Electric cars will be exempt from VAT for another three years in Norway after the EFTA Surveillance Authority (ESA) has today approved the period of state aid including other tax exemptions once more in Brussels.
The European Free Trade Association Surveillance Authority (ESA) that watches over trade within the European Union has permitted the Norwegian government to extend a series of temporary tax exemptions for zero-emission vehicles, including value-added tax (VAT).
Among the EV subsidies and privileges Norway grants to zero-emission vehicles is the zero-rated VAT that will stay for another further three years. For hydrogen cars, this grace period will be 6 years even.
Additionally, ESA approved other tax breaks for a period of six years, including an exemption from annual vehicle tax and registration tax.
Christina Bu, secretary general of Norway’s EV association called the measures “absolutely crucial” for Norway’s switch to electric cars. “Without further tax exemption, we’d probably not be able to reach the 2025 target of selling zero-emission cars only,” she added.
The Authority has decided that the measures are in line with the state aid rules of the European Union’s EEA Agreement, since they aim to achieve an objective of common interest: the reduction of greenhouse gas emissions.
However, the authorities in Brussels have asked the Norwegian Government to review the VAT breaks after two years, to see whether they are still relevant given the falling costs of EV technology.
The zero-rating measures will cut Norway’s tax revenues by approx. NOK3.2bn (324m euros).
– ADVERTISEMENT –