Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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181. To ask the Minister for Finance if there are plans for electric and hybrid vehicles with regard to company tax; and if he will make a statement on the matter. [36384/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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In Finance Act 2019 I legislated for a CO2-based benefit-in-kind (BIK) regime for company cars from 1/1/2023. From that date the amount taxable as BIK remains determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO2 emissions-based bands will determine whether a standard, discounted, or surcharged rate is taxable. The number of mileage bands is reduced from five to four.

I believe that better value for money for the taxpayer is achieved by curtailing the amount of subsidies available and building an environmental rationale directly into the BIK regime. It was determined in this context that reforming the BIK system to include emissions bands provides for a more sustainable environmental rationale than the continuation of the current system with exemptions for electric vehicles (EVs).

There is currently a 0% BIK rate for EVs, a measure that forms part of a broader series of very generous measures to support their uptake including a reduced rate of 7% VRT, a VRT relief of up to €5,000, low motor tax of €120 per annum, SEAI grants, discounted tolls fees, and 0% BIK on electric charging. The BIK exemption was intended as a temporary measure and is set to end at year end 2022, coinciding with the onset of the new BIK regime on 1/1/2023. From this date EVs will benefit from a preferential rate of BIK, ranging from 9 – 22% depending on mileage, while internal combustion engine (ICE) vehicles will be subject to higher BIK rates, up to 37.5%. This new structure with CO2-based discounts and surcharges will incentivise employers to provide employees with electric and hybrid vehicles.