New 2025 Tax Break Speeds Up Depreciation for Electric Company Cars
A new tax rule will allow businesses to claim higher depreciation on electric company cars from July 2025. The change aims to encourage the purchase of zero-emission vehicles by offering faster write-offs. However, the scheme mostly applies to outright purchases rather than leases.
Under the updated policy, companies buying electric vehicles on or after 1 July 2025 can deduct 75% of the purchase price in the first year. This is a significant increase compared to standard depreciation rates. Over the next five years, the remaining value will be written off at 10%, 5%, 5%, 3%, and finally 2%.
The special depreciation generally does not extend to leased vehicles. An exception exists for full-amortization leases, where the lessee covers both the vehicle's cost and financing, with the option to take ownership at the end. Estimates suggest several thousand such leases may already exist in Germany, though precise figures remain unavailable.
Industry reports and tax data indicate growing interest in these contracts, but no official statistics confirm exact numbers. The rule change could further boost demand for electric company cars among businesses looking to reduce taxable income.
The new depreciation method offers a strong financial incentive for companies to switch to electric vehicles. Those purchasing qualifying cars from mid-2025 will benefit from accelerated tax relief. Full-amortization leases remain the only leasing option that may qualify under the updated rules.
