Global Daily Tax News, Norway Announces Vehicle Tax Changes In Revised Budget, (May 20, 2024)

The Norwegian Government has announced proposals for a series of changes to the value-added tax rules that apply to vehicles, as well as vehicle tax cuts.

In the revised Budget for 2024, the Government has proposed revisions to the value-added tax rules that apply to the purchase of vehicles for leasing, car rental, and taxi businesses.

Presently, these businesses can deduct the value-added tax on the purchase of passenger vehicles. If the vehicle is resold within four years, however, the deduction must be returned proportionately. A change to the rules is proposed to align the amount that must be returned with the depreciation in the value of the vehicles acquired, to remove distortions to selling decisions.

The Government has also announced that the one-off tax for all passenger cars will be reduced, and a new exemption will be introduced for wheelchair taxis. Further, the Government is to introduce tax relief for those acquiring electric vehicles worth less than NOK500,000 (USD46,780).

Finance Minister Trygve Slagsvold Vedum said: "The Government proposes more neutral rules for leasing, car hire and taxis. When deductions are now to be calculated based on actual depreciation instead of template values, we get a more correct taxation of vehicles in these industries."

"Overall, the proposal will involve a tax reduction for the taxi industry, especially for wheelchair taxis, for which we will remove the one-off tax entirely. In addition, it will be cheaper to lease, rent, and buy electric cars under NOK 500,000," the Minister said.

The change will apply from July 1, 2024, except for vehicles delivered after this date where a purchase or lease agreement was entered into before May 14, 2024.