Federal Council decides to remove exemption from duty for e-vehicles

Bern, 08.11.2023 - From 1 January 2024, e-vehicles will be subject to automobile duty. During its meeting on 8 November 2023, the Federal Council took note of the results of the consultation on removing the exemption from duty for e-vehicles and approved an amendment to the Vehicle Duty Ordinance. The Federal Council's aim is to redress shortfalls in tax receipts and to secure the deposits flowing into the motorway and urban transportation fund. The imposition of duty on e-vehicles is part of the budget adjustment concept which the Federal Council adopted at its meeting on 25 January 2023.

Based on the Vehicle Duty Act, the Federal Council levies 4% duty on vehicles for passenger or goods transport. Revenue from automobile duty counts as restricted funds under the Federal Constitution, and is allocated to the motorway and urban transportation fund. E‑vehicles have been exempt from automobile duty since its introduction in 1997. At the time, the Federal Council's aim in introducing the exemption was, in particular, to create market incentives for the development of electromobility.

With the growth in electromobility, the situation has now changed significantly. Between 2018 and 2022, annual imports of e-vehicles saw an almost sixfold increase, from around 8,000 to over 45,000. In the first half of 2023, some 30,400 e-vehicles were imported. Compared to the figure one year earlier (just under 18,300), this corresponds to an increase of approximately 66%. The share of e-vehicles in total imports was about 23% in the first half of 2023 (previous year: approx. 16%). This increase led to an appreciable decrease in receipts from automobile duty: for 2022 as a whole, the tax shortfall is around CHF 78 million, and for the current year a shortfall of some CHF 100 million to CHF 150 million is expected. If the exemption from duty had continued, the estimated cumulative tax shortfall for 2024 to 2030 would have been CHF 2 billion to CHF 3 billion. By making e-vehicles subject to automobile duty, the Federal Council is acting to redress this shortfall.

Amendment to the Automobile Duty Ordinance

Following the removal of the exemption on 1 January 2024, e-vehicles will be subject to the normal 4% rate of duty on automobiles for passenger or goods transport. The duty is levied on the import price, rather than the final sale price. According to the industry, the ongoing reduction in production costs for e-vehicles will result in price parity between fossil fuel vehicles and e-vehicles as from 2025. It should therefore still be possible to achieve a profit margin in the future, without increasing prices for the consumer and without state subsidies.

Part of the budget adjustment concept

In the consultation on amending the Vehicle Duty Ordinance, which ran from 5 April to 12 July 2023, a clear majority of participants were in favour of the amendment. Around one third of those who took part in the consultation wanted a later implementation date.

The Federal Council takes the view that the exemption from duty as an incentive is no longer necessary, given the sharp rise in the share of e-vehicles in total car imports and the convergence of prices. Moreover, the imposition of duty on e-vehicles is part of the budget adjustment concept which the Federal Council adopted at its meeting on 25 January 2023. The future imposition of duty on e-vehicles will have a positive impact on the entire federal budget: an increase in deposits from automobile duty in the motorway and urban transportation fund will mean that the deposits in the fund from mineral oil tax can be reduced, at least temporarily. This will take up to CHF 150 million a year off the general federal budget.

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