Business Electric Vehicles: Properly Deducting Depreciation, Charging Costs, and Subsidies

Why the Numbers Look Different Today Than They Did Three Years Ago

The KfW Environmental Bonus for private and commercial electric vehicle buyers has been history since December 2023—anyone purchasing an electric vehicle today no longer receives a direct subsidy on the purchase price. While that sounds like a step backward, the legislator has shifted the advantage into tax law: through accelerated depreciation and significantly more favorable taxation of private use. For self-employed individuals, this means: the financial benefit now comes back year after year through the tax return, rather than as a one-time payment at purchase.

Depreciation (AfA - Absetzung für Abnutzung) for Electric Vehicles: Regular Depreciation and New Special Rule

A passenger car is regularly depreciated linearly over six years according to the official depreciation schedule—an electric vehicle has the same useful life as a conventional vehicle. Since July 1, 2025, however, there is an arithmetically degressive special depreciation specifically for purely electric vehicles acquired by the end of 2027: in the year of acquisition, up to 75 percent of costs can be deducted, and in subsequent years the rate decreases gradually until the vehicle is fully depreciated after six years. This shifts depreciation noticeably forward and provides relief precisely in the years when liquidity is tight following the purchase.

Important for practice: The special depreciation is optional, not mandatory. Those with low profits in the early years may find the linear option more advantageous—the decision should always be made in conjunction with expected profit development, rather than in isolation during the year of acquisition.

Charging Station and Electricity Costs as Business Expenses

A wall box at the business location is a separate asset. If acquisition costs fall below the threshold for minor assets, it can be immediately deducted in full; above that, it is depreciated over the customary useful life. Input tax deduction is possible if the vehicle is used for business purposes. For charging electricity itself, it depends on where you charge: electricity at the business charging station is a regular business expense via the electricity bill, but those who charge at home don't need to collect individual receipts—the tax authorities accept flat-rate amounts.

• With charging facility at the business: 30 euros flat rate per month for pure electric vehicles, 15 euros for hybrids
• Without charging facility at the business: 70 euros flat rate per month for pure electric vehicles, 35 euros for hybrids

These flat rates originally come from wage tax simplification for employees but have been approved by the tax authorities for analogous use by sole proprietors and freelancers. This eliminates the need to split personal and business electricity costs at the home meter—an effort hardly anyone voluntarily undertakes.

Taxable Benefit with Mixed Use

If the electric vehicle is also used privately, this portion must be taxed—with the 1 percent method, the rate for pure electric vehicles is reduced to 0.25 percent of the gross list price per month, provided the price does not exceed a certain threshold. This threshold was raised from 70,000 to 100,000 euros on July 1, 2025, so that higher-priced models also benefit from the reduced rate. If the gross list price is above that, at least the 0.5 percent rule applies—half of what would be owed for a comparable conventional vehicle. Those who keep a mileage log instead benefit similarly: when calculating costs, only one quarter of the acquisition costs or lease payments are applied, and above the price threshold, half.

What's Left of the Subsidy Program

The classic environmental bonus has expired, but that doesn't fully replace what direct subsidies once provided. If a business does receive a public subsidy—for example, for charging infrastructure as part of a regional funding program—it can optionally reduce the acquisition costs and thus the depreciation basis, or it is taxed as business income. Both approaches are permissible, but only one fits the particular profit situation: those who want to tax the subsidy immediately need loss carryforward potential in that year or consciously accept the higher tax burden.

In the final analysis, the combination of three levers remains decisive: accelerated depreciation, reduced taxation of private use, and flat-rate electricity allowances. Individually, each lever seems manageable—taken together, they significantly change the cost-benefit calculation of an electric vehicle in a business.