2017/0520/DK
EC/EFTA
DK Denmark
  • T00T - TRANSPORT
2018-01-26
2017-11-17

The draft concerns vehicles, including leasing vehicles

Draft Act amending the Registration Tax Act and the Fuel Consumption Tax Act (amendment of the registration tax, amendment of allowances for safety equipment, raising of thresholds and the energy efficiency surcharge, tightening of rules on the leasing, etc. of vehicles, raising of the repair limit and the raising and increased differentiation of fuel consumption tax, etc.)

The draft act follows the agreement on changes related to car taxes, reached by the government (Venstre, the Liberal Alliance and the Conservative People’s Party) on 21 September 2017.

The proposed amendments aim to lower the very high registration tax so that it is cheaper for Danes to buy environmentally friendly and safe family cars. It is therefore proposed to lower the registration tax rate on the cheapest cars to 85 %. At the same time, the threshold for said rate is raised to DKK 185 000 (2017 level). A reduced registration tax for motorcycles and camping cars is also proposed.

It is also proposed that the current allowance for safety equipment be amended so that allowances no longer be granted for ABS and ESC, which are nowadays mandatory systems. Instead, allowances are increased for seatbelt reminders and a five-star safety rating on the basis of Euro NCAP, which actively encourage the selection of cars with good safety features.

It is proposed that the limits for good or poor fuel economy be raised for petrol and diesel cars and that the tax surcharge be raised from DKK 1 000 to DKK 6 000. The aim is to continue to provide a significant incentive to choose more energy-efficient and therefore more environmentally friendly cars. It is also proposed that vintage cars be exempt from the proposed amendments related to energy efficiency.

It is proposed that the range for the green ownership tax be expanded and that the tax for passenger cars also be raised. The amendments aim to ensure that the green ownership tax is up-to-date and remains an incentive to choose more energy efficient cars. In addition to this, it is proposed that the raised fuel consumption tax not apply to light goods vehicles, thus ensuring that the average total tax burden for said vehicles does not increase as a result of the proposed changes.

It is proposed that the repair limit be raised gradually, from the current 65 % to 70 % in 2019 and 75 % from 2020 onwards. This is considered to favour body shops as well as spare-part manufacturers and distributors, etc. as more cars will be repaired instead of being scrapped.

Finally, the draft act strengthens a number of conditions regarding leasing vehicles, etc. The aim of this is to address the fact that, in practice, leasing cars can in some cases drive on Danish roads for a substantial period with very little, or no tax at all, having been paid. With this in mind, it is proposed that a system of standard forms be introduced. This system will replace the current system of prior approval of contracts, which is an administrative burden on businesses and the Danish Customs and Tax Administration (SKAT).

The proposed amendments concerning the reduction of the registration tax, modernisation and raising of the ownership tax as well as the amendments to conditions for leasing vehicles, etc. are estimated with considerable uncertainty to result in an overall loss in revenue, after returns and behaviour, of DKK 0.6 billion in 2018, falling to DKK 0.2 billion in 2025.

It is also estimated quite tentatively that the gradual rise in the repair limit from 2019 will result in a loss in revenue, after returns and behaviour, of approximately DKK 50 million in 2019, increasing to approximately DKK 100 million from 2020. Reducing the registration tax for camping cars is estimated to result in an annual loss in revenue, after returns and behaviour, of approximately DKK 10 million from 2018.

In order to minimise the negative economic and administrative impacts on businesses and SKAT, the draft act seeks to deviate from the common commencement dates by proposing that the act enter into force on the day after being published in the Danish Official Journal.