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German government to set up tax incentives for electrical cars


The German government aims to set up tax incentives to promote the purchase of electric-powered cars used by company employees. Till now, employees who drove a company car for private use had to pay a tax of one per cent on the list price of the vehicle. In the future the rate will be cut to 0.5 per cent if the company car is electric-powered or a hybrid vehicle, according to a legislative draft seen Friday by dpa. Previously, the Frankfurter Allgemeine Zeitung newspaper and Spiegel-online had reported on the plans.

The draft bill is to be approved by the cabinet next Wednesday. If passed by parliament, the reduced tax for electric-powered company cars would apply to vehicles that are bought or leased between the period of January 1, 2019 and December 31, 2021.

Under the current regulations, electric-powered company cars were considered to be financially unattractive due to the high acquisition costs. The coalition parties CDU/CSU and SPD had agreed in their coalition pact to reduce taxes on company cars.

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