Mobility Blog

Passing of the Tax Reform Act 2019/20 – changes to benefits in kind, NoVA and insurance tax based on engine size

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Passing of the Tax Reform Act 2019/20 – changes to benefits in kind, NoVA and insurance tax based on engine size

Revision of the benefits in kind

On account of the changeover to the more realistic WLTP method of measurement, the CO2 emission figures will be much higher than before as of 2020. In order to prevent any added tax burden on employees, the limits for CO2 emission have been adjusted as follows for the classification of the benefits in kind:

Year of first registration                    Maximum CO2 emission value

2020                                                     141 grams per kilometer
2021                                                     138 grams per kilometer
2022                                                     135 grams per kilometer
2023                                                     132 grams per kilometer
2024                                                     129 grams per kilometer
from 2025                                             126 grams per kilometer

The CO2 emissions limit in the calendar year of the first registration is decisive when determining the benefits in kind.

The CO2 emission of 141 grams per kilometre applies in the calendar year 2020 for motor vehicles first registered after 31 March 2020 and will be reduced by 3 grams every year up until the calendar year 2025.

The following thus applies: The CO2 limit for newly registered vehicles with the cut-off date 01 April 2020 is 141 grams per kilometre. Consequently, vehicles with a first registration from 01.04.2020 and a CO2 emission from 142g/km will be taxed at 2% of the acquisition costs (maximum EUR 960 per month). Vehicles with max. CO2 values up to 141g/km will be rated as 1.5% benefits in kind or a max. of EUR 720 a month.

The former regulation remains applicable for vehicles registered for the first time before 31 March 2020. This means: The limit of 121 grams of CO2 per kilometre applies for vehicles registered before the end of 2019, for vehicles registered between 1 January 2020 and 31 March 2020, the limit drops to 118 grams of CO2 per kilometre (according to the old measurement method).

These changes do not apply for old vehicles already on the roads.

NoVA & insurance tax based on engine size

In future, the equation (CO2 in g/km – 115) / 5 will be used to calculate the tax rate as a percentage for the NoVA, whereby the maximum tax rate is 32% and EUR 350 must be deducted as a fixed sum (so-called NoVA bonus). As of 1 January 2021, the value of 115g/km will be reduced by 3 grams every year.

Purely electric vehicles remain exempted from the NoVA. 

IMPORTANT: The new NoVA regulation is mandatory for vehicles ordered after 1 December 2019 and delivered after 1 January 2020.

The insurance tax based on engine size will change on 1 October 2020 and in future will be calculated using the equation (kW-65) * 0.72 + (CO2 - 115) * 0.72. The minimum monthly tax rate has been set at EUR 7.20. The previous surcharges for monthly, quarterly and semi-annul payments will no longer apply in future for vehicles registered for the first time after 1 October 2020. As of 2021, the CO2 value will drop annually by 3 g/km and the engine power by 1 kW.  

Purely electric vehicles remain exempted from the insurance tax based on engine size.