Norwegian government proposes freezing VAT exemption for electric vehicles priced below 500,000 kroner

The Norwegian government has proposed freezing the value-added tax (VAT) exemption for electric vehicles (EVs) priced below 500,000 kroner. Electric cars have been exempt from VAT, but since January 1, 2023, a tax has been applied to purchases above this threshold. Additionally, a new weight-based one-time registration fee for EVs has been introduced, applied to weights exceeding 500 kilograms. Christina Bu, Secretary General of the Norwegian Electric Vehicle Association, praised the proposal for encouraging progress towards a goal of 100% zero-emission new car sales by 2025.

However, she expressed dismay at the government’s decision to cut traffic insurance fees for fossil fuel vehicles, creating a disparity where insurance costs are almost 1,000 kroner lower for gasoline and diesel cars compared to EVs. Bu criticized the lack of exemption for electric vans from insurance fees, despite requests from Parliament.

As of late 2023, Norway registered 689,169 electric passenger cars, representing nearly a quarter of all passenger vehicles. Of newly registered cars in 2023, four out of five were electric, highlighting a positive trend in EV adoption.

Stian Thu, an EV owner since 2018, emphasized the importance of maintaining the VAT exemption to ensure EV purchases remain financially appealing. He underlined that the benefits traditionally associated with EV ownership are critical for fueling the transition to electric vehicles.

The government has also allocated 1.2 billion kroner in the budget to promote electric heavy-duty vehicles, focusing on charging infrastructure and support for purchases. Norway aims for all new passenger cars and light vans to be zero-emission by 2025, with gradual targets for heavier vehicles and public transport through 2030.