Less interest in electric cars in the Netherlands as tax breaks set to be cut

The tax break for electric cars in the Netherlands is set to be slowly reduced from 2025 until it is completely scrapped by 2030. According to the Dutch mobility organisation, the Royal RAI Association, these plans are part of the reason the sale of electric vehicles in the country is stagnating.

Electric car tax break in the Netherlands to be cut from 2025

Currently, drivers of zero-emission vehicles, such as electric cars or those that are hydrogen powered, do not have to pay motor vehicle tax. This is expected to change from January 1, 2025 when electric car owners will receive a 75 percent discount on motor vehicle tax. From 2026 to 2029, this discount will be reduced even further to 25 percent and from 2030 the discount will be completely removed.

Initially, the tax break would have been phased out more gradually but the Dutch Minister of Finance Eelco Heinen discovered a miscalculation in the previous government’s budget. According to Heinen, the last government didn’t take into account that batteries make electric vehicles heavier than petrol cars which means they should be taxed more as the motor vehicle tax depends on the weight of vehicles among other factors.

How the tax break for electric cars was set up before would essentially give drivers a “double discount” and cost the government extra money in lost tax income.

Dutch sales of electric cars tapering off

Mobility organisations, BOVAG and RAI Association have revealed that 14 percent of vehicles in the Netherlands are now partly or fully electric – four times higher than five years ago. However, this number has started to stagnate. Therefore the RAI Association urges the government to continue promoting electric cars.

“We are seeing consumer interest in electric cars decline,” said RAI Association chairman Frits van Bruggen. “This is partly due to unexpected cutbacks in incentive measures, such as the correction of the weight of electric cars for motor vehicle tax. But also because there is a lack of long-term perspective. The sector and motorists need clear and consistent government policy for the longer term.”

The organisation also believes that the government should provide more clarity and consistency when it comes to subjects like zero-emission zones. “Municipalities and industry associations have actively started working on this,” Van Bruggen said referring to cities such as Amsterdam and Utrecht that have plans to broaden emission-free areas from 2025. “Now, two months before the introduction, the government is sowing doubt by proposing a postponement. That kind of uncertainty is not good for the transition to zero-emission transport.”

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