After Over 25 Years, Switzerland Will No Longer Give Electric Cars Tax Breaks. Here's Why
On Nov. 8, the Swiss Federal Council announced that it would no longer be issuing an exception for its import duty on electric vehicles starting January 1, 2024.
Since its introduction in 1997, electric vehicles have been exempted from the 4% import duty on vehicles for passenger or goods transport weighing no more than 1600 kg under the Automobile Tax Ordinance (AStV).
In its statement, the Swiss Federal Council claims that between 2018 and 2022, yearly imports of EVs saw an increase from around 8,000 to over 45,000. Citing a 78 million Swiss francs ($89 million) tax shortfall in 2022, the Swiss Federal Council expects the tax shortfall to reach up to 150 million Swiss francs ($169 million) this year. According to its press release, the duty will be levied on the electric vehicle's import price, not its final sale price.
At the time the 1997 exemption was announced, the Swiss government was looking for ways to encourage electromobility for its citizens. Following the high EV adoption rates in recent times, the Swiss Federal Council shares that "the situation has now changed significantly."
Why Switzerland stopped its EV tax break
In the first half of 2023 alone, JustAuto reported that around 30,400 e-vehicles were imported into Switzerland, which is already 66% higher than the preceding year.
Additionally, the Swiss government is looking to manage its tax losses in an effort to secure funding for its high and urban transport fund. In doing so, it cites a temporary reduction from its mineral oil tax.
If the tax exemption continued, the Swiss Federal Council estimated a windfall between two billion ($2.26 billion) to three billion Swiss francs ($3.94 billion) from 2024 to 2030.
However, KPMG shares that automobiles will no longer be subjected to any customs duty (tariff number category 87) with the abolishment of Swiss industrial tariffs effective on the same date, which cover all goods except agricultural and fishery products.
Lastly, it cites how the move is in alignment with its budget adjustment concept, which the Federal Council adopted earlier this year.