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Norway normalizes buying an electric car by eliminating the VAT exemption

As has been rumored since last year, the Norwegian government’s plans to change policies related to electric cars are going to become reality. The Scandinavian country has always been considered a laboratory for the rest of the electric car markets because it is far ahead of them thanks to the policies applied since 20 years ago and that it has not been paralyzed by any of the political formations that have acceded to the government. One of the reasons why Norwegians choose an electric car over a combustion car is the price. They are cheaper there because they do not pay 25% VAT that they do pay for combustion. An advantage that now the government has decided to eliminate by proposing a new VAT application plan based on price.

This week, with the proposed revision of the Norwegian government’s budget, the new plan for remove subsidies for electric vehicles. The first measure to fall is the VAT exemption for electric cars that cost more than 500,000 crowns (around 59,000 euros) which will come into force from January 1, 2023. Starting next year in this new scheme, the VAT application plan for electric vehicles will have a dynamic basis, that is, some steps are established so that the more expensive an electric car is, the higher the VAT will be. incur. At the same time, Norway will launch a subsidy scheme to replace the VAT exemption.

The new legislative plan stipulates that electric cars purchased between now and the end of the year will be exempt from VAT, regardless of the price. Today, in the Scandinavian country electric cars do not pay VATwhile the general type of a combustion model is of the 25%. They also do not pay road tax or import duties, and have a minimum 50% reduction in road tolls, ferries or regulated parking areas. Discount that can increase depending on the location. In addition, there is a quorum among all political parties to maintain the expansion of the charging infrastructure.

“At the bottom of the price range, fully electric cars will be supported, but the more expensive they are, the more VAT they will have to pay,” Finance Minister Trygve Slagsvold Vedum explained about the move. “Today, long-range electric cars can be bought in all price ranges. So we think it’s right that those who choose to buy the more expensive ones also pay some VAT to the community.”

the norwegian newspaper The Local calculates that under this new subsidy scheme, the purchase of an electric car with a price of more than 600,000 crowns (59,000 euros) will have a VAT of around 4% (about 25,000 crowns). Those costing more than one million crowns (almost 100,000) euros will have a VAT of 12.5% ​​(120,000 crowns). In any case, it will be well below the regular VAT in Norway, which is 25%.

Plans to change policies related to electric vehicles had been in the news for a week since the Norwegian Ministry of Transport considered abolishing or reducing the privileges for electric vehicles both in the tax part and in measures that facilitate their use, such as tolls in the larger cities. The government not only intends to replace combustion engines with electric ones, the objective goes further: to change the way of moving. “It’s great that people use electric cars. But it’s not good if people get in their cars and drive to busy urban areas instead of walking, cycling or using public transport,” explains Transport Minister Jon-Ivar Nygård.

The Norwegian Automobile Association NAF (Norges Automobil Forbund-NAF) has criticized the measure: “The entire electric car policy is at stake. It’s an incomprehensibly bad idea,” Christina Bu, secretary general of the association, told public broadcaster NRK.

While total registrations in Norway are down 15% this year, electric car sales are up 28.9% compared to the same period last year. In April, 74.1% of all new registrations in Norway were fully electric cars and in March the market share was 86.1%.

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