Germany's New Tax Break Expands Benefits for Leased Electric Company Cars
A new tax rule for electric company cars will take effect in Germany from July 1, 2025. The change allows businesses to claim special depreciation on fully amortised leases, not just purchases. This follows a period in which around 15,000 companies used existing incentives for electric vehicles before the 2024 deadline.
Under the updated policy, firms leasing electric cars can now benefit from accelerated depreciation—if the lease is a full-amortization agreement. Such contracts ensure that payments cover both the vehicle's purchase price and financing costs. At the end of the term, the lessee gains ownership.
The depreciation rates are spread over five years. In the first year, companies can write off 75% of the acquisition cost. Over the next four years, the rates drop to 10%, 5%, 5%, 3%, and finally 2%.
Previously, the special depreciation under § 7 EStG applied only to outright purchases. The finance ministry reported in January 2025 that around 15,000 businesses had already used the old rules before they expired at the end of 2024.
The new method expands tax benefits to leased electric vehicles, provided the lease meets full-amortization criteria. Companies adopting this approach will see lower upfront tax burdens in the first year. The policy shift aims to encourage wider use of electric cars in corporate fleets.
