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Norway Permitted To Extend Electric Car Tax Breaks

by Ulrika Lomas, Tax-News.com, Brussels

19 December 2017


The European Free Trade Association Surveillance Authority (ESA) has permitted Norway to extend a series of temporary tax exemptions for zero-emission vehicles, including in the area of value-added tax.

Under the package of measures designed to encourage more electric car sales, zero-emission vehicles will be zero-rated for VAT purposes for a further three years.

Additional tax breaks were approved by the ESA for a period of six years, including an exemption from annual vehicle tax and registration tax.

Hydrogen-powered cars will also be zero-rated for a period of six years.

The ESA had previously approved Norway's existing aid scheme until December 31, 2017, and the new program of tax breaks will be valid from 2018.

The Authority has decided that the measures are in line with the state aid rules of the EEA Agreement, since they aim to achieve an objective of common interest: the reduction of greenhouse gas emissions.

However, the ESA has asked the Norwegian Government to review the VAT breaks after two years, to ascertain whether they are still relevant giving the falling costs of electric propulsion technology.

The zero-rating measures will reduce tax revenues in Norway by an estimated NOK3.2bn (USD383m).

TAGS: tax | interest | vehicle tax | Norway | tax breaks | Europe

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