Depreciation of Electronic Second-Hand Vehicles Could Potentially Pose Prices Risks, Says Expert
The German government has introduced a new special depreciation for electric vehicles (EVs), providing companies purchasing EVs between July 1, 2025, and December 31, 2027, with a very favorable accelerated depreciation scheme. This scheme allows companies to write off 75% of the acquisition cost in the first year, followed by 10% in the second year, and smaller percentages in subsequent years (5%, 5%, 3%, and 2% up to the sixth year) [2][3][4][5].
This incentive offers significant benefits for companies that purchase EVs. The large first-year depreciation drastically reduces taxable income right away, improving cash flow and lowering the effective cost of acquiring EVs. The increased gross list price threshold for benefit-in-kind (BIK) taxation on company electric vehicles from €70,000 to €100,000 further enhances the attractiveness of purchasing EVs as company cars [1][3][5].
However, it is important to note that this special depreciation does not apply to leasing models. Leasing companies typically deduct costs based on lease payments over time, so they do not get the special depreciation on the asset itself [2][3][4][5]. This means that companies that choose to lease EVs will not benefit from the immediate tax advantages offered by the special depreciation.
For companies considering leasing vs. purchasing, the impact is as follows:
| Aspect | Purchasing EVs | Leasing EVs | |------------------------------|-------------------------------------------------------|----------------------------------------------| | Eligibility for special depreciation | Eligible for 75% first-year accelerated depreciation on purchase price | No eligibility for asset depreciation (lease payments are deductible expenses instead) | | Tax benefit | Immediate, significant reduction in taxable profit in acquisition year | Spread out over lease term, without accelerated depreciation | | Benefit-in-Kind threshold | Raised from €70,000 to €100,000, reducing BIK tax for electric company cars purchased | BIK rules apply similarly but leasing does not leverage purchase depreciation benefits | | Cash flow impact | Improved in year 1 due to depreciation offset | Smoother expense recognition aligned with lease payments |
As a result, companies purchasing EVs benefit much more immediately from the new special depreciation than those leasing, who only deduct lease costs as operating expenses over time. This incentivizes ownership over leasing during the 2025-2027 window to maximize tax-efficient investment in EVs [2][3][4][5].
Despite the advantages of leasing not being directly affected by this incentive, CEO Frank Hägele of Deutsche Leasing views the government's initiatives to promote investments in Germany as fundamentally positive. He does not expect much impact on his own automotive leasing business from this incentive [2][3].
In summary, the new German special depreciation for electric vehicles offers a significant tax advantage for companies purchasing EVs between July 1, 2025, and December 31, 2027. While leasing models are not taken into account in this incentive, the acceptance of e-mobility in commercial fleets is continuously increasing, according to Hägele [6]. The stabilizing and improving used car prices for electric vehicles is important to avoid negative impacts on the acceptance of used electric vehicles [7]. Overall, the incentive is expected to encourage more companies to purchase EVs, potentially leading to a shift away from leasing models during the 2025-2027 period.
References:
- German government raises BIK threshold for electric company cars
- Deutsche Leasing offers financing options for electric vehicles
- Special depreciation for electric vehicles: Frequently asked questions
- German government introduces new special depreciation for electric vehicles
- Impact of special depreciation on electric vehicles
- Electrification of commercial fleets not at risk despite leasing customers being excluded from the new incentive
- Stabilizing and improving used car prices for electric vehicles
In the context of the new special depreciation for electric vehicles, companies purchasing EVs are offered a significant tax advantage, especially in the first year, with a 75% write-off of the acquisition cost, as compared to leasing models, where costs are deducted as operating expenses over time and do not qualify for the special depreciation scheme. (Finance, purchase)
The special depreciation scheme for electric vehicles, introduced by the German government, aims at encouraging more companies to opt for purchasing EVs over leasing models, potentially leading to a shift in the commercial fleet electrification trend during the 2025-2027 period. (Finance, lease)
