What is the composition of the car tax?

Car tax

Approximately 65.8 million motor vehicles and trailers are registered throughout Germany. This generates approximately 9.4 billion in tax revenue every year.

When was car tax introduced?

The forerunner of today's car tax was introduced in 1906. At that time, the revenue was to be used to maintain roads and build new ones.

What is the tax revenue used for?

The car tax was originally levied to finance the maintenance and construction of roads and motorways. Today, the Federal Ministry of Finance points out that the revenues from the car tax are not used solely for road maintenance, but, like all tax revenues, are used to cover all expenditures. In addition, the tax is intended to provide an incentive to switch to more environmentally friendly alternatives.

How is the tax calculated?

The relevant characteristics for calculating the tax are made up of the following vehicle data:

• CO2 standard test values
• Engine capacity
• Date of registration
• Type of drive

The date of registration is particularly relevant. If the car was registered before 1 July 2009, the amount of tax depends on the emission class and the engine capacity.

For vehicles registered after 1 July 2009, the CO₂ emissions and engine capacity are decisive. The lower the emissions, the lower the car tax.

Who is exempt from car tax?

Of course, no car tax has to be paid for ambulances, fire engines and police cars, as these cars serve to protect and keep everyone safe. No taxes have to be paid for diplomatic vehicles, disaster control vehicles and vehicles belonging to non-profit organisations either.

A basic tax exemption applies to disabled drivers who are helpless, blind or exceptionally disabled. However, this does not mean that other drivers can benefit from the tax exemption. Other drivers may only drive the car for the services of the disabled car owner.

Agricultural and forestry vehicles may be exempt from tax. To do so, some conditions must be met, such as proof of carrying out contract work for agricultural and forestry enterprises.

Tax exemption for e-cars

To promote e-cars, the federal government has decided to exempt drivers of e-cars from vehicle tax for 10 years. This applies to e-cars registered between 18 May 2011 and 31 December 2020. After the 10 years, however, e-car drivers will receive a 50 percent reduction in vehicle tax. The tax exemption is expected to remain in effect until 31 December 2025. The exemption will be granted until 31 December 2030 at the longest.

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