Switzerland to End Tax Exemption for Electric Cars in 2024
In an effort to boost sales, many countries have offered tax benefits for electric cars. However, due to significant revenue losses, politicians have decided to end the exemption in Switzerland starting in 2024. As of January 1, 2024, buyers of electric cars in Switzerland will have to pay a tax of four percent of the import price to the government. According to Swiss authorities, the share of electric cars in new registrations was nearly a quarter (23%) in the first half of 2023, resulting in significant revenue losses. The decision to exempt electric cars from taxes was made in 2023 to make the environmentally friendly vehicles more attractive despite their higher purchase prices. However, the Swiss government now believes that this is no longer necessary as the production costs of electric cars are expected to decrease in the coming years, making them more competitive with traditional combustion engine vehicles.
A recent study by the Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) on behalf of the Federal Ministry of Digital and Transport (BMDV) even showed that the costs of an electric car over the entire usage period are already lower. The revenue from automobile taxes in Switzerland is earmarked for specific purposes, and the higher tax revenue resulting from the end of the exemption will benefit the National Road and Agglomeration Traffic Fund (NAF), which operates the transportation infrastructure.
While the decision to end the tax exemption for electric cars in Switzerland may be disappointing for some buyers, it is a necessary step to ensure that the government can continue to fund important transportation infrastructure projects. As electric cars become more affordable, it is likely that the demand for them will continue to grow, making them an increasingly important part of the transportation landscape.
