Switzerland To Terminate Tax Exemption For Imported Electric Cars

Switzerland Ends Tax Exemption for Electric Cars on Import Value, Implemented Since 1997 to Boost their Appeal.

April 6, 2023
4:35 PM

Switzerland's government plans to impose an import tax on electric cars starting next year, ending their exemption from the existing auto tax. The move by the Federal Council aims to counter a decline in income from the auto tax and strengthen public finances. Currently, the auto tax is a 4% levy on the import value of vehicles, and electric cars have been exempted since 1997 to promote their adoption. However, the government now deems the exemption unnecessary due to the significant increase in electric car numbers and narrowing price gap with combustion engine cars. Last year's estimated shortfall from the auto tax was 78 million francs (USD 85.7 million), projected to increase to 100-150 million francs this year. The tax proceeds support the maintenance of major roads and traffic-related projects.

Switzerland’s government announced on Wednesday its intention to introduce an import tax on electric cars, which have been exempt from this charge until now, starting from next year. The decision by the Federal Council aims to address a decline in income from the existing auto tax and is part of broader efforts to strengthen public finances. Currently, the auto tax is a 4% levy on the import value of vehicles, and electric cars have enjoyed an exemption since its inception in 1997, as an incentive to promote their adoption.

The government stated that the exemption for electric cars is now deemed unnecessary due to the significant increase in their numbers and the narrowing price gap with combustion engine cars. The annual import of electric cars has risen from around 8,000 to over 45,000 between 2018 and 2022, constituting nearly one-fifth of all auto imports last year.

As a result, there has been a decline in revenue from the auto tax, with the government estimating a shortfall of around 78 million francs (USD 85.7 million) last year, and projecting it to increase to between 100 and 150 million francs this year. The proceeds from the tax are directed towards a fund that supports the maintenance of major roads and other traffic-related projects.

What Are Switzerland's EV Plans?

Switzerland has announced plans to impose an import tax on electric vehicles (EVs) starting next year, ending their exemption from the existing auto tax. The move is aimed at addressing a decline in income from the auto tax and strengthening public finances. The government cites the significant increase in EV numbers and narrowing price gap with combustion engine cars as reasons for ending the exemption. The annual import of EVs has risen substantially in recent years, constituting nearly one-fifth of all auto imports in the country.

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