Supplementary evidence from Frank Burmeister (ELV0140)

Additional questions:

1)    Could you list the subsidies that the Netherlands have implemented in the past or currently to incentivise EV uptake.

2)    In particular, do you subsidise or offer incentives in the second-hand car market?

Ad 1) Direct financial subsidies for private individuals (cannot be used by individuals with a company car or by companies):

1a) Purchase/leasing subsidy new cars

1b) Purchase/leasing subsidy used cars

This subsidy cannot be used by companies or individuals who will drive in a company car. From July 2020, Battery Electric Vehicles (BEV’s) bought by private individuals in the Netherlands were beckoned by a subsidy for the purchase of a new or used BEV with a list price between 12.000 and 45.000 euro’s and a minimum range of 120 kilometres. Individuals have to drive al least three years in the electric vehicle (in case of buying) respectively four years (in case of leasing). We had to recalculate our total budget due to the strong demand of individuals for BEV’s in 2021 (for the years 2022 and further).

Until now, we did not formulate fiscal incentives for the long run (2025 and further). Therefore, we see this year that the demand of individuals for BEV’s is declining. One of the main reasons is that the road tax exemptions/reduction on BEV’s will stop in 2025 (see below) if we do not formulate new measures. In the Netherlands the road tax is based on the weight of a car. A BEV is heavier than a comparable petrol car. Therefore, BEV’s have to pay 200 – 500 euro’s per year more road tax than a comparable petrol car. As a result of this the demand of individuals for BEV’s is declining now. We will suggest to a new government to repair this fiscal disadvantage of BEV’s next year. Otherwise, the transition of BEV’s will delay (especially private individuals).   

1.b) Fiscal incentives:

-          Road tax reduction/exemption: BEV’s are exempted from road tax till 2024. In 2025 they have to pay 25% of the “normal” tax rate. From 2026 100% (weight correction? (see above)).

-          Tax on benefit in kind (BIK): Individuals with a battery electric company car have a lower percentage of the list price added to their income when using their company car also privately. For petrol cars this is 22%. For BEV’s it was 4% in 2019, 8% in 2020, 12% in 2021, 16% in 2022, 17% in 2025 and 22% in 2026 and further.

-          Registration tax: Zero emission cars are exempted from paying registration tax because they do not have any CO2 emission. For petrol cars the system is progressive depending on the CO2 emission of the car. From 2025 onwards also BEV’s have to pay a fixed amount of 372 euro per car.

-          Profit tax: The Netherlands have the “MIA” regulation in which investments in cleaner technology are being encouraged by making them deductible in profit tax. This advantage has significantly decreased over the last years and is no longer applicable for BEV’s.

Ad 2) In particular, do you subsidise or offer incentives in the second-hand car market?

Nearly 90% of all cars in the Netherlands are owned by private individuals. The used car market is the biggest car market in the Netherlands (1,9 mln transactions per year compared with new cars 360.000 transactions per year) where especially private individuals buy their own cars. To support the transition towards electric vehicles in the Netherlands we want to give private people a choice to buy an electric vehicle by offering subsidy on used cars. We focus the subsidy on affordable family and small cars to be more effective and to lower the percentage of free riders.

As we can see this year, the subsidy cannot stand alone. A weight correction in the road tax will be necessary if we want private people to buy a used electric vehicle.