Switzerland Ends Tax Exemption for Electric Cars
Geneva: In a significant move, Switzerland has decided to scrap the tax exemption for imports of electric cars. The growing presence of electric vehicles on Swiss roads has resulted in a decline in tax revenues. Starting from January 1, electric cars will be subject to the same four-percent import duty as traditional fuel vehicles.
Since its introduction in 1997, electric vehicles had been exempt from this tax. The exemption was initially aimed at creating incentives for the use of electric cars. However, the government now believes that the exemption is no longer necessary due to the substantial increase in the share of electric vehicles in total car imports and the convergence of prices.
Between 2018 and 2022, the annual import of electric vehicles in Switzerland rose almost sixfold, from around 8,000 to over 45,000 vehicles. Furthermore, in the first half of 2023, around 30,400 electric vehicles were imported, representing a 66-percent increase compared to the same period of the previous year. This surge in imports means that electric vehicles accounted for nearly a quarter of total imports in the first half of this year, up from 16 percent in the first half of 2022.
Consequently, the significant increase in electric vehicle imports has led to a noticeable decrease in automobile duty receipts. In 2022 alone, the tax shortfall amounted to approximately 78 million Swiss francs ($89 million), and it is expected to reach 100-150 million Swiss francs this year. If the tax exemption had continued, the cumulative tax shortfall from 2024 to 2030 was estimated to be between two and three billion francs.
In an effort to address this tax shortfall, the Swiss Federal Council has decided to subject electric vehicles to automobile duty. The government emphasizes that the industry anticipates the cost of producing electric vehicles to be on par with fossil fuel vehicle production by 2025. Therefore, it believes that a profit margin can be achieved without increasing prices for consumers or relying on state subsidies.
With these changes, Switzerland aims to adapt its tax policy to the evolving landscape of the automotive industry and ensure a fair and sustainable revenue stream. The government’s decision reflects the increasing popularity and market viability of electric vehicles, as well as the need to maintain a balanced fiscal framework.
Published On Nov 10, 2023 at 12:31 PM IST
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