Incentives and Legislation | European Alternative Fuels Observatory

The incentives and legislations section is updated for 2025, published on 18th April 2025, representing the situation as of that date. Major changes of incentives and polices are updated on a rolling basis from that date onwards.

Incentives and legislation that aim to increase uptake of alternative fuels vehicles and infrastructure.

If you know of other national or local incentives that should be included in this section, please send us an email, or use the button on the right, and let us know. We review the proposed changes and implement the updates on a short notice.

Purchase subsidies

A new socially graduated purchase grant was introduced on 1 January 2026. Private individuals can receive up to €6,000 depending on household income and vehicle price. This replaces the previous Umweltbonus which ended in 2023.

Ownership tax benefits

BEVs and fuel-cell vehicles first registered by 31 December 2025 are exempt from vehicle tax for up to 10 years, though no later than 31 December 2030. After the exemption (or after 2030), they are taxed at 50% of the standard rate, based on vehicle weight in 200 kg increments, approximately:

€5.625 per 200 kg (≤2,000 kg)
€6.01 per 200 kg (≤3,000 kg)
€6.39 per 200 kg (≤3,500 kg)

BEVs registered from 1 January 2026 will no longer be tax-exempt; they will be taxed immediately, at 50% of the standard weight-based rate.

Vehicles (conventional engines) emitting ≤ 95 g CO₂/km, registered between 12 June 2020 and 31 December 2024, receive a €30/y reduction for 5 years, but are not fully exempt.

Plug-in hybrids are not exempt; taxed using standard engine displacement and CO₂-based rules.

Severely disabled persons may be eligible for tax reductions under separate schemes, not tied to BEV status.

A coalition agreement calls for extending the exemption until 2035, but no law has been enacted yet.

Company tax benefits

Employees using fully electric company cars with a list price ≤€100,000 (increased from €95,000 in 2025) are taxed at a reduced Benefit-in-Kind (BIK) rate of 0.25% per month. BEVs above €100,000 are taxed at 0.5%. ICE vehicles are taxed at 1% per month.

These rates are valid through 2030. Companies purchasing BEVs between July 2024 and December 2028 can deduct up to 40% of the vehicle’s value in the first year, decreasing annually to 6%. Employer-provided workplace charging is tax-free. If no workplace charging is available, employees may receive €70/month tax-free for home charging. Employers may also subsidize home charger installation without triggering taxable benefit.From 1 January 2025, PHEVs must meet stricter criteria (≥80 km electric range or ≤50 g CO₂/km) to qualify for the 0.5% BIK rate. Non-compliant PHEVs lose eligibility.

Other financial benefits

No national-level non-tax financial benefits are currently in effect, but local authorities and employers may provide financial support for charging infrastructure or energy costs related to BEV usage.

AF infrastructure incentives

Germany targets one million public charging points by 2030. Key programmes include:

Master Plan Charging Infrastructure II: 68 measures supporting network expansion, digitisation, and commercial vehicle charging.
Deutschlandnetz Initiative: Ensures fast-charging availability across all regions within minutes of any location.

Funding is available for private sector investments, covering up to 40% of costs for SMEs and 20% for larger firms. Petrol stations are required to install fast chargers at 75% of locations.Dedicated measures support underserved areas and a nationwide charging network for heavy-duty vehicles, including competitive tenders for fast-charging sites.

Local incentives

The environmental bonus may also be combined with various other public funding programs. However, most of these programs are not aimed at private individuals, but at companies, municipalities or associations.

Announced Policy Changes (Effective Later in 2025 and After)

BEVs registered between 1 January 2026 and 31 December 2030 are exempt from vehicle tax for 10 years (until 31 Dec 2035 at the latest).
Special depreciation rules for company BEVs (40% in year of purchase) apply retroactively from 1 July 2025 and remain in force through 2028.
Germany will continue to expand its nationwide public charging network, including mandates for chargers at petrol stations and specific support for heavy-duty vehicle charging infrastructure.

Institutions involved in Incentives

National Platform Elektromobilität (NPE)Federal Ministry of Transport and Digital Infrastructure (BMVI)Federal Office of Economics and Export Control (BAFA)Federal Ministry for Economic Affairs and Climate Action (BMWK)Federal Ministry of FinanceKfW-BankFederal Environment Agency (Umweltbundesamt)German Energy Agency (dena)German Association of the Automotive Industry (VDA)NOW GmbH (National Organisation for Hydrogen and Fuel Cell Technology)

Interesting links

ADAC – BEV purchase incentives ADAC – Vehicle tax exemptions Wiedergrün – 2025 E-Mobility Outlook

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Incentives and Legislation timeline

2012
Introduction of Vehicle Tax Exemption
Germany introduced a 10-year exemption from vehicle tax (Kfz-Steuer) for battery electric vehicles (BEVs) and fuel cell electric vehicles (FCEVs).
Details: The exemption applied to vehicles registered by December 31, 2015, as part of the Transaction Tax Amendment Act passed on October 25, 2012. Initially, a 5-year exemption was in place, which was extended to 10 years to encourage early EV adoption
2016
Renewed Vehicle Tax Exemption and Introduction of Purchase Subsidies
- The 10-year vehicle tax exemption was renewed for EVs registered between January 1, 2016, and December 31, 2020.
- Germany introduced purchase subsidies (Umweltbonus) for EVs under the National Development Plan for Electric Mobility.
- The subsidy program, approved in April 2016 with a €1 billion budget, offered up to €5,000 for private buyers and €3,000 for corporate buyers, with incentives decreasing by €500 annually until 2020. The goal was to have 1 million EVs on German roads by 2020
2019
Reduced Benefit-in-Kind (BIK) Taxation for Electric Company Cars
- Germany introduced reduced BIK taxation for electric company cars.
- For EVs handed over to employees for private use after December 31, 2018, only half of the gross catalogue price was used as the taxation base, resulting in a taxable amount of 0.5% of the gross list price per month (compared to 1% for conventional vehicles).
- For EVs with a gross list price up to €40,000, the taxable amount was further reduced to 0.25%
2023
Purchase subsidies changed
From January 1st, 2023, the federal share of funding for battery electric vehicles and fuel cell vehicles with a net list price of up to 40,000 euros instead of 6,000 euros will then be 4,500 euros , with a net list price between 40,000 euros and up to 65,000 euros instead of 5,000 euros only 3,000 euros. Electric vehicles with a purchase price of more than 65,000 euros will continue to receive no funding.
2024
Purchase subsidies ended
Since 1st January 2024, purchase subsidies ended, as mandated by the Federal Office of Economics and Export Control (BAFA).
2024 (July 1)
Introduction of Special Depreciation Allowance
- A new tax incentive was introduced for companies purchasing EVs.
- Companies can deduct up to 40% of the value of newly purchased BEVs and other zero-emission vehicles from their tax bill in the year of purchase, decreasing to 6% over subsequent years.
- This applies to vehicles purchased between July 2024 and December 2028, with an estimated annual cost of €465 million
2026
Vehicle tax exemption Extended until 31 December 2030
BEVs registered between 1 January 2026 and 31 December 2030 are exempt from vehicle tax for 10 years (until 31 Dec 2035 at the latest).
2026 (1 January)
New Purchase Subsidy Introduced
A new socially graduated purchase grant was introduced on 1 January 2026. Private individuals can receive up to €6,000 depending on household income and vehicle price.