Electric Vehicle Incentives and Tax Exemptions

Did you know that financial incentives and potential tax exemptions are available for the purchase of electric vehicles, both for professional use and personal circumstances? This time, the focus is not solely on businesses: private buyers can benefit too.

Tax incentives have a considerable effect on household and business budgets, so choices should be guided by the opportunity to improve tax efficiency.

Unlike most tax benefits, this support is available not only when companies purchase vehicles, but also when they are bought by private individuals.

Electric vehicle incentives for private buyers and businesses

Consider Artur’s situation. He was planning to buy a new vehicle and, with help from UWU Solutions, learned about every incentive and benefit available when purchasing electric vehicles. By making an informed decision, Artur achieved significant savings.

The incentive is intended for private individuals and companies purchasing a new, exclusively electric vehicle. In summary, the following financial benefits are available:

However, it is important to bear in mind that:

• For the purchase of a 100% electric passenger light vehicle, only vehicles with a purchase price of €62,500 or less are eligible, including VAT and associated costs;
• You must retain the vehicle for a minimum period of 24 months.

Applications must be submitted by completing a form on the Environmental Fund website. Incentives are limited by the funds allocated and applications will be ranked according to the date on which the request is formally submitted. But that is not all.

ISV and IUC exemptions for electric vehicles

There are also specific points concerning exemption from ISV and IUC that may affect your decision:

• Exclusively electric cars: these are entirely exempt from ISV and IUC, provided that their registration date is after 2007.
  • Used imports from the European Union: no tax is payable;
  • Imports from outside the European Union: these are likewise not subject to ISV or IUC. However, customs duties will be payable as part of the vehicle transaction.
• Hybrid and plug-in hybrid cars:
  • IUC: they are not exempt from tax;
  • ISV on new vehicles or used imports: standard hybrids pay 60% of ISV, while plug-in hybrids pay 25% of the amount.

Practical case: “Artur and his new car”

Artur chose to purchase an exclusively electric vehicle costing €60,000. This amount includes VAT and the relevant expenses. It is also a passenger light vehicle. However, his son António raised a relevant question that is certainly worth considering: “Dad, wouldn’t it be more advantageous to buy a hybrid?”

As he was properly informed, Artur was able to answer his son straightaway based on the tax benefits we had outlined. Curious about the answer? Let us quantify the savings obtained through this purchase.

To make the process easier, UWU Solutions set out all the information relevant to Artur’s current requirements, as follows:

Artur can purchase a new, fully electric passenger light vehicle and receive €3000. In addition, he will not have to pay IUC or ISV on it.

As this shows, even for private buyers, the tax savings associated with purchasing an electric vehicle can be highly significant. Environmental concerns are undoubtedly receiving increasing recognition and, for this reason, the related tax incentives are continually renewed. Why not take advantage of them?

Article available from UWU.

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Vehicle Taxation. Every month, Razão Automóvel publishes an article from UWU Solutions on vehicle taxation. It covers news, changes, key questions and the latest developments in this area.

UWU Solutions began operating in January 2003 as an accounting services company. Over more than 15 years in business, it has recorded sustained growth, founded on the high quality of its services and customer satisfaction. This has enabled it to develop further expertise, particularly in Consultancy and Human Resources, through a Business Process Outsourcing (BPO) model.

UWU currently employs 16 members of staff across its offices in Lisbon, Caldas da Rainha, Rio Maior and Antwerp, Belgium.