Insight: Spain delays implementation of a WLTP-based tax system until 2021

25 September 2018

Spain has postponed the implementation of a revised tax regime based on WLTP emission figures until 2021, ending speculation that a new tax regime could be introduced as early as January 2019.

Registration taxes in Spain are currently structured by CO2 emissions bands of ≤120g/km, >120-<160g/km, ≥160-<200g/km and ≥200g/km. Some model variants have already moved into a higher tax band as a result of the new NEDC-correlated emissions figures but a significantly higher number of cars would be affected if Spain simply adopted WLTP emissions figures to calculate the tax rate. For example, a car which has CO2 emissions equal to or less than 120g currently pays no tax. However, most cars with 120g CO2/km or less under NEDC testing are showing figures in excess of 120g CO2/km under WLTP testing. Simply switching to a WLTP-based regime, the cars with less than 120g CO2/km that are currently not subjected to tax would be taxed at a rate of 4.75% of their price. Cars that move from the >120-<160g/km band to the ≥160-<200g/km band or from the ≥160-<200g/km to the ≥200g/km band would be subject to an additional 5% of their price in registration taxes.

Introducing a WLTP-based tax system that would neutralise this impact on numerous cars will be a challenge and so Spain has delayed the roll-out of a revised tax regime until 2021. In the meantime, the Ministry of Industry, Commerce and Tourism has approved the usage of NEDC-correlated values until 31 December 2020 in order to reduce the impact on the sector. In a recent press release, the Ministry of Industry, Commerce and Tourism stated that it will allow the use of the correlated value up to that date to give a homogeneous treatment to the taxation of vehicles and to mitigate the direct impact on the demand of automobiles of WLTP.’

The release further states that ′with the application of the correlated index, the fiscal impact of the change of procedure is graded and the renewal of the mobile fleet is promoted.  At the same time, it facilitates the orderly transition to more sustainable mobility and taxation.’

Only Finland and Germany have confirmed that, from 1 September, taxes on new cars are calculated using WLTP emissions figures. The additional tax liability is minimal in Germany as only €2 is payable for each g/km of CO2 over 95g/km. For example, if a car emits 20g/km more CO2 under WLTP testing than under NEDC, it will only be subject to an extra €40 in registration tax. Finland has introduced a revised tax table to calculate the registration tax of WLTP approved cars from 1 September as registration taxes can add up to 50% to the cost of a new vehicle. CO2 emissions are used to determine the percentage of the list price (including 24% VAT) that is payable as the registration tax, and so the simple implementation of WLTP figures would have added thousands of Euros to the price of some model variants.

Details on the changes to the tax regime in Finland and its impact will be published in a separate article in the coming weeks.