV share of 2.2% in new vehicle registrations in
2017 and Norway 39.2%, whereas the average in the European Union was 1.4% [8].
Moreover, business and private customers are discussed separately. For the business customer,
we sum up the components that affect the employer (registration tax, annual ownership tax, grants)
and the tax paid by the employee for the benefit in kind of privately using a company car. This is
important as yearly tax advantages of xEVs often derive from company car taxation [8]. As company
cars are typically new vehicles and are kept for a short holding period [9], they have a severe impact on
renewing the vehicle fleet and hence also on future xEV penetration. For example, in Germany, 90% of
passenger cars in the vehicle stock are privately owned, whereas 60% of annual first registrations are
undertaken by a company or organization [10]. In the UK, 0.94 million employees paid benefit in
kind taxes for using a company car vehicle privately in the period from April 2013 to March 2014 [9],
whereas 2.26 million new vehicles were registered in the UK in 2013 [7].
In addition, two different segments will be analyzed (B- and E-segment). By applying this
methodology, an outlook can be given for future vehicle taxation.

1.2. Vehicle Taxation in Europe

In Europe, a heterogeneous range of national vehicle taxation systems exists in parallel, varying
both through taxation components in place (purchase subsidies and registration taxes at point of sale,
annual ownership taxes, company car taxes) and through the parameters determining the tax burden
(CO2 , engine power, engine displacement, electrical driving range, vehicle weight, vehicle list price,
fuel type). Subsequently, the vehicle taxation of six examined European countries (Germany, the NL,
Italy, Norway, the UK and France) will be described in more detail for the year 2017 [8,11]. Regional
taxes are not taken into account.
Hybrid electric vehicles (HEV, without external plug) are only mentioned in Norway as they were
treated the same as a conventional vehicle in the other countries.

1.2.1. Germany
In Germany, there is no registration tax. There is only an overall registration fee of about
€26.30 depending on the city. The annual vehicle tax is dependent on both the displacement (Diesel:
€9.50/Gasoline: €2 for every 100 cubic centimetr and part thereof) and CO2 (€2 for every gram above
95 gCO2 /km).
Purchase subsidies were introduced in June 2016 and run until June 2019 (€4000 for BEV and
€3000 for PHEV with less than 50 gCO2 /km and not exceeding €60,000 net list price of the base
model). Half of the subsidy is paid by the government and the other half is paid by the automobile
manufacturer. As the manufacturer subsidy reduces, the net list price in addition less value added tax
(19%) has to be paid by the customer (this sums up to €380 for BEV and €285 for PHEV).
World Electric Vehicle Journal 2018, 9, 30 3 of 11

The company car tax is commonly calculated as 1% of the gross list price times the personal
income tax rate. As a calculation basis for company car taxation of BEV and PHEV, the gross list
price is reduced by €500 per kWh storage capacity of the battery with a cap at 20 kWh (€10,000) for
vehicles bought before 31 December 2013. After 2013, this amount is reduced by €50 every year
(i.e., −450 €/kWh in 2014, −400 €/kWh in 2015, etc.). This compensation is available only for vehicles
bought before 31 December 2022.

1.2.2. The Netherlands

The registration tax is determined by the car’s CO2 emissions. It is not charged for BEV. In addition,
there is a separate rating scheme for PHEV. Diesel vehicles are charged extra if exceeding 65 gCO2 /km.
The annual tax depends on the vehicle’s weight and fuel type (vehicles with less than 50 gCO2 /km
pay half tariff, vehicles with 0 gCO2 /km are entirely exempted).
The company car taxation is implemented by adding a percentage of the vehicle’s consumer price
to the personal salary. In case of 0 gCO2 /km, the percentage is 4% if the list price is not exceeding
€50,000. For all other vehicles, 22% is applied.

1.2.3. Italy
In Italy, vehicle taxation is only depending on engine power. Nevertheless, there are local
differences as each province can increase the nationwide base rate by up to 30%. Electric vehicles are
exempted from paying vehicle taxes for five years from the date of the first registration. Afterwards,
they must pay a charge equal to a quarter of the amount of their corresponding gasoline vehicles.

1.2.4. Norway
The registration tax depends on the vehicle’s weight (about €405 up to 1200 kg, about €620 from
1200 kg). An exchange rate of 9.1 NOK/€ is used. Norway is charging an import tax which takes
into account the vehicle’s weight, CO2 -emissions and NOx -emissions. The vehicle weight of PHEV is
reduced by 26% for the calculation of the import tax. HEVs get a weight advantage of 10%. Until 2016,
the engine power was also part of the calculation scheme. Furthermore, BEVs are exempted from the
25% value added tax.
The annual tax is about €313 apart from two exemptions: BEVs pay only about €50 and diesel
vehicles without a particle filter pay €365.

1.2.5. The United Kingdom

The registration fee is a fixed amount of €64 (exchange rate of 0.86 £/€ is used).
There are three categories of purchase subsidies (in addition, a maximum list price of €69,800
applies for eligibility of categories 2 and 3):
• Category 1 = €5230 (CO2 emissions less than 50 g/km, zero emission range of at least 70 miles)
• Category 2 = €2910 (CO2 emissions less than 50 g/km, zero emission range between 10 and
69 miles)
• Category 3 = €2910 (CO2 emissions between 50 and 75 g/km, zero emission range of at least 20 miles)
A new annual tax scheme was introduced on 1 April 2017. First year rates are strongly depending
on CO2, whereby only 0 gCO2 /km is free of charge. From the second year onwards, tax rates depend
on the vehicle price. The company car tax rate is CO2 -dependent with a lower rate in the range between
0 and 50 gCO2 /km. For diesel, a surcharge of 3% is added to the company car tax rate.

1.2.6. France
The registration tax is depending on both the horse power and CO2 -emission (“Malus
Ecologique”). The yearly vehicle tax applies only to vehicles above 190 gCO2 /km. The company car
tax is CO2 -dependent as well.
World Electr. Veh. J. 2018, 9, x FOR PEER REVIEW 4 of 11

World Electric Vehicle Journal 2018, 9, 30 4 of 11

Vehicles below 20 gCO2/km get a subsidy of €6000 with a cap at 27% of the acquisition price.
Between 21 and 60 gCO2/km, the subsidy is €1000 (max. 20% of the acquisition price). An additional
subsidyVehicles
applies if a diesel
below vehicle
20 gCO (registered before January 2007) is replaced with a new BEV or
2 /km get a subsidy of €6000 with a cap at 27% of the acquisition price.
PHEV. This21
scrapping subsidy amounts €4000 when purchasing a vehicle below 20 gCO2/km and
Between and 60 gCO 2 /km, the subsidy is €1000 (max. 20% of the acquisition price). An additional
€2500
subsidy applies if a diesel vehicle60(registered
for vehicles between 21 and gCO2/km.before
Scrapping subsidies
January 2007) isare not considered
replaced in BEV
with a new the CO
or 2PHEV.
step curves as the requirement of holding a 10 year-old diesel vehicle is fulfilled only by
This scrapping subsidy amounts €4000 when purchasing a vehicle below 20 gCO2 /km and €2500 fora minor part
of vehicles
the stock.between 21 and 60 gCO /km. Scrapping subsidies are not considered in the CO step curves
2 2
asThe annual tax is a fixed rate of €160/year for vehicles > 190 gCO2/km.
the requirement of holding a 10 year-old diesel vehicle is fulfilled only by a minor part of the stock.
Company car taxation is depending on CO2 (starting from 50 gCO2/km) plus a fixed rate of
The annual tax is a fixed rate of €160/year for vehicles > 190 gCO2 /km.
€20/year for gasoline and €40/year for diesel.
Company car taxation is depending on CO2 (starting from 50 gCO2 /km) plus a fixed rate of
€20/year for gasoline and €40/year for diesel.
1.3. Additional xEV Benefits
1.3. Additional
Fuel xEV Benefits
cost savings are an additional xEV benefit [12] caused partly by lower excise duties on
electricity. Excise duties are included in the fuel costs and will not be taken into account in the CO2
Fuel cost savings are an additional xEV benefit [12] caused partly by lower excise duties on electricity.
step curves.
Excise duties are included in the fuel costs and will not be taken into account in the CO2 step curves.
Road charges are not taken into account, even though xEVs might be exempted from certain
Road charges are not taken into account, even though xEVs might be exempted from certain
charges in some local region (e.g., London, Oslo). Additionally, xEVs might profit from free parking
charges in some local region (e.g., London, Oslo). Additionally, xEVs might profit from free parking in
in city areas or free use of ferries (Norway) [5,13] or bus lane access [14]. As these advantages are
city areas or free use of ferries (Norway) [5,13] or bus lane access [14]. As these advantages are limited
limited to locally restricted areas, they are not taken into account since we want to describe the
to locally restricted areas, they are not taken into account since we want to describe the common
common situation in the countries considered.
situation in the countries considered.
Some countries grant subsidies for installing a home charging station (e.g., UK €580 [8]). Such
Some
grants are not countries
consideredgrant
in the subsidies
step curvefor installing
calculation a home
as they charging
are purely station
focused (e.g., UK
on explicit €580 [8]).
vehicle
Such grants
taxation are not considered in the step curve calculation as they are purely focused on explicit
schemes.
vehicle taxation schemes.
2. Methodology for a Comparison of Vehicle Taxation Schemes
2. Methodology for a Comparison of Vehicle Taxation Schemes
The typical way of comparing tax advantages in Europe is a direct comparison of two vehicles.
The typical way of comparing tax advantages in Europe is a direct comparison of two vehicles.
Figure 2 is an example for this and illustrates the large variance in Europe of the overall tax advantage
Figure 2 is an example
in a three-year holding for this and
period of aillustrates
PHEV tothe a large variance vehicle
conventional in Europe of the
(both overall tax advantage
E-segment). For all in
a three-year holding period of a PHEV to a conventional vehicle (both E-segment). For all
calculations in this paper, the personal income tax is assumed to be 40% for the calculation of thecalculations in
this paper,
company the personal income tax is assumed to be 40% for the calculation of the company car taxation.
car taxation.

Figure 2. The
Figure overall
2. The tax advantage
overall of a of
tax advantage plug-in hybrid
a plug-in electric
hybrid vehicle
electric (PHEV)
vehicle compared
(PHEV) to a to a
compared
conventional vehicle
conventional in the
vehicle E-segment
in the for afor
E-segment business customer.
a business This comprises
customer. purchase
This comprises subsidies,
purchase subsidies,
registration taxes at point of sale and yearly ownership taxes paid by the employer as well as company
car taxes paid by the employee.
 WorldElectr.
World Electr.Veh.
Veh.J.J.2018,
2018,9,9,x xFOR
FORPEER
PEERREVIEW
REVIEW 5 5ofof1111

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arederived actual
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reasons,
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aresupposed
supposed to to
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beequal in
equal
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and engine
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power.In
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gCO22/km representsaaBEV.
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and50
and 50
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2 aaPHEV a PHEV is
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withboth both
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and 150gCO
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gCO2/km representsaaa
/km represents
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conventional
conventional vehicle.
vehicle.
conventional vehicle.

Figure 3. Vehicle characteristics of a typical E-segment vehicle.

Figure3.3.Vehicle
Figure Vehiclecharacteristics
characteristicsofofaatypical
typicalE-segment
E-segmentvehicle.
vehicle.

InFigure
In Figure4,4,vehicle
vehicle characteristics
vehiclecharacteristics
characteristicsof of
ofaaatypical
typical B-segment
typicalB-segment
B-segmentcar car(small
(small cars)
(smallcars) are
cars)are shown.
areshown. PHEVsare
shown.PHEVs are
notoffered
not inthis
offeredinin this
this segment
segment
segment due
due
due to
thethe
totothe factfact
fact thatthat
that sizesize
size and
andprice
and price
pricedo doallow
donot
not not allow
allowan an installation
aninstallation
installationofoftwo of two
twodrive-
drive-
drive-trains.
trains.As
trains. As a consequence,
Asaaconsequence,
consequence, these
thesecars
these cars cars
are
are areelectric
either
either either electric
electric or conventional.
ororconventional.
conventional.
Inthis
In thispaper,
paper,
paper,we we focus
wefocus on
focuson CO
onCO stepcurves
CO222step curvesofofgasoline
gasolinevehicles
vehiclesasasPHEVs
PHEVsare arenowadays
nowadayslargely
largely
fueledby
fueled by gasoline.
bygasoline. Nevertheless,the
gasoline.Nevertheless, methodologyofofCO
themethodology CO2 22step
stepcurves
curvescancanbe
beapplied
appliedsimilarly
similarly
similarlytoto
to
diesel vehicles.
vehicles.
diesel vehicles.

Figure Vehicle
Figure4.4.Vehicle characteristicsofof
Vehiclecharacteristics
characteristics ofaaatypical
typicalB-segment
typical B-segmentvehicle.
B-segment vehicle.
vehicle.

The resultingtaxation
The taxation curves(Figures
(Figures 5–7)areare solelydependent
dependent onCO CO2 emissions.Since
Since the
Theresulting
resulting taxationcurves
curves (Figures5–7)5–7) are solely
solely dependent on on CO22 emissions.
emissions. Sincethethe
characteristiclines
characteristic linescomprise
compriseallalltaxation
taxationand
andincentive
incentivecomponents
componentsfor forthree-year
three-yearholding
holdingtime,
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both
characteristic lines comprise all taxation and incentive components for three-year holding time,
one-timetaxation
one-time taxation(registration
(registrationtaxtaxand
andgrants)
grants)and
andyearly
yearlytax
taxitems
items(annual
(annualtax
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and,ininthe
the caseofof
both one-time taxation (registration tax and grants) and yearly tax items (annual tax and,case
in the
businessuse,
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thebenefit
benefitininkind
kindtax
taxpaid
paidbybythe
theemployee)
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case of business use, the benefit in kind tax paid by the employee) are included. For comparability,
yearholding
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forboth
boththe
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theprivate
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a three-year holdingisperiod is used for both the business and thecustomer.
private customer.
World Electric Vehicle Journal 2018, 9, 30 6 of 11

World Electr. Veh. J. 2018, 9, x FOR PEER REVIEW 6 of 11

3. Results
3. Results
Figure 5 shows CO2 based taxation step curves of a business customer vehicle based on a typical
E-segment Figure 5 shows
vehicle forCOthe2 based taxation
past three yearsstepincurves
Norway, of a business
the UK, customer
Italy, the vehicle
NL, Germanybased onand a typical
France.
E-segment vehicle for the past three years in Norway, the UK, Italy, the
It can be seen that the UK and France have stepwise changes in taxation with increasing CO2 values. NL, Germany and France. It
can be seen that the UK and France have stepwise changes in taxation with increasing CO 2 values.
This was the reason to call the methodology CO2 -based taxation step curves. Contrary to that, Norway,
This was the reason to call the methodology CO2-based taxation step curves. Contrary to that,
the NL and Germany have continuous correlations between vehicle CO2 emissions and taxation levels,
Norway, the NL and Germany have continuous correlations between vehicle CO2 emissions and
meaning that each additional gram of CO2 is charged. The steps at 50 and 110 gCO2 /km in Norway
taxation levels, meaning that each additional gram of CO2 is charged. The steps at 50 and 110
are caused by the weight reduction advantage of PHEV and hybrids. Hybrid electric vehicles without
gCO2/km in Norway are caused by the weight reduction advantage of PHEV and hybrids. Hybrid
an electric
externalvehicles
plug get only in Norway an additional benefit (weight of HEV is reduced by 10% for the
without an external plug get only in Norway an additional benefit (weight of HEV
calculation
is reducedofby the10%import
for thetax). For this of
calculation reason, a steptax).
the import in taxation arises ata 110
For this reason, stepgCO 2 /km in
in taxation Norway
arises at
(from 50 to 110 gCO
110 gCO2/km in Norway 2 /km an HEV is assumed). Italy has no dependency on CO
(from 50 to 110 gCO2/km an HEV is assumed). Italy has2 no dependency on at all.
COMoreover
2 at all.
it can be seen from Figure 5 that some countries like the UK, the NL, Norway and France
adapt vehicle
Moreover it can on
taxation be aseen
yearly
from basis, whereas
Figure 5 that Germany and Italy
some countries like keep their
the UK, thetaxation
NL, Norwayschemes andfor
several years.
France adapt vehicle taxation on a yearly basis, whereas Germany and Italy keep their taxation
In addition,
schemes the yearly
for several years. tax difference in Euro per year between a BEV with 0 gCO2 /km versus a
conventional vehicle
In addition, thewith 120 tax
yearly gCO 2 /km is shown
difference in Euroinpertheyear
greybetween
arrays in Figure
a BEV with5. In Italy,2/km
0 gCO the versus
advantage a
of aconventional
BEV is onlyvehicle€175 per with 120ingCO
year /km is
the2case shown in the
considered. In grey arraysand
Germany in Figure
France,5. In
theItaly,
BEVthe advantage
advantage is in
of a BEVrange
a medium is onlyof€175€1790perrespectively
year in the case€2660considered.
per year In andGermany
representsand aFrance, the BEVofadvantage
combination the purchaseis
in a medium
subsidy for xEVs range
andofCO €1790
2 respectively
-dependent €2660
taxation. per
The year and
largest represents
BEV a combination
advantage occurs of
in the purchase
Norway (€5630
persubsidy for NL
year), the xEVs and CO
(€6550 per2-dependent
year) and in taxation.
the UK The largest
(€6740 per BEV
year).advantage
Norway and occurstheinNetherlands
Norway (€5630 grant
per year), the NL (€6550 per year) and in the UK (€6740 per year). Norway
no purchase subsidies but rather implemented a strong CO2 -dependency in the registration tax and the Netherlands grantthat
no purchase
is quite subsidiesfor
advantageous buta rather
0 gCOimplemented
/km-vehicle. a strong
In CO2-dependency
addition, the UK inthe
and the NL
registration
admit tax that
xEVs large
2
is quite
benefits in advantageous
company car taxation.for a 0 gCO2/km-vehicle. In addition, the UK and the NL admit xEVs large
benefits in company car taxation.
Looking at the tax and incentive advantage between BEV and PHEV, the difference from 0 to
Looking at the tax and incentive advantage between BEV and PHEV, the difference from 0 to 1
1 gCO2 /km-vehicles has to be considered in the CO2 -based taxation step curves. In Figure 5, it can be
gCO2/km-vehicles has to be considered in the CO2-based taxation step curves. In Figure 5, it can be
observed that Norway reduced this step in 2016 and nearly eliminated it in 2017 so that PHEV benefits
observed that Norway reduced this step in 2016 and nearly eliminated it in 2017 so that PHEV
nearly in the same way from tax exemptions like a BEV. Vice versa, the NL increased the taxation
benefits nearly in the same way from tax exemptions like a BEV. Vice versa, the NL increased the
ontaxation
PHEV in onthe
PHEVlast inyears andyears
the last hence increased
and the difference
hence increased from 0 from
the difference to 1 gCO
0 to 12 /km-vehicles.
gCO 2/km-vehicles. In the
UKInandthe UK and Germany, there is only a small difference in taxation between BEV and PHEV. This is in
Germany, there is only a small difference in taxation between BEV and PHEV. This is true
France asFrance
true in well asaslong wellthe PHEV
as long theisPHEV
belowis20 gCO20
below 2 /km.
gCO2This
/km.demonstrates
This demonstrates the heterogeneous
the heterogeneous fiscal
classification of electrified
fiscal classification vehiclesvehicles
of electrified in Europe.
in Europe.

Figure 5. CO
Figure 2 based
5. CO stepstep
2 based curves of vehicle
curves taxation
of vehicle of business
taxation customers
of business basedbased
customers on a typical E-segment
on a typical E-
gasoline
segmentvehicle in three-year
gasoline vehicleholding time, including
in three-year one-time
holding time, and yearly taxation/incentives
including one-time and yearlyin 2015,
taxation/incentives
2016 and 2017. in 2015, 2016 and 2017.
World Electric Vehicle Journal 2018, 9, 30 7 of 11
World Electr. Veh. J. 2018, 9, x FOR PEER REVIEW 7 of 11
World Electr. Veh. J. 2018, 9, x FOR PEER REVIEW 7 of 11
Figure
Figure66shows
showsthe theCO
CO22 based
based step
step curve for aa private
curve for private customer
customer for for aa vehicle
vehiclebased
basedon
onaatypical
typical
Figuregasoline
E-segment 6 showsvehicle.
the CO2Inbased
the stepand
UK curve
the for
NL, a the
private
tax customer for
difference a vehicle
between a based on a typical
conventional vehicle
E-segment gasoline vehicle. In the UK and the NL, the tax difference between a conventional vehicle
E-segment
and gasoline is vehicle. In the UK and the NL,costumer
the tax difference betweenthanafor
conventional vehicle
andaaBEVBEVororPHEV
PHEV ismuchmuch higher
higher for
for aa business
business costumer (see Figure
(see Figure 5)than
5) foraaprivate
privatecustomer
customer
and
(see a BEV or PHEV is much higher for a business costumer (see Figure 5) than for a private customer
(seeFigure
Figure6)6)due
duetotothe
theCO
CO22-dependent
-dependent taxation
taxation ofof the
the benefit
benefit inin kind
kind for
forthe
theprivate
privateuse
useofofcompany
company
(see in
cars Figure 6)countries.
these due to the COFor2-dependent taxation of the benefit in kind for the private use of company
example, the private customer has a benefit of €1940 per year for a
cars in these countries. For example, the private customer has a benefit of €1940 per year for a BEV
cars
BEV in these
versus countries.
a conventional For example,
vehicle the
with private customer has a benefit of €1940 per year for a BEV
versus a conventional vehicle with 120120gCOgCO 2 /km,
2/km,
whereas
whereas thethe business
business customerhas
customer hasa ayearly
yearly
versus a conventional
advantage €6740 vehicle withcase.
120 IngCO 2/km, whereas the business customer has a yearly
advantage of €6740 in the considered case. In Norway, the private customers additionally profit froma
of in the considered Norway, the private customers additionally profit from
advantage
value added oftax
€6740 in the considered
exemption (VAT case.
is not In Norway,
included in in the
thethe
CO private customers additionally profit from
a value added tax exemption (VAT is not included 2 -step
CO 2-stepcurve).
curve).
a value added tax exemption (VAT is not included in the CO 2-step curve).

Figure 6. CO2 based

based step curves
curves of
of vehicle taxation of private customers based on
onaaatypical
typical E-segment
Figure6.6.CO
Figure CO22 based step
step curves of vehicle taxation
vehicle taxation of
ofprivate
privatecustomers
customersbased
basedon typicalE-segment
E-segment
gasoline
gasoline vehicle in three-year holding time, including one-time and yearly taxation/incentives in 2015,
gasoline vehicle in three-year holding time, including one-time and yearly taxation/incentives inin2015,
vehicle in three-year holding time, including one-time and yearly taxation/incentives 2015,
2016
2016 and
and 2017.
2017.
2016 and 2017.

Figure 7. CO2 based step curves of vehicle taxation of private customers based on a typical B-segment
Figure 7. CO2 based step curves of vehicle taxation of private customers based on a typical B-segment
Figure 7. CO
gasoline 2 based
vehicle step curves
in three-year of vehicle
holding time,taxation of one-time
including private customers
and yearlybased on a typical B-segment
taxation/incentives in 2015,
gasoline vehicle in three-year holding time, including one-time and yearly taxation/incentives in 2015,
gasoline vehicle
2016 and 2017. in three-year holding time, including one-time and yearly taxation/incentives in 2015,
2016 and 2017.
2016 and 2017.
Figure 7 depicts the CO2 based taxation of a B-segment vehicle for a private customer. In
Figure 7 depicts the CO2 based taxation of a B-segment vehicle for a private customer. In
comparison todepicts
Figure 7to Figure 7,
theit can
CO2bebebased
seen that the taxation
taxation level of a B-segment
of a B-segment vehicle
vehicle for is much
a private lower
customer.
comparison Figure 7, it can seen that the taxation level of a B-segment vehicle is much lower
than
In of a E-segment
comparison vehicle
to Figure due
7, itdue to the
cantobethe
seenlower price
thatprice (the UK),
the taxation less engine power (Italy), the lower
than of a E-segment vehicle lower (the UK),level
less of a B-segment
engine vehicle
power (Italy), theislower
much
weight (Norway, NL) and less displacement (Germany, France). In Norway, the NL, the UK, France
weight (Norway, NL) and less displacement (Germany, France). In Norway, the NL, the UK, France
World Electric Vehicle Journal 2018, 9, 30 8 of 11

lower than of a E-segment vehicle due to the lower price (the UK), less engine power (Italy), the lower
weight (Norway, NL) and less displacement (Germany, France). In Norway, the NL, the UK, France
World Electr. Veh. J. 2018, 9, x FOR PEER REVIEW 8 of 11
and Germany, the B-segment-BEV advantages for private customers compared to a conventional
vehicle
andareGermany,
in the range of €1000 to €2500
the B-segment-BEV per year.forInprivate
advantages Italy, the advantage
customers is much
compared to smaller.
a conventional
vehicle are in the range of €1000 to €2500 per year. In Italy, the advantage is much smaller.
4. Outlook
4. Outlook
In this section, the benefit of analyzing CO2 step curves is demonstrated on the one hand by
analyzingIn this section, the
retrospectively thebenefit of analyzing
bonus/malus CO2 in
system step curves
France is demonstrated
and, on the by
on the other hand, onediscussing
hand by the
analyzing retrospectively the bonus/malus system in France and, on the other hand,
announced development of company car taxation in the UK and registration tax in the NL. As the UK, by discussing
the NLtheand
announced
France development of company
adapt their taxation car taxation
schemes nearlyinevery
the UKyear,
and registration
we focus on taxthem
in theinNL. Assection.
this the
UK, the NL and France adapt their taxation schemes nearly every year, we focus on them in this
section.
4.1. France
As
4.1.described
France in Section 1.2.6, France has installed a bonus/malus system at the point of vehicle
registration in which the bonus is a purchase subsidy for vehicles with low CO emissions and the
As described in Section 1.2.6, France has installed a bonus/malus system at the2 point of vehicle
malusregistration
is a fee forinvehicles with
which the high
bonus is CO 2 emissions.
a purchase subsidyIn for
Figure 8, the
vehicles respective
with low CO2 bonus/malus scheme
emissions and the
is shown
malus from 2010
is a fee foronwards. It can
vehicles with highbeCO
seen that it was
2 emissions. adjusted
In Figure regularly
8, the with
respective the following
bonus/malus schemetrends
(marked in Figure
is shown from 82010
with numbered
onwards. It canarrows):
be seen that it was adjusted regularly with the following trends
(marked in Figure 8 with numbered arrows):
1. Decreasing bonus level,
1. Decreasing bonus level,
2. Increasing malus level,
2. Increasing malus level,
3. The
3. starting point
The starting of the
point malus
of the malusisisshifted
shiftedto
to lower CO22values,
lower CO values,
4. CO limits for subsidies are lowered.
4. 2 CO2 limits for subsidies are lowered.

Figure
Figure 8. Bonus/malusscheme
8. Bonus/malus scheme in
in France
Francefrom
from2010 to to
2010 2017.
2017.

In 2017, the malus steps are eliminated respectively reduced to an increment of 1 gCO2/km.
In 2017, the malus steps are eliminated respectively reduced to an increment of 1 gCO2 /km.
4.2. The United Kingdom
4.2. The United Kingdom
The UK plans a yearly increase of company car tax rates until 2019 (see Figure 9). From 2020
The UK plans
onwards, a yearly
it is under increase
discussion of company
to introduce car tax rates
a dependency of the until 2019car
company (see Figure
taxation 9). electric
to the From 2020
onwards, it is under discussion to introduce a dependency of the company car taxation
driving range of PHEVs (1–50 gCO2/km) [15]. A long-range PHEV with more than 130 miles in zero to the electric
COrange
driving 2 emission mode is(1–50
of PHEVs treated
gCOequally
2 /km)to [15].
a BEV.ABoth would have
long-range PHEVa company car tax
with more thanrate
130of miles
only 2%,in zero
which would
CO2 emission mode be aissignificant drop compared
treated equally to a BEV. to Both
the previous
would years.
have aIncompany
Figure 9, we
carroughly
tax rateillustrate
of only 2%,
whichthe discussed
would dependency
be a significant of compared
drop electric driving
to therange by translating
previous the electric
years. In Figure driving range
9, we roughly in the
illustrate
gCO2/km. For illustration, we assume that 130 miles correspond to less than 3 gCO2/km, 70 miles
discussed dependency of electric driving range by translating the electric driving range in gCO2 /km.
correspond to 9 gCO2/km, 40 miles correspond to 19 gCO2/km and 30 miles correspond to 27
For illustration, we assume that 130 miles correspond to less than 3 gCO2 /km, 70 miles correspond
gCO2/km. In the end, this will depend on the CO2-emission in charge sustaining mode and hence on
to 9 gCO 2 /km, 40
the specific
miles correspond to 19 gCO2 /km and 30 miles correspond to 27 gCO2 /km. In the
combustion engine.
World Electric Vehicle Journal 2018, 9, 30 9 of 11

end,
Worldthis
Electr.will
Veh. depend
J. 2018, 9, xon
FORthe
PEERCO 2 -emission in charge sustaining mode and hence on the specific
REVIEW 9 of 11
combustion engine.
TheDiesel
The Dieselsurcharge
surcharge will
will staystay in place
in place and beand be dependent
dependent on compliance
on compliance of RealEmissions
of Real Driving Driving
Emissions
test test Step
Step 2 (RDE 2 (RDE
2) from 2) from
April April 2018[16].
2018 onwards onwards [16].

Figure9.9. CO
Figure CO2 based
based step
step curves
curves of
of vehicle
vehicle taxation
taxation of
of business
business customers
customersininthetheUK
UKand
andprivate
private
2
customers in the Netherlands from 2017 to 2020. The CO 2 step curves for the UK in 2020 are
customers in the Netherlands from 2017 to 2020. The CO2 step curves for the UK in 2020 are illustrating
illustrating
the ongoing the ongoingon
discussion discussion on introducing
introducing a dependencya dependency of electric
of electric driving driving
range range for PHEVs.
for PHEVs.

4.3. The Netherlands

4.3. The Netherlands
In the Netherlands, an increase in vehicle taxation will be undertaken every year until 2020 (see
In the Netherlands, an increase in vehicle taxation will be undertaken every year until 2020
Figure 9). The separate PHEV registration tax rates (introduced in 2017) will be increased in 2019
(see Figure 9). The separate PHEV registration tax rates (introduced in 2017) will be increased in
(compare the range of 1 to 50 gCO2/km). Table 1 shows the CO2 vehicle emissions by which a private
2019 (compare the range of 1 to 50 gCO2 /km). Table 1 shows the CO2 vehicle emissions by which a
customer has the same tax burden over the years. In 2020, a vehicle has to emit 100 gCO 2/km in order
private customer has the same tax burden over the years. In 2020, a vehicle has to emit 100 gCO2 /km
to have the same tax burden (€2224 each year over a three-year holding period) like a 116.4 gCO2/km-
in order to have the same tax burden (€2224 each year over a three-year holding period) like a
vehicle in 2015. Hence, a technical improvement of 2.5 to 3.5% has to be achieved every year to
116.4 gCO2 /km-vehicle in 2015. Hence, a technical improvement of 2.5 to 3.5% has to be achieved
maintain the identical tax level.
every year to maintain the identical tax level.
Table 1. CO2-values for having the same tax burden every year in absolute values (gCO2/km) and
Table 1. CO2 -values for having the same tax burden every year in absolute values (gCO2 /km)
relatively to previous year (%) for business customers in the UK and private customers in the
and relatively to previous year (%) for business customers in the UK and private customers in
Netherlands.
the Netherlands.
Private customer in the Netherlands
year 2015 2016
Private customer 2017 2018
in the Netherlands 2019 2020
vehicle emission (gCO2/km) 116.4 112.5 109.5 106.0 103.5 100.0
year 2015 2016 2017 2018 2019 2020
deltaemission
vehicle vs. previous
(gCOyear (%) 116.4 3.3 112.5 2.6
109.5 3.2
106.0 2.4
103.5 3.4100.0
2 /km)
delta vs. previous year (%)Business customer
3.3 in UK
2.6 3.2 2.4 3.4
year 2015 2016 2017 2018 2019 2020
Business customer in UK
vehicle emission (gCO2/km) 140 130 120 110 95 90
year
delta vs. previous year (%) 2015 7.12016 7.72017 8.3 2018 13.6
2019 5.32020
vehicle emission (gCO2 /km) 140 130 120 110 95 90
delta vs. previous year (%) 7.1 7.7 8.3 13.6 5.3
4.4. Discussion
In principle, every gram CO2-emission has the same impact on the environment. From this point
4.4. Discussion
of view, there is no reason to have steps in vehicle taxation at certain CO 2 levels. Steps are more or
less In principle,
randomly everyand
chosen gram CO2lead
hence -emission
to an has thesituation
unfair same impact on the
between environment.
vehicles, From only
which differ this point
in 1
of view, there is no reason to have steps in vehicle taxation at certain CO levels.
gCO2/km. From a customer's point of view, continuous CO2-dependancy2 is fairer and follows Steps are moretheor
less randomly
guidelines chosen and
on financial hence lead
incentives to anand
for clean unfair situation
energy between
efficient vehiclesvehicles,
[17]. Thiswhich differ only in
was implemented
1for
gCO /km.
bonus/malus
2 From a customer’s point of view, continuous
in France in January 2017 (see Section 4.1). 2 CO -dependancy is fairer and follows the
guidelines on financial
According incentives
to the plans in theforUK,
clean and energyPHEV
a long-range efficient
withvehicles [17]. 130
more than Thismiles
was implemented
in zero CO2
for bonus/malus
emission in France
mode will in January
be treated equally2017
to a (see
BEVSection 4.1). car taxation (Section 4.2). This follows
in company
the assumption that a PHEV with a high mileage in zero-CO2-emission-mode can be considered to
drive predominantly electrically and should be promoted like a BEV. A recent study even revealed
that PHEVs with about 60 km of real-world range currently electrify as many annual vehicles’
World Electric Vehicle Journal 2018, 9, 30 10 of 11

According to the plans in the UK, a long-range PHEV with more than 130 miles in zero CO2
emission mode will be treated equally to a BEV in company car taxation (Section 4.2). This follows
the assumption that a PHEV with a high mileage in zero-CO2 -emission-mode can be considered to
drive predominantly electrically and should be promoted like a BEV. A recent study even revealed that
PHEVs with about 60 km of real-world range currently electrify as many annual vehicles’ kilometers
as BEV with a much smaller battery [18]. Such long-range PHEV will help to convince a larger share of
the population to drive an electric vehicle as they help to overcome driving range limitations in areas
with limited (public) charging infrastructure and to manage the one or two long distance vacation
trips per year.
In terms of CIP-percentage (continuous improvement process), the average CO2 -emission of the
European vehicle fleet improved with 3.2% CIP the last years [19]. Looking at Table 1, a CIP-percentage
of 2.5 to 3.5% has to be achieved every year to maintain the identical tax level in the Netherlands,
which is hence a reasonable value. Looking at a business customer in the UK, the mean CIP-percentage
would be about 7.5% to have the same tax burden as in the previous year (Table 1). This is far beyond
that of the CIP of 3.2% observed in Europe so far [19]. As a consequence, a part of the company car
users will choose a xEV due to the advantage in company car taxation. Nevertheless, an additional
consequence is that the number of company car users decreased over the past last years (12% less in
2013 compared to 2008 [9]) as xEVs are not yet suitable for all customers (dependency on charging
infrastructure, limited variety of xEV models, missing confidence in new technology).

5. Conclusions
In this contribution, a methodology is introduced which gives a comprehensible overview of
the heterogeneous and complex vehicle taxation landscape. By calculating CO2 based taxation step
curves, the influence of CO2 on vehicle taxation in different European countries is demonstrated
and compared for private and business customers as well as for different vehicle segments (full-size
cars in E-segment and small cars in B-segment). This methodology enables the discussion about the
development of taxation and incentive schemes and provides a powerful tool for benchmarking xEV
technologies in a comprehensive European comparison. By applying the method to six European
countries, it can be learned that the change frequency of vehicle taxation differs very much. France,
the UK, the NL, and Norway adapt on a yearly basis unlike Germany and Italy. Moreover, it can be
seen that the taxation level for the same vehicle is quite different in Europe. This also applies to xEVs
as their incentivation is very heterogeneous in Europe. The CO2 -based taxation step curves reveal
severe CO2 -steps in taxation in some countries (e.g., France, the UK). Private and business use has to
be differentiated as large tax advantages for low-emission vehicles arise from company car taxation
(e.g., the NL, the UK) for the benefit in kind of privately using a company car.

Author Contributions: Conceptualization & Methodology: K.H.; Visualization: R.D.; Supervision: S.P.
Funding: This research received no external funding.
Conflicts of Interest: The authors declare no conflict of interest.

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