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In Austria, drivers of electric cars currently enjoy several tax advantages compared to drivers of cars with combustion engines. Only cars with a CO2 emission value of 0 grams per kilometre qualify as electric cars under Austrian tax law. Hybrid vehicles and electric vehicles with range extenders do not meet this condition and are thus excluded from most of the tax benefits (unless explicitly mentioned otherwise). The benefits of electric cars extend to many different areas of Austrian tax:
Electric cars are exempt from classic "car taxes" such as the motor vehicle tax or the standard consumption tax (Normverbrauchsabgabe).
With regards to VAT, electric cars – unlike most other cars – are generally subject to input VAT deduction. Usually, input VAT deduction for cars is only possible in certain cases, such as transporters, leasing cars or cab companies, among others. However, while non-electronic cars are only eligible for an input tax deduction in these specific cases, electric cars do not need to fulfil a special business purpose provided they are 100 % electric. The actual extent of the input VAT deduction depends on the purchase price of the car. If it is less than EUR 40,000 (incl. VAT), the full amount of VAT can be deducted. In the range of EUR 40,000 to EUR 80,000 (incl. VAT) a full input VAT deduction is still possible, but a VAT taxation of self-supply must be taken into account for amounts exceeding EUR 40,000 (see a sample calculation below). Lastly, if the purchase price exceeds EUR 80,000 (incl. VAT), no input VAT deduction can be made.
Sample calculation (purchase price between EUR 40,000 and EUR 80,000):
Ms X purchases a 100 % electric car for EUR 60,000 incl. VAT. For this purchase (based on the full amount), an input VAT deduction of EUR 10,000 can be made (60,000 – 60,000/1.2). The part exceeding EUR 40,000 (EUR 20,000 incl. VAT in this example) is subject to VAT as self-supply. However, the VAT amount contained in the EUR 20,000 is not subject to VAT taxation of self-supply. The VAT assessment basis is therefore EUR 16,666.67 (EUR 20,000/1.2) and the VAT amounts to EUR 3,333.34 (EUR 16,666.67*0.2). The input VAT deduction in this case is therefore EUR 6,666.67.
Moreover, while non-electric cars generally have to be depreciated linearly over eight years according to Austrian income tax law, a degressive depreciation of up to 30 % per year can be made for electric cars, meaning businesses are allowed to depreciate a higher amount at the beginning of the use of the electric car.
Electric cars are also well-suited for use as company cars. If an employer provides its employee with a car and permits private use of the car, this is generally treated as taxable remuneration in kind of up to EUR 960 per month. However, if the car provided to the employee is an electric car, the Austrian legislator qualifies the value of this remuneration in kind as being EUR 0. Therefore, if the employer provides the employee with an electric car for private use, both the employer and the employee do not have to pay any additional wage-tax-related duties.
The new CO2 tax was the central element of the Austrian eco-social tax reform with the declared objective of putting a price tag on greenhouse gas emissions. Since solar, wind and hydro power are not directly affected by the CO2 tax, electricity obtained from these sources is CO2 tax free. Therefore, if a company runs purely electric cars with electricity from renewable energy sources, the vehicle fleet avoids the CO2 tax. A green vehicle park is thus not only environmentally friendly but also cheaper thanks to its avoidance of CO2-tax-related price increases.
Another incentive to switch to electric cars is the new investment tax allowance for ecological investments. This affects ecological assets which are acquired/produced starting from 1 January 2023. The investment tax allowance provides for a business expense of up to 15 % of the acquisition/production costs of certain ecological assets, including electric cars.
As the benefits of electric cars with a CO2 emission value of 0 grams extend to many different areas of Austrian tax, it is sensible to deal with these aspects prior to purchasing such cars.
authors: Marco Thorbauer, Tobais Hayden, Clemens Grassinger, Benedikt Schachner-Gröhs, Philipp Statzinger, Stefan Egger