Company car subsidies for petrol and diesel vehicles cost taxpayers in Europe’s five largest countries €42 billion annually, according to a report released on Monday by the NGO Transport & Environment (T&E).
These subsidies do not benefit private vehicle owners. Company cars account for 60% of new vehicle registrations in Europe.
Italy tops the list with the largest subsidies at €16 billion, followed by Germany at €13.7 billion, France at €6.4 billion, and Poland at €6.1 billion. Many countries continue to incentivise petrol and diesel vehicles.
In contrast, the UK and Spain offer much lower tax benefits for polluting company cars. Belgium is noted as a positive example where tax reforms have promoted a shift towards electric vehicles.
“Every year taxpayers fund billions of euros in tax benefits for company car drivers,” said Stef Cornelis from T&E. “These are often costly, luxurious, and polluting SUVs. This policy is not only harmful to the climate but also socially unfair. While the UK and Belgium have taken steps to reduce these benefits, major European car markets remain passive. The European Commission must act.”
SUV company car drivers receive very high fossil fuel subsidies via company car taxation, the study highlights. Compared to a private buyer, they pay up to €8,900 per year less in taxes for driving a polluting SUV. This also explains why companies are registering twice as many SUVs than private households. Of the total €42 billion, €15 billion subsidises SUVs.
