Hungarian business news portal Portfolio reports on an EV analysis by Transport & Environment (T&E), a European organization promoting clean energy and sustainable transport. The group looked at vehicle taxation systems in 31 countries across the continent and found that company cars account for around 60 percent of new car sales in the EU, meaning this segment is the most important channel for increasing demand for electric vehicles.
The financial incentive for buying electric company cars in Germany, the continent’s largest car market, is one of the lowest in all of Europe. This is a problem because company car sales in Germany account for more than two-thirds of the local new car market and nearly a third of company car sales in the EU.
German corporate car buyers can save an average of only €8,718 in taxes over four years by choosing an electric model (compact SUV) instead of a petrol/diesel one, while in France — the EU’s second-largest market — they can save almost three times that amount, €24,395.
The German value also lags behind Hungarian data, where there is a tax difference of €11,825 in favor of purchasing electricity,
In other words, according to the analysis (calculated at the current exchange rate of 404 forints to the euro at the time of writing this article), over four years, nearly HUF 4.8 million less tax is paid for a company electric compact SUV compared to a gasoline one. This places Hungary towards the end of the EU middle ground in this respect, and among the former Eastern Bloc countries, only Slovenia (€27,001) and the Czech Republic (€13,952) are ahead of it.
Although progressive tax systems exist in Europe that support e-mobility and could lead to higher electrification rates, governments in the largest markets are essentially doing the opposite, instead of promoting electric vehicles through smart taxation and increasing deductions for polluting SUVs.
The analysis highlights Germany as the “European tax haven” for conventionally powered heavy-duty SUVs, as German companies purchasing such vehicles can receive more benefits over four years than they have to pay in taxes on the SUV.
In Germany, which ranks last on the list at number 31, the financial benefits associated with purchasing a company car can total €7,072 over four years, according to the analysis, but in Estonia (€3,033) and Hungary (€118), the net balance of taxes payable is negative from the buyer’s perspective in the large (E) conventionally-powered SUV category.
Denmark tops the list, where the four-year net tax burden can total €208,690, but the deduction in Ireland (€182,450), France (€142,912) and Norway (€129,450) is also high enough to deter corporate customers from buying large petrol SUVs.
In the smaller, compact size category, deductions are generally lower in individual countries than in the case of heavy SUVs, but remarkably, there are countries where the situation is exactly the opposite. For example, in Germany, the balance is positive in this category as well, meaning that companies purchasing compact internal combustion engine-powered SUVs can receive a net tax benefit of €2,753 over four years, while in Hungary there is a payment obligation of €57.
Financial incentives in these countries are driving companies planning to buy conventionally powered SUVs towards larger, more polluting, more resource-intensive models.
The T&E analysis also examined the tax obligations for private car buyers, based on a typical ownership period of 10 years, which is longer than the four-year period specified for company cars.
When comparing taxes on privately owned vehicles, a similar trend can be detected. The list is also led by the Northern European countries, which are at the forefront of many other environmental awareness indicators. For example, in the absolute first place, Denmark, citizens who own a compact SUV equipped with an internal combustion engine must pay an average of €45,213 in taxes over a 10-year period. In the large countries, the deductions are much smaller, for example in Germany it is only €1,535, which is not much higher than the Hungarian value of €1,208, which puts our country at the top of the last third of the field, which is typically made up of Eastern European states.
By choosing the electric model, retail buyers can also exempt themselves from significant tax obligations, although there is significant variation between European countries in this respect.
In most countries, the differences between the deductions for electric and conventionally powered compact city SUVs reach the order of millions of forints over 10 years, converted from euros, with the top countries Denmark and Norway well above HUF 10 million (€44,086 and €27,276, respectively). The large countries are typically in the middle ground, but the 23rd and 27th positions of Germany (€1,535) and the United Kingdom (€622) can be classified as the last ones, along with Hungary’s 24th position (€1,208).
The European trend of large urban SUVs is driven by corporate car purchases: Based on sales figures for 2024, 71 percent of the nearly three-quarters of a million large SUVs registered in the EU were in corporate fleets. The trend is even more pronounced for heavier SUVs (EG segments), which have a share of the company car market that is three times higher than that of private car purchases.
The main reason for this is the tax policy, the effects of which are also reflected in the sales figures: While Germany and Poland account for 30 percent and 6 percent of new company cars registered in the EU, respectively, the two countries have a much larger share of 40 percent and 16 percent of EU sales of petrol/diesel heavy (EG segment) urban SUVs. In contrast, in France, which has a tax system that supports e-mobility, although 15 percent of new company cars are registered in the EU, only 0.3 percent of large petrol/diesel SUVs are sold on the French company car market.
“Reforming the car tax system could increase demand for electric vehicles, generate additional revenues, and make the green transition more socially just,” T&E points out
By restructuring tax systems at the member state level, the purchase of electric vehicles manufactured in the EU could also be supported, and at the EU level, the European Commission should set binding targets for electric vehicles for large companies, the organization’s policy recommendations state.
The spread of large urban SUVs is a worrying trend in several respects, as these vehicles have larger engines and mass compared to conventional passenger cars, and therefore have a larger environmental footprint and emit more carbon dioxide and other pollutants that contribute to climate change than average cars. Due to their size, they are also more often involved in fatal traffic accidents.
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