The five biggest countries in the European Union spend €42 billion a year subsidising company cars that run on fossil fuels, new data from environmental group Transport & Environment (T&E) has shown.
The study, which was undertaken by ERM on behalf of TRE, calculated the effects of the four tax benefits traditionally offered with relation to company cars – benefit-in-kind, depreciation write-offs, VAT deductions and fuel cards.
Subsidising company cars
With company cars accounting for 60% of all new car registrations in Europe, the study found that Italy subsidises company cars the most, to the tune of €16 billion, followed by Germany (€13.7 billion), France (€6.4 billion) and Poland (€6.1 billion).
‘The biggest subsidy happens via benefit-in-kind schemes that continue to incentivise petrol and diesel vehicles,’ T&E noted.
The study also noted that SUV company car drivers receive substantial subsidies, paying up to €8,900 less in taxes compared to private buyers of similar vehicles. This disparity has led to a greater prevalence of high-polluting SUVs registered by companies rather than by private households.
In the UK and Spain, however, tax advantages for petrol– and diesel-powered company cars is much lower, due to a scheme in which electric vehicle drivers pay low taxes.
“Taxpayers are paying billions every year in tax benefits so company car drivers can drive polluting petrol cars, many of which are expensive, high-end, high-polluting SUVs,” commented Stef Cornelis, director of the electric fleets programme at T&E. “This is bad climate policy and socially unfair. Governments in the UK and Belgium have introduced green tax measures and are phasing out benefits for polluting vehicles. But governments in Europe’s largest automotive markets are failing to address this absurdity. This is why the European Commission needs to take action.”
Greening Corporate Fleets Regulation
T&E is calling on the European Commission to prioritise the phasing out of fossil fuel subsidies and proposes the introduction of a Greening Corporate Fleets Regulation by 2025.
This regulation would establish binding electrification targets for large corporate fleets and leasing companies, thereby facilitating the EU’s broader transition to sustainable transportation and lower emissions, and helping achieve the goals of the upcoming EU Clean Industrial Deal.
“President von der Leyen has reconfirmed her support for the Green Deal and called her Commissioner candidates to phase out fossil fuel subsidies,” Cornelis added. “However, the huge tax benefits that wealthy petrol company car drivers still receive in Europe today conflict with that goal. Under her new leadership, the Commission should set electrification targets for large company car fleets, and finally end this tax anomaly.
“This also fits in the EU’s wider industrial agenda as these targets will boost demand for EVs and create a lead market for clean tech, here by bringing investment certainty for carmakers and the e-mobility sector overall.” Read more here.
