Slovenia is determined to follow in the footsteps of Norway, Iceland and Great Britain. Countries that clearly encourage the transition to e-mobility. This is also indicated by the latest move by the DZ upon the adoption of an amendment to the VAT Act, which allows electric vehicles used for business purposes to deduct VAT. But is this enough for a quick green transition?
- An electric car without value added tax - without VAT?!
- Electric car without value added tax
- VAT deduction for electric cars
- VAT deduction when purchasing an electric vehicle
The fact is that acceptance electric mobility strongly connected with purchase incentives electric vehicles. For example, Britain is currently the world's second largest market for Porsche Taycan, immediately after China, before USA and Germany and this is solely due to the tax deductions available to business users. It is the same in Iceland and Norwegian - government policy directly affects the adoption of e-mobility. People do not buy a "green" transition if it costs them more, but only if it saves them. And they need to save a lot. This once again confirms the fact that consumers always make decisions with their wallets.
But there must be more moves by the "government" and they must be cohesive and strongly linked to the goals. That's right Iceland the first to establish a fund to invest in infrastructure. The result is a network of EV (electric vehicle) charging points around the island that is expanding all the time. The move clearly shows how government policy is encouraging buyers and changing the culture of going green. Electric vehicles are now cheaper to buy and somehow also drive, and Iceland has also responded to problems or challenges of charging with good infrastructure and incentives in this area. What about Slovenia?!
Electric vehicles are already up to 50 percent cheaper than conventional ones for business use in Slovenia, but "almost" no one knows and uses this!
Many people do not know that electric vehicles, despite the higher purchase price for business users, were Slovenia has been an excellent financial option for the last three years. And financiers in companies that did not force the directors to switch to electric vehicle fleets are not good financiers by any means. We are not talking about a subsidy for electric vehicles, which represents only a few percent of the value of the vehicle. Rather, the fact that an electric vehicle could be considered for 40% investment relief (similar to trucks) and that a personal credit rating has been calculated usage 5x lower than the credit rating of classic cars with internal combustion. So, on the one hand, the company pays less tax on profits, and on the other hand, the gross salary of the employee who uses a green vehicle only increases by 0.3% of the purchase value and not 1.5% as with a classic internal combustion car in each monthly calculation of the credit rating for personal use. The result is that over a period of 5 years, by purchasing an electric vehicle, we save a huge amount of money and, according to our calculations, you save up to 50 percent of all financial resources. Owning an electric vehicle was already an extremely favorable financial option. (Check the contribution)
Electric cars without value added tax - the right to deduct VAT for electric passenger vehicles
Amendment to the Act on VAT - ZDDV-1 a new one is being introduced Article 66b, which asserts an exception to the limitation of the right to deduct VAT for the purchase of motor vehicles - i.e. passenger cars, motorcycles, bicycles and similar vehicles with an auxiliary engine, if these vehicles are intended for the performance of the taxpayer's activities.
Until now, input VAT deduction for passenger cars was only possible if the company used them for its main activity, such as a driving school or taxi service. According to the new amendment, it does not matter what activity the vehicle is used for, but the VAT deduction is allowed in full for all vehicles that cumulatively meet the following conditions: (1.) the motor vehicle is carbon dioxide-free and (2.) the value of the motor vehicle with including calculated VAT and other duties does not exceed 80,000 euros.
In relation to the mentioned vehicles, the taxpayer can also claim the right to deduct VAT on the purchase of fuels, lubricants, spare parts and services closely related to this.
In other words, when buying a Tesla 3 electric car (base model), which has cost up to now 48,969 euros, you will be able to claim a VAT refund in the amount of 8,830 euros - of course only as a company. So the car will cost you 40,139 euros. At the same time, you will still be able to request a subsidy from the eco fund in the amount 3,500 euros, applied for investment relief (reduction of profit), and so far had a really low credit rating for the use of this type of vehicle 0.3% of the purchase value of the vehicle.
Financially, it will Tesla Model 3 aligned with the regular Volkswagen Golf (cheaper for approx. 50%), when it comes to business users. Despite the initial higher price, the purchase of an electric vehicle worth 50,000 euros will cost the company significantly less over the 5-year ownership period. In other words, its ownership will have positive financial effects. To put it another way. A Volkswagen Golf will cost you much more as a company over 5 years of ownership than an electric car - more than 100% more expensive when purchased. Math that doesn't seem logical, but it is!
The financial effects can also be up to 70 percent savings for the company, if all factors were taken into account. Also cheaper energy and lower maintenance costs of electric cars. Higher sales values of used vehicles of certain brands.
But is this enough to switch to green, even in Slovenia?
Let's look north first. Iceland is blessed by nature. It is the land of fire and ice. When ice melts, water flows. Hydropower represents just 70 percent of electricity in Iceland. Wells drilled into the ground near volcanoes bring heat and hot water. Geothermal energy heats as much as 85 percent of houses and produces almost all the remaining electricity.
Lots of electricity. Many reasons to switch to an electric car. Many people in Iceland drive green. Thus, in 2020, the share of EVs and PHEVs (electric cars and plug-ins) represented as much as 45 percent of new car sales, which is the second highest transition rate to e-mobility in the world after Norway, which recently exceeded 90 percent.
Iceland is looking to green e-fuels (either fully synthetic or biomass) as they realize that trucks and boats are unlikely to go electric any time soon. And not only at home. Icelanders are aware that this is a possibility for the future, so they encourage an innovation environment to build new technologies.
In Norway, the money to develop domestic electricity infrastructure comes from overseas sales of its vast oil and gas reserves in the North Sea. Iceland's dirty secret is heavy industry - especially aluminum smelting. Although powered by electricity, the island's three main factories produce 1.6 million tonnes of CO2 per year, while producing 800,000 tonnes of aluminium. This is 30 percent of Iceland's total CO2 emissions. And Slovenia?
Cars powered by electricity have already been tax-favorable in Slovenia. This means that ownership by legal entities was already financially advantageous. Of course, we can immediately see here that it is a challenge that is primarily cultural. In Slovenia, green has no place in debates and seems like a decoration, an unnecessary adjective and a distant reality. In order to transition to green, it will be necessary to approach matters comprehensively. And above all, together - comprehensively. Both right and left political monkeys will have to see this as a common goal and not just a political platitude to get 2 percent of the votes of those who really care about the environment.
Changes are needed in the minds. Private houses will have to start generating their own energy from solar cells, all new buildings will have to be passive and energy self-sufficient. Factories will have to generate part of the energy themselves. Public parking lots will have to be covered with solar cells and allow vehicle charging. The infrastructure will have to be such that electric cars become a kind of mobile energy storage. All this will be necessary for a more serious transition to green mobility and a switch in the minds of Slovenians to green. In any case, just like elsewhere in the world, the transition will be clear, especially when it will really be felt in the wallet of the end consumer, who will cost much more to drive and own a conventional vehicle than an electric vehicle.
A few more facts about the future and e-mobility:
- Countries will start issuing emission coupons for vehicles with internal combustion by the end of 2024. This means that the registration of this type of vehicle will become extremely expensive - or much less favorable than today. The calculation will be based on the annual mileage.
- The value of electric cars will grow. Also due to the greatly increased demand, which will not keep up with the supply. Despite increased production resources, the value of batteries can rise and not fall, as has been the case so far. Mainly due to increased demand, which will not only be in the automotive industry. Practically every facility will need a storage battery.
- The value of solar power plants will grow, due to the increased demand, but at the same time the relative limitation of production resources.
- Many brands have announced that they will completely phase out conventional internal combustion cars by 2028. One such brand is Opel, which is expected to be an electrified brand as early as 2028. So in just over 6 years!
LEAS – Owners of electric cars in Slovenia
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