Background information

Royal Decree-Law 5/2023 of 28 June, adopted and extended certain measures in response to the economic and social consequences of the war in Ukraine. In addition to including the extension of anti-inflation measures such as the reduction in VAT on foodstuffs, discounts on public transport, discounts on fuel for professionals, etc., some new measures of interest were also included. Royal Decree-Law 5/2023 of 28 June includes a 15% deduction in Personal Income Tax (PIT) for the purchase of an electric vehicle. This personal income tax deduction on electric vehicles is part of the government's green initiative to boost the uptake of electric vehicles. This measure pursues the broader objective of transitioning to a greener and more sustainable transport system, aligning with the European Union's goals of reducing greenhouse gas emissions and promoting clean energy. Ultimately, this deduction is expected not only to increase the demand for electric vehicles, but also to support the development of the electric vehicle industry.

Content of measure

Royal Decree-Law 5/2023 of 28 June includes a 15% deduction in Personal Income Tax (PIT) for the purchase of an electric vehicle. The deduction applies to new and used electric cars, plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel cell vehicles (FCVs). This deduction, which came into effect on 1 July 2023, will be extended until 31 December 2024. The measure may be extended to December 2025, if the Council of Ministers approves it. The maximum base for the deduction is €20,000, which is made up of the purchase, expenses and taxes linked to such a purchase. In addition to paying for the vehicle in full, there are other options to qualify for the deduction. One option is to pay the seller a down payment (advance payment of at least 25%) for the purchase of the vehicle. In this case, the deduction will take place in the period in which the advance payment is made. As a complement to these advantages for the purchase of electric vehicles, the installation of recharging points for these cars is encouraged with similar measures. Individuals will be eligible for a 15% personal income tax deduction (PIT) if they install these plug-in battery charging points in a property they own. The requirement is that the system is not linked to an economic activity.

Use of measure

There is no estimate of the number of users. The aid is aimed at citizens who purchase a new electric vehicle.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Does not apply to businesses	Applies to all citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	No involvement
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: N/A

Involvement

Social partners did not take part in the design and approval of this measure (they were not even consulted).

Views and reactions

The automotive sector is asking the Spanish government for more tax benefits for the purchase of electric vehicles. Specifically, the Spanish Association of Automobile and Truck Manufacturers (ANFAC), the dealer association (Faconauto) and the Spanish Association of Automotive Suppliers (Sernauto) are calling on the Spanish government for more tax benefits so that Spain does not fall behind in the transition to electric vehicles. The companies value the 15% deduction in Personal Income Tax for the purchase of an electric vehicle, but do not consider it sufficient. They are calling for more tax benefits, whether by means of a reduction, rebate or any other formula, because they consider that taxation is a fundamental accelerator for electrification to become a reality.

Sectors and occupations

This case is not occupation-specific.

Sources

• 28 June 2023: Royal Decree Law 5/2023 (www.boe.es)