Excise duty on electric cars has, until recently, been a disincentive to buy these rather expensive vehicles. However, the law is changing and evolving all the time, so that buying an electric car or hybrid no longer has to come with so many additional costs. In the following article, you will find out how much excise duty is on electric cars, what excise duty actually is on these types of vehicles, whether it is worth importing 'electrics' from the USA and what about VAT. Let's find out!
Excise duty on electric cars - are electrics subject to excise duty?
When considering excise duty on electric cars, it is worth starting with a definition of the term. What exactly is excise duty? It is a form of tax levied on various goods (such as fuel, alcohol or cigarettes). The purpose of excise duty is to reduce demand for the products in question and thereby raise funds for the state budget. Until recently, all cars imported from abroad and new cars in the country were subject to excise duty, including electric and hybrid cars. Currently, electric vehicles, plug-in hybrids (PHEVs) and hydrogen-powered cars are exempt from excise duty. For models such as hybrids without a charging option (HEV) and hybrids with a high-capacity engine, excise duty has also been reduced - but has not disappeared completely. It is therefore worth noting that the zero excise duty on plug-in hybrids (PHEVs) only applies to vehicles with internal combustion engines up to 2,000 cc.
Amount of VAT on electric cars?
VAT is a tax on goods and services. It is levied at the various stages of a product's manufacture. How much is VAT for electric cars? The amount is, of course, dependent on the cost of the vehicle, but what is crucial for consumers is that VAT is deductible at settlement. Current legislation for both electric and internal combustion cars makes it clear that 100% VAT can be deducted when the car is used for business. It is also possible to deduct 50% of VAT when the vehicle is used as a passenger car. In order to obtain a full VAT exemption for a car, appropriate evidence must be provided to show that the car is only used for purposes arising from the business. Efforts are underway to allow 100% VAT deduction for electric cars used for both business and private purposes. However, it is not clear if and when these are implemented.
Excise duty on electric cars imported from the US
There are plenty of companies on the market that act as intermediaries for importing cars from abroad. We are not only talking about Europe, but also about other continents. Importing cars from the United States is quite popular. Why? When buying a vehicle from the USA, excise duty on electric cars is abolished. Of course, due to regulatory changes that allow cars with engines up to 2000 cc to be purchased without excise duty, fewer people are now pulling cars all the way from across the Atlantic. However, it is still a convenient option that saves (depending on engine capacity) 3.1% or 18.6% of the value of an electric car. Nevertheless, VAT (23%) and duty (10%) when importing vehicles from the USA still apply. This is because the new regulations only apply to excise duties.
Who can be exempt from paying excise duty on a car?
From 1 July 2021, revised excise duty rules for passenger cars come into force. This is to prevent drivers converting cars (e.g. vans to cars) just to avoid paying excise duty. To reiterate: electric cars without excise duty are electric cars, plug-in hybrids with internal combustion engines of less than 2000 cm³ and hydrogen-powered cars. In order to benefit from the exemption from excise duty, an application for exemption of the car from this tax must be submitted via the Tax and Customs Electronic Services Platform.
Excise duty on electric cars and changes to the law introduced in 2021
Thanks to the changes to the law introduced in 2021, people who buy electric cars or hybrids will benefit. This is because excise duty is not applicable in such a situation. As the current excise law reads: "A passenger car which is an electric vehicle within the meaning of Article 2(12) of the Act of 11 January 2018 on Electromobility and Alternative Fuels and a hydrogen-powered vehicle within the meaning of Article 2(15) of that Act shall be exempt from excise duty." The new excise duty on electric cars applies upon the then presentation of an appropriate application that certifies that the car can be exempted from the charge.
Why were these changes made?
Customs and excise duties on electric cars have been factors that have deterred many people from buying environmentally friendly vehicles. Changes to the excise law and the possibility of subsidies aim to increase the number of electric vehicle purchases. In the interests of air quality and environmental protection, the 'My Electric' programme has been organised. Under the programme, both individuals and businesses can count on subsidies for the purchase of an electric car in Poland. Support for electromobility through financial assistance also includes the leasing of electric cars. If you want to buy your own electric vehicle, the prices of such models start with discounts from around 50,000 PLN.
What are the benefits of using such cars and is it worth taking advantage of the abolished excise duty? The most important advantage of electric vehicles is, of course, their environmental friendliness. In addition, they also have many other advantages for users. Among other things, they are appreciated for their low noise level and high efficiency. A quiet vehicle means comfort and convenience on a daily basis. In addition, they break down much less frequently than internal combustion engine cars, making operation much less troublesome. This is due to the design of these cars, which is less complex than that of traditional internal combustion engine vehicles: the possibility of numerous breakdowns is thus avoided. This saves costs especially with long-term use - which is why hybrids and 'electrics' have become popular with taxi drivers all over the world. Although you still have to reckon with a small number of charging stations, it is worth taking advantage of the subsidies and lack of excise duty for electric cars and hybrids. The introduction of 'electrics' into everyday transport by more people will have a significant impact on the quality of the environment in which we all live, after all.
After reading this article, you already know what excise duty on electric and hybrid cars is currently in force in Poland and what the rates are for each type of car. You have learnt the definition of VAT and excise duty and are aware of the benefits of buying an electric vehicle. Many Poles have already taken advantage of their subsidies and purchased or leased their new electric cars. Perhaps now is the time for you to make your move?
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