Tax Aspects of Fuel Cell Electric Vehicles in the Netherlands: an update

The environmental investment credit (milieu-investeringsaftrek or MIA) is a tax benefit in the form of an additional deduction for entrepreneurs who invest in environmentally friendly business assets. Hydrogen-powered cars have also been identified by the legislator as being of importance for the protection of the Dutch environment and are eligible for this allowance.

It is interesting to note that the MIA has been abolished for full-electric passenger cars (BEVs) as of 1 January 2022, but is still available for hydrogen-powered cars for the time being. Furthermore, as of this year, the MIA can also be applied to freight vehicles that run on a mixture of hydrogen and diesel fuel.

This regulation can be summarized as follows. Businesses can apply an additional deduction from the taxable profits based on a percentage of the investment in new business assets. The asset should be included in the Dutch Government’s Environmental List. Hydrogen-powered passenger cars used within business setting are Category 1 MIA assets and are eligible if the investment amount remains below € 75,000. Hydrogen-powered delivery vans also fall under Category 1 and are eligible for investment amounts of up to € 125,000. The MIA additional deduction for Category 1 investments is currently 45%. On Budget Day 2022, the Cabinet announced additional budget for the MIA in the amount of € 50 million annually, starting 2023.

The Arbitrary Depreciation of Environmental Investments, or VAMIL, is a provision that allows for arbitrary depreciation on environment-friendly assets within the company. The investment should be included in the Dutch Government’s Environmental List. This depreciation is possible up to an amount of 75% of the investment cost and must take place within the time that the asset is used within the company. Since the business can choose the moment of depreciation, this can result in a liquidity or interest advantage. The VAMIL can be applied to passenger cars powered by hydrogen and is eligible up to a maximum of € 75.000. It is also worth noting that VAMIL and MIA can be applied alongside each other.

From 15 March 2021 to 31 December 2025, the Government opened the Subsidy Program for Zero Emission Commercial Vehicles (SEBA). Businesses can apply for the subsidy for the purchase or sometimes financial lease of zero-emission vehicles. To be eligible for SEBA, certain specific requirements must be met. For example, the car cannot have been delivered earlier and the weight cannot exceed 4,250 kilograms. The subsidy is maximized on € 5,000 per application. Meanwhile only € 3,67 million is left of the yearly subsidy budget of € 22 million.

If a company car is elected to be used privately as well, an addition (or bijtelling) to the salary for wage tax purposes applies. In 2022, the reduced additional tax liability rate of 16% of the car’s list price will apply to hydrogen-powered cars. For BEVs, this 16% rate applies to the first € 35,000, with the regular additional tax liability rate of 22% applying to the excess portion of the list price. On Budget Day 2022 it is announced that this threshold of € 35.000 will be degraded to € 30.000 in 2023.

The Private Motor Vehicle and Motorcycle Tax, or BPM, is a purchase and import tax that is calculated based on the vehicle's CO2 emissions. Since hydrogen-powered cars have no CO2 emissions, no BPM is due on purchase or import. The exemption for zero-emission vehicles will remain in place at least until 2024. It is however expected that the purchase and use of hydrogen-powered cars will continue to be subsidized beyond 2024.

For delivery vans, there is currently a general exemption from BPM, regardless of emissions or fuel, if the taxpayer qualifies as an entrepreneur for VAT purposes. On Budget Day 2022, the Cabinet announced its intention to abolish this exemption from 1 January 2025. Also, as of this date, the BPM for the delivery vans will no longer be calculated on the list value, but on the CO2 emissions as was already the case for passenger cars. As a result, emission-free delivery vans will continue to be exempt from BPM. The government hopes until 2030, the year in which the Netherlands wants to achieve the Paris climate goals, to raise additional funds with this measure and to accelerate the transition to emission-free cars.  

Motor vehicle tax (MRB) is calculated on the basis of the weight of the car and its environmental impact, among other factors. For motorcycles, a fixed amount of tax must be paid. Emission-free motor vehicles are exempt from the MRB. This exemption applies at least until 2024. It is noted that the government announced that the MRB will change to a regime whereby the levy is dependent on the mileage of the vehicle. Under the announced regime, emission-free cars will also be subject to tax although likely against a lower rate per kilometer.

In the Netherlands and Europe, the network of hydrogen fuel stations has much room left to grow. For instance, the Netherlands currently has only 16 operational hydrogen fuel stations. More and more stations should be appearing in the near future. Hydrogen as a motor fuel is not subject to excise duties (accijns) at the pumps, currently. It is also not expected that this will be introduced in the short term.