Alongside paying for car insurance and biennial safety inspections, there is another cost drivers in Germany need to be aware of: the motor vehicle tax (Kfz-Steuer). Vehicle taxes in Germany are calculated based on the type of vehicle, fuel consumption, engine capacity and CO2 emissions. In recent years, the CO2 emissions have become a more decisive figure in calculations.
As soon as you have registered a vehicle in Germany, you will be asked to pay the vehicle tax for it. Almost all kinds of vehicles in Germany are subject to the motor vehicle tax, but the amount you pay depends on a few different factors.
The calculation of motor vehicle tax is based on a few main components:
To work out your tax liability, you can use this motor vehicle tax calculator (in German) from the Federal Ministry of Finance.
There are also some differences, depending on when the car was first registered:
Since 2021, newly-registered cars with a high fuel consumption have been subject to a higher rate of vehicle taxes.
If you are self-employed in Germany, you can deduct your motor vehicle tax from your taxable income in your tax return, so long as you use the vehicle for business purposes at least 50 percent of the time. If you are an employee and drive to work, you cannot deduct your vehicle tax as a business expense, as it is already provided for in the travel allowance.
To promote the use of electric cars, the German government has decided to exempt electric vehicles from vehicle taxes until the end of 2030. This rule will apply to electric cars registered for the first time between 2020 and 2025.
People with disabilities can apply to have their vehicle tax reduced by 50 to 100 percent, depending on their disability. This reduction can only be applied to one car and must be applied for.
In order to be able to register a vehicle, you must submit a form known as a “SEPA direct debit mandate” to the registration authority.
Once you have registered your car, you will automatically receive a tax liability notification from the main customs office (Hauptzollamt), that outlines your tax number, how much vehicle tax is due and how to pay it.
This tax assessment is unlimited and so will continue to apply in future years; you will not be sent annual reminders of how much tax you owe. You will only receive a new tax assessment if there are any relevant changes, for instance if the vehicle is modified or if the tax rate changes.
If you have set up a direct debit, your vehicle tax payment will be automatically debited from your bank account each year as a lump sum for the year following.
Alternatively, you can arrange to transfer the funds to the customs office in your area via a bank transfer. However, you will have to remember to do this on the correct date every year; the customs office will not remind you that your tax payment is due.
If you sell your vehicle, export it, or deregister it (i.e. declare it off-road), you will be owed a reimbursement for the surplus tax you have paid. To receive this refund, you must make sure that either you or the buyer submits a notice of sale to the vehicle registration authority.
If your bank account information changes, or if you change address, you must inform your local vehicle registration authority as soon as possible. You also need to inform the responsible customs office by filling out and submitting a new SEPA direct debit mandate.