Passenger cars are being placed under a stricter CO2-emissions-based framework, as the bill submitted for public consultation provides for a reduction of tax exemptions for expensive company cars and an enhancement of incentives for electric vehicles.

The draft law of the Ministry of National Economy and Finance introduces substantial changes to the tax treatment of passenger vehicles, aiming to more closely link taxation with environmental footprint. The most notable provision concerns company cars worth over €40,000, for which the favourable tax treatment is abolished when emissions exceed 50 grams of CO2 per kilometre.

In practice, the measure mainly affects higher-end hybrid models and certain diesel vehicles, which until now enjoyed a tax advantage in the context of being used as company cars. The message is clear: high-value and higher-emission vehicles will now be treated under stricter terms.

At the same time, the bill also reshapes the registration tax regime, limiting exemptions for hybrid cars. By contrast, fully electric vehicles and hydrogen fuel-cell cars continue to be exempt from registration tax, maintaining the strongest tax incentive in the market.

With these changes, incentives for what are now considered polluting and expensive passenger cars are being reduced, while incentives for zero-emission vehicles are maintained, based on the vehicle’s carbon emissions at the point of purchase of a new car.