The Dutch government has communicated its plans for the mobility sector through the 2025 Tax Plan. The plan focuses on ensuring stable long-term revenue from automotive taxes, maintaining the affordability of car mobility, and preserving accessibility within the Netherlands. It also proposes changes to automotive taxes, definitions, and subsidies as part of a comprehensive reform of the country’s automotive tax system, for which a detailed plan is expected in the first quarter of 2025. Below is a summary of the proposed changes and their implications for both electric and traditional vehicles.

This article was written by Cem Adiyaman ([email protected]) and Hendrik Bastiaans ([email protected]) both are part of the International Service Practice. Cem is part of the Business Consulting Team with a focus on automotive. Hendrik is part of the International Tax Team with a focus on Green Taxes and Incentives.

Motor Vehicle Tax on Zero-Emission Passenger Cars

At present, owners of zero-emission vehicles in the Netherlands are exempt from Motor Vehicle Tax. However, beginning 1 January 2025, a 25% discount will be implemented for zero-emission cars, effective until 2029. The government had previously planned to end the 25% discount for electric cars by 2026, but the updated 2025 Tax Plan introduces an extended 25% discount from 2026 to 2029, preventing stagnation in the growth of zero-emission cars. From 2030, no further Motor Vehicle Tax benefits or weight corrections will be applied for battery electric vehicles. Consequently, from 2030, zero-emission cars will incur a higher Motor Vehicle Tax compared to gasoline cars, due to their generally greater weight.

For plug-in hybrid electric vehicles, the 2025 Tax Plan will remove the 50% Motor Vehicle Tax discount completely by 1 January 2026, making plug-in hybrid electric vehicles fully liable for Motor Vehicle Tax payments. 

The incremental introduction of Motor Vehicle Tax for zero-emission cars and the removal of benefits for plug-in hybrid electric vehicles reflect the government’s strategy to phase out tax incentives for these vehicles as their market share increases.

Changes to Private Motor Vehicle and Motorcycle Tax (BPM) on the purchase of Zero-Emission and Plug-In Hybrid Passenger Cars

The BPM is levied on the registration of new cars based on CO2 emissions. For electric cars, the BPM exemption will be lifted in 2025, and these vehicles will now be subject to a base BPM rate upon registration. Prior to this, zero-emission cars were entirely exempt from BPM, and the new base rate is intended to reflect the growing role of electric cars in the market.

For plug-in hybrid electric vehicles, the 2025 Tax Plan proposes the abolition of the current specific BPM rate table. This change reflects updated European regulations that align CO2 emission measurements more closely with real-world driving conditions, leading to a significant increase in BPM rates for plug-in hybrid electric vehicles starting in 2025. From 2025, plug-in hybrid electric vehicles will be taxed similarly to regular fuel vehicles based on CO2 emissions, with higher rates due to the re-evaluation of their actual emissions under new testing procedures.

Simplification Effort in Automotive Tax Definitions

A major simplification proposed in the 2025 Tax Plan involves aligning vehicle classifications for tax purposes with the definitions used in the Netherlands Vehicle Authority system. This move aims to eliminate discrepancies between fiscal vehicle definitions and the Netherlands Vehicle Authority system, streamlining tax administration and reducing confusion among businesses and consumers. This alignment is expected to lower the administrative burden and simplify tax procedures, particularly for the Private Motor Vehicle and Motorcycle Tax (BPM) and Motor Vehicle Tax.

Abolition of Purchase Tax Exemption on Commercial Vehicles

Following up on proposals from the 2023 Tax Plan, the BPM exemption for commercial vans owned by entrepreneurs will be eliminated starting 1 January 2025. From that date, the basis for BPM on commercial vans will shift to CO2 emissions. A flat rate of 330 grams per kilometer will be applied to commercial vans for which no CO2 emissions are available. 

Phase-Out of Wage Tax Benefit for electrical cars

Under the current system, employees using zero-emission cars for private purposes enjoy a reduced wage tax addition (bijtelling). However, this benefit is being phased out gradually. In 2024, the bijtelling rate for electrical cars is 16% on the list price up to €30,000, with any amount exceeding this subject to the standard 22% rate. Furthermore, there is still also a threshold with an absolute maximum of €1,500 regarding the provided 6% rate discount that reduced the rate from 22% to 16%. 
In 2025, the rate will increase to 17%, and by 2026, the rate for all cars, including electrical cars, will be unified at 22%. Interestingly, for hydrogen-powered and solar-powered cars, the reduced wage tax addition will continue to apply to the entire list price without a threshold throughout 2025. 

Discontinuation of Key Subsidy Schemes

Two important subsidy schemes, SEPP (Private Electric Passenger Car Subsidy Scheme) and SEBA (Zero-Emission Company Car Subsidy Scheme), have played a significant role in promoting the adoption of electric vehicles in the Netherlands. However, the 2025 Tax Plan confirms that these subsidies will be discontinued. In 2024, private individuals purchasing or leasing a new electric vehicle could receive a subsidy of €2,950, while used electric cars were eligible for a €2,000 subsidy. These subsidies were instrumental in fostering the growth of electric vehicle ownership, but as of 2025, they will no longer be available, reflecting the government's strategy to phase out direct financial incentives. 

Summary of key changes for Electric Vehicles in 2025

Here is a brief overview of the most significant changes for electric vehicles in 2025:

  1. Motor Vehicle Tax for electric cars will be 25% of the full MRB rate in 2025, gradually increasing to 100% by 2031. 
  2. The BPM exemption for electric cars will expire in 2025, with a base rate applied upon registration.     
  3. BPM rates for plug-in hybrid electric vehicles will increase significantly due to new CO2 emission measurement methods, aligning with those of conventional fuel cars. 
  4. The SEPP subsidy for new and used electric vehicles will be discontinued. 
  5. The reduced ‘bijtelling’ for electric vehicles will increase from 16% to 17% in 2025, and the benefit will be fully phased out by 2026.

These changes mark the government’s shift towards a more standardized tax treatment for electric vehicles as they become more commonplace while ensuring that the mobility sector continues to contribute to the national budget without stalling the transition to zero-emission mobility.

Forward-thinking 

Considering the current changes in the legislation regarding Tax & Sustainability in the Dutch automotive sector it will be necessary to think about long-term strategy for your company and employees. At this stage, the Dutch government is gathering information on how sustainably employees’ transportation activities are organized. If your organization has 100 or more employees, you are required to report on business travel and commuting by your employees starting from July 1, 2024.  

You must submit the requested data for 2024 by June 30, 2025. Reports will include trips that start or end in the Netherlands, with distinctions made between:

  • Business travel and commuting
  • Mode of transportation
  • Type of fuel used

Furthermore, the Corporate Sustainability Reporting Directive (CSRD) will require according to their latest reporting standards (ESRS) to also report on scope 3 emissions and to disclose milestones for reducing greenhouse gas emissions in subsequent target years.  This will provide stakeholders such as banks and investors more insight on how to rate the ESG performance of companies. These sustainability reports are mandatory and will require a sign-off from an auditor, therefore it will be easier to compare the performance of individual companies with developed performance standards by stakeholders. 

Now the Dutch government decided to amend the taxes and incentives for electric vehicles it will be necessary to take these developments into account when planning on the net zero goals for you companies. The increase of taxes in the Dutch automotive sector will require to reconfigure company budgets planned to be utilized for the company's sustainability goals.

RSM is thought leader in the field of tax and sustainability consulting. We offer frequent insights through training and sharing of thought leadership that is based on a detailed knowledge of European Green Taxes, ESG regulation, and practical applications in working with our customers. If you want to know more, please reach out to one of our consultants.