Denmark delays tax hikes on EVs in new budget

Denmark will postpone a planned tax increase on electric cars as part of a budget deal agreed by the government and most opposition parties, helping the Nordic nation to boost sales of such vehicles.

The budget will allocate 200 million kroner ($30 million) over 2024 and 2025 to keep in place the current tax-free allowance on electric cars, according to a statement on Monday.

It thus delays a gradual phase-out of tax discounts for zero-emission vehicles through 2030.

Tax benefits have helped support rising sales of electric cars in Denmark, which is one of the European Union’s frontrunners in that transition while still clearly trailing neighboring Norway.

A third of new passenger cars registered in the country were full-electric in the past year, up from 19 percent in the previous 12-month period, according to data from Statistics Denmark.

The Danish Car Importers Association estimates this share to exceed 50 percent in 2024 in light of the new budget, it said in a statement. There are now more than 177,000 electric vehicles in Denmark, corresponding to 6.3 percent of all passenger cars.

The fiscal plan for 2024, which was agreed by 11 of the 12 parties in parliament and also includes additional spending on welfare and green investments, will have a neutral impact on the economy, the government said.