The Federal Council has made a decision to remove the exemption from duty for electric vehicles effective from January 1, 2024.
During its meeting on November 8, 2023, the Federal Council approved an amendment to the Vehicle Duty Ordinance, taking into account the results of the consultation on this matter.
The primary goal of this decision is to address shortfalls in tax revenue and ensure the funds allocated to the motorway and urban transportation fund.
The imposition of duty on e-vehicles is part of the budget adjustment concept introduced by the Federal Council on January 25, 2023.
Based on the Vehicle Duty Act, a 4% duty on vehicles for passenger or goods transport will be levied.
Revenues generated from automobile duty are designated as restricted funds under the Federal Constitution and are channeled into the motorway and urban transportation fund.
The exemption from automobile duty for e-vehicles has been in place since 1997, with the aim of promoting electromobility through market incentives.
However, with the significant growth in the adoption of e-vehicles, the situation has changed.
Between 2018 and 2022, annual imports of e-vehicles increased nearly sixfold, from 8,000 to over 45,000.
In the first half of 2023, approximately 30,400 e-vehicles were imported, reflecting a 66% increase compared to the same period the previous year.
The share of e-vehicles in total imports reached approximately 23% in the first half of 2023, compared to around 16% in the previous year.
This growth in e-vehicle adoption has led to a notable reduction in receipts from automobile duty, resulting in a tax revenue shortfall of approximately CHF 78 million for the year 2022.
For the current year, a shortfall of CHF 100 million to CHF 150 million is expected.
Had the exemption from duty continued, the estimated cumulative tax revenue shortfall for the period from 2024 to 2030 would have ranged between CHF 2 billion and CHF 3 billion.
Therefore, the decision to subject e-vehicles to automobile duty is intended to address this shortfall.
Following the removal of the exemption on January 1, 2024, e-vehicles will be subject to the standard 4% duty rate applied to automobiles for passenger or goods transport.
This duty is calculated based on the import price rather than the final sale price.
The Federal Council believes that the removal of the exemption from duty is now appropriate, given the substantial increase in the market share of e-vehicles and the expected price parity between e-vehicles and fossil fuel vehicles by 2025, as production costs continue to decrease.
This move is expected to have a positive impact on the federal budget by increasing deposits in the motorway and urban transportation fund, allowing for a reduction in deposits from mineral oil tax to the general federal budget, saving up to CHF 150 million annually.
During the consultation on amending the Vehicle Duty Ordinance, which took place from April 5 to July 12, 2023, a majority of participants expressed their support for the proposed amendment.
Some stakeholders suggested a later implementation date, but the Federal Council’s decision is based on the evolving landscape of e-vehicle adoption and budgetary considerations.