Vehicle Taxation

In March 1997, the German Parliament adopted an amendment to the Motor Vehicle Tax Act which took effect in July 1997. The amendment allowed for temporary exemptions of the annual motor-vehicle tax for low pollutant emissions cars (cars that meet the limit values laid down in the European Commissions proposal for the follow up Directive 94/12 EC) and higher taxes for some high emissions cars. The tax rate was also reduced for cars that had a very low level of specific consumption. Particularly energy efficient and low pollutant cars benefited from tax rebates: so called "5-litre cars" (120 g CO2/km) enjoyed a non-recurring tax rebate of DM 500 upon the date of first registration. The tax rebate for so-called "3-litre cars" (90 g/CO2/km) was DM 1 000, irrespective of the date of first registration. The amended Act was subject to renewal five years after its implementation.