Norway to keep tax breaks for electric cars a little longer

The government’s budget proposal from October included plans to introduce a value-added tax (VAT) on the purchase price of electric cars exceeding 300,000 kroner from 1 January 2026 – this measure remains in place. Currently, electric cars are exempt from VAT on purchases up to a price of 500,000 kroner (approximately 42,600 euros). Given that Norway’s standard VAT rate is 25 per cent, this exemption makes EVs in this price range significantly more attractive. With the future threshold set at 300,000 NOK (around 25,500 euros), the price limit is reduced substantially, noticeably restricting the range of vehicles that qualify to smaller and more affordable battery-electric models.

Nevertheless, the proposal to completely abolish the VAT exemption for electric cars in 2027 was overturned. The agreement now reached stipulates that the upper limit will be lowered to 150,000 kroner (currently around 12,800 euros) in 2027, with the VAT exemption fully phased out only in 2028.

This price threshold, however, represents a sharp reduction: in 2026, with the limit at 300,000 NOK, a significant proportion of Norwegians will still benefit if they wish to purchase a more affordable electric car. By 2027, with the threshold reduced to just 150,000 NOK, even upcoming small electric cars priced around 20,000 to 25,000 euros (just below the 300,000 kroner mark) will no longer qualify for the VAT exemption. At 150,000 NOK, the range of eligible models will be severely limited, and the measure is likely to be scarcely utilised in practice.

Nevertheless, the Norwegian Electric Car Association (Norsk Elbilforening) is happy with the budget compromise. “We are relieved and happy. It is crucial for the electric car initiative that VAT is introduced more gradually than originally planned by the government,” says Elbil Secretary-General Christina Bu. “This will help reduce emissions further. We would like to thank all budget partners, and particularly the SV, for prioritising this goal in the final rounds.”

The SV is the “Sosialistisk Venstreparti” (Socialist Left Party). “We have worked to ensure that newly sold cars remain emission-free. In the final hours of negotiations, we agreed to phase out the VAT exemption for electric cars gradually, rather than overnight as the government proposed,” says SV leader Kirsti Bergstø. “It is essential that electric cars remain affordable so that people with average incomes can still buy a car. The transition must be affordable for everyone. These changes will also impact the used car market, where many of us purchase vehicles.”

The reduction of tax privileges for electric cars, given their over 97 per cent share of new registrations in November, comes as no surprise. In the past, however, it has been shown in several countries that overly abrupt government measures can significantly disrupt an otherwise stable demand trend. In Norway, too, the previous uncertainty surrounding the VAT exemption from the turn of the year was already reflected in sales figures: in November 2025, 19,427 electric cars were registered – almost double the number from the previous year. While discount campaigns and improved availability of affordable vehicles also contributed, the Norwegian Road Information Authority (OFV) attributed the registration peak primarily to the impending tax changes.

Another effect of the nearly 20,000 new electric cars registered in November was that electric cars surpassed diesel cars in Norway’s vehicle fleet: by the end of November, there were 918,603 diesel cars and 914,588 electric cars registered. This shift occurred because only 140 new diesel cars were registered in November.

elbil.no (taxes), elbil.no (diesel; both in Norwegian)

This article was first published by Sebastian Schaal for electrive’s German edition.