Electric company car depreciation in Europe: write-off rules by country, from capital allowances to Germany's 75%

In 2026, several European countries let a company write off most or all of a new electric car in its first year: 100% in the UK through the first-year allowance, 75% in Germany, and up to 100% in Spain through free depreciation. Elsewhere, the Netherlands, Belgium, Italy and Portugal apply normal depreciation, but with rules that favour electric cars through deductibility percentages or cost caps.

This guide is for finance directors of companies with fleets in one or several European countries. It compares the tax write-off of an electric company car country by country, explains VAT and leasing, shows a worked example in euros and lists the deadlines and mistakes to watch. Tax rules decide when you get relief on the car; they do nothing for the running cost of energy, which is where Voltaback works with more than 200 companies.

Depreciation in Europe: no common rule, but the same logic

There is no EU-wide rule on how fast a company may depreciate a car for tax purposes. Each country sets its own system, and they fall into three families:

• Accelerated write-off for electric vehicles: the UK, Germany and Spain let companies deduct a large share of the cost in year one, for a limited period.
• Normal depreciation with an EV-friendly deductibility rule: Belgium and Italy depreciate cars normally but limit the deductible share of car costs, with better terms for zero-emission cars (Belgium) or for cars assigned to employees (Italy).
• Normal depreciation with a cost cap: Portugal limits the depreciable cost of a car, with a higher cap for electric cars; the Netherlands depreciates cars like any other asset, with no CO2 cap.

Two principles apply everywhere:

1. Accelerated depreciation moves relief forward; it does not add to it. Over the life of the car, the total deduction equals the purchase price minus the sale price. The gain is the cash flow and the time value of the tax saved early.
2. The order or acquisition date decides which rule applies. Most of the favourable schemes have deadlines in 2026 or 2027, so the renewal calendar matters.

Comparison table: writing off a new electric company car in 2026

Sources: GOV.UK, capital allowances on business cars, § 7 EStG, Spanish Corporate Tax Law, BOE, Ondernemersplein, afschrijven, Securex, Centro Fiscale, company car deductibility 2026, Portuguese Corporate Tax Code, art. 88.

Country by country: how each system works

United Kingdom: 100% first-year allowance until March 2027

In the UK, a car bought by a business is not depreciated for tax. The accounting depreciation is added back and the business claims capital allowances instead, based on CO2 emissions and on whether the car is new.

Source: GOV.UK, first-year allowances for zero-emission cars.

When a car that received the 100% allowance is sold, the sale proceeds create a balancing charge, taxed as profit in the year of sale. Leased cars get no capital allowances, but their rentals are deductible; the 15% lease rental restriction only applies above 50 g/km, so electric cars escape it. Source: HMRC BIM47714.

Germany: 75% in the year of acquisition

Germany introduced a special declining depreciation for electric vehicles acquired between 1 July 2025 and 31 December 2027: 75% of the cost in the year of acquisition, regardless of the month, then 10%, 5%, 5%, 3% and 2% over the following years. It cannot be combined with other special depreciation.

On the employee side, a battery electric company car with a gross list price up to €100,000 (acquired after 30 June 2025) is taxed on a quarter of the list price under the 1% rule, the so-called 0.25% rule, and electric cars are exempt from vehicle tax until 2035 at the latest. Our guide to electric company car taxation covers the employee side in each country.

Spain: free depreciation for vehicles entering into service by 2026

Spanish companies can depreciate new electric and plug-in hybrid vehicles freely, which means up to 100% of the cost in the first year, when the vehicle enters into service in a tax period starting in 2024, 2025 or 2026. New charging infrastructure qualifies under the same rule, provided it has the required technical documentation and installation certificate. For a company whose tax year matches the calendar year, the vehicle must therefore enter into service by 31 December 2026.

Netherlands: fully deductible, no special allowance

Dutch companies depreciate an electric car like any other business asset: at most 20% of the cost per year, and only down to a realistic residual value. Car costs are fully deductible; there is no CO2-based cap, and private use is taxed on the employee side through the bijtelling. The environmental investment allowances (MIA and VAMIL) no longer apply to electric passenger cars, and passenger cars are generally excluded from the small-scale investment allowance (KIA). Charging points can still qualify for investment allowances: check the current RVO lists.

Belgium: the order date decides

In Belgium, the deductible share of all car costs (depreciation or lease, maintenance, insurance, energy) is fixed by the date of the signed order or lease contract and kept for the whole life of the car. A zero-emission car ordered by 31 December 2026 stays 100% deductible; one ordered in 2027 is 95% deductible, and so on down to 67.5% from 2031. Petrol and diesel cars ordered from 1 January 2026 are no longer deductible at all for companies.

Italy: the use of the car decides

Italy has no dedicated incentive for electric company cars on the depreciation side. What matters is the use: a car assigned to an employee for business and private use for most of the tax period is 70% deductible with no cap on the purchase cost, while a generic business car is only 20% deductible, on a cost capped at €18,075.99. The employee is taxed through a flat benefit based on the ACI cost tables, at 10% for battery electric cars, which makes assignment to an employee the usual route.

Portugal: higher caps for electric cars

Portugal caps the acquisition cost accepted for depreciation at €25,000 in general, €50,000 for plug-in hybrids and €62,500 for battery electric cars. Above all, the autonomous taxation that hits every cost of a company car (depreciation, rent, insurance, energy, maintenance) is 0% for an electric car costing up to €62,500, and 10% above. Source: Caixa Geral de Depósitos, autonomous taxation.

VAT on electric company cars: another country-by-country rule

The EU VAT Directive allows member states to restrict the deduction of VAT on cars, and most do. VAT often weighs more than the depreciation timing.

Sources: HMRC VAT Notice 700/64, country tax codes as above.

One VAT point is common to every country: the VAT on electricity reimbursed to an employee who charges at home is not recoverable, because the invoice is in the employee's name.

Worked example: a €45,000 electric car bought in 2026

Assumptions: a new electric car costing €45,000 excluding VAT, bought and put into service in 2026 by a profitable company, kept four years. Corporate tax rates rounded: UK 25%, Germany about 30% (corporate and trade tax), Spain 25%, Belgium 25%, Netherlands 25.8%. In Belgium, five-year straight-line depreciation; in the Netherlands, five years down to a €15,000 residual value.

Voltaback calculation, for illustration only; check your own case with your tax adviser.

How to read it:

• The year-one gap is large: around €11,000 of tax saved in the UK or Spain, against about €1,500 in the Netherlands for the same car.
• Over four years, the gap shrinks. In every country, total relief converges towards the real loss of value of the car. When the car is sold, the UK taxes the proceeds through a balancing charge, Germany and Spain through the gain on a fully depreciated asset.
• The real advantage is cash flow. A growing company with profits to absorb the deduction benefits most; a company in tax losses gains little from accelerated schemes.

Accounting depreciation versus tax depreciation

The schemes above are tax rules. They do not change how the car is depreciated in the accounts, and the two often diverge.

• In the accounts, a car is depreciated over its expected useful life down to its expected residual value, typically three to five years for a company car. Under IFRS or most national accounting standards, a 75% or 100% first-year charge would not reflect the real loss of value.
• For tax, the company applies the national rule: first-year allowance, special depreciation, free depreciation or the normal tax rate.
• The difference creates a temporary gap between accounting profit and taxable profit, usually recorded as a deferred tax liability in the balance sheet, which reverses as the car ages or is sold.

In the UK the split is complete: accounting depreciation is always added back and replaced by capital allowances. In Germany, Spain or Belgium, the tax depreciation is calculated on the same asset with different rates, and the auditor will expect the reconciliation.

Can the battery be depreciated separately?

In almost every case, no. The traction battery is an integral part of the car and is depreciated with it, under the same rule and the same cost caps. Two situations are different:

• A battery leased separately from the car, an arrangement some manufacturers have offered: the battery rental is then a running cost, deducted like a lease payment.
• A battery replaced after purchase: the replacement can be a separate asset or a repair cost depending on the national rules and its amount.

Battery durability still matters for depreciation in practice, because it drives the residual value. From 18 February 2027, the EU Batteries Regulation requires a digital battery passport for EV batteries placed on the market, which should make battery condition easier to document at resale. Source: Regulation (EU) 2023/1542, EUR-Lex.

Buying or leasing: what changes by country

A company that leases a car does not depreciate it: it deducts the rentals. Accelerated depreciation therefore only benefits companies that buy.

• UK: rentals fully deductible for electric cars, but no first-year allowance.
• Germany and Spain: rentals are deductible, but the 75% or free depreciation is lost; buying can give a stronger year-one effect.
• Belgium: the same deductibility percentage, fixed by the date of the lease contract, applies to rentals.
• Netherlands: rentals fully deductible, which is close to depreciation in effect.
• Italy: the same 70% or 20% rule applies to rentals, with an annual cap of €3,615.20 for the 20% case.

A higher deduction does not mean a cheaper car: rentals include the lessor's margin and finance cost. Compare total cost after tax over the holding period, not the tax alone. The full decision is in our guide to leasing or buying electric company cars.

Charge points: depreciation rules too

Workplace and home charge points paid by the company are assets too, and several countries treat them favourably:

• UK: charge points get the 100% first-year allowance until the same 2027 deadlines.
• Spain: new charging infrastructure qualifies for free depreciation under the same 2024 to 2026 rule as the vehicles.
• Netherlands: charging points can qualify for environmental and small-scale investment allowances.

The grants available for workplace chargers in each country are in our guide to business charge point grants.

What is coming: clean corporate vehicles

In December 2025, the European Commission proposed a regulation on clean corporate vehicles. It would set national targets from 2030 for the share of zero- and low-emission vehicles in new registrations by large companies, with the obligation on member states rather than directly on each company. Corporate fleets account for about 60% of new car registrations in the EU. The text was still being negotiated in late 2026. Source: Leaseurope, Automotive Package.

If adopted, it is likely to push countries to keep or add tax incentives for electric company cars, and to make them less favourable for combustion cars, as Belgium has already done.

Planning your renewal calendar

For a multi-country fleet, 2026 and 2027 concentrate several deadlines:

Align orders, deliveries and entry into service with these dates, and check whether the rule depends on the order, the delivery, the payment or the first use: it differs by country.

What to remember, depending on your role

• Finance director of a multi-country group: model the year-one tax effect per country, then the total cost after tax over the holding period. The accelerated schemes favour buying in the UK, Germany and Spain; leasing remains neutral or close in the Netherlands and Belgium.
• Fleet manager: the renewal calendar is the lever. A delivery that slips from December to January can change the deduction in Belgium or Spain.
• Owner-manager of a small company: the company deduction and the personal benefit in kind work together. In the UK, a director with an electric company car pays benefit in kind on 4% of the list price in 2026/27, against up to 37% for petrol and diesel (HMRC EIM24705); in Germany, the 0.25% rule plays the same role.
• HR and compensation: depreciation does not change the employee's taxable benefit, which follows its own rules in each country. Energy reimbursement does, and must follow each country's rule on the real cost or the accepted flat rate.

Common mistakes

• Applying one country's rule to the whole fleet. A car registered in Germany and one registered in Belgium do not have the same deduction.
• Claiming accelerated relief on a used car. The UK first-year allowance and Spanish free depreciation apply to new vehicles.
• Forgetting the tax on the sale. Year-one relief is not a permanent gain; budget for the balancing charge or the taxable gain when the car is sold.
• Missing a deadline by a few days. Order, delivery and entry into service can fall in different years.
• Ignoring VAT. In Italy or Belgium, blocked VAT can outweigh the depreciation timing.
• Treating tax as the whole cost. Over four years, energy and its management weigh as much as the tax timing.

The line tax rules do not fix: energy

Depreciation schedules and deductibility percentages decide when you get relief on the car. They do nothing for the cost of the kWh. A company car covering 25,000 km a year at 23 kWh per 100 km uses about 5,750 kWh, which costs about €860 at home on a night tariff at €0.15 and about €3,160 on public fast chargers at the European median of €0.55. Source: eleport, European fast charging price report, October 2026.

Over a four-year holding period, that gap of more than €9,000 per car exceeds the year-one tax advantage of most depreciation schemes. The way to close it is to make home charging easy and fairly reimbursed. Voltaback does this as 100% software: each home session of each company car is measured from the car's data and reimbursed at the driver's real tariff, with no hardware to install and more than 48 car brands supported. Measure your own fleet's potential with the home charging cost simulator, and put it in context with our guide to fleet total cost of ownership.

Get the tax right, then control the energy

Accelerated depreciation makes 2026 and 2027 a good time to buy electric company cars in several European countries. Once they are on the road, the cost that keeps running is energy. To see how Voltaback measures and reimburses home charging across your fleet, in every country where it operates, book a demo.