In two-thirds of EU Member States, companies do not get a clear tax signal to switch to EVs because of weak tax incentives.

In 18 out of 27 Member States, the tax gap between an EV and a fossil-fuel car is not enough to compensate for higher EV prices, according to new T&E analysis.

To assess where clear incentives exist, T&E evaluated whether the gap exceeded the EV price premium, which stood at €10,650 in 2025, reasoning that where taxes offset the upfront premium, the lower running costs of EVs can then make the business case for electrification. However, the study finds that the tax gap between electric and fossil-fuel company cars surpasses the EV price premium only in 9 countries.

Company cars are key to tackling road transport pollution. They account for 59 per cent of new car registrations and 78 per cent of oil imports consumed by new cars. Last December, the EU presented the Clean Corporate Vehicle regulation which sets national electrification targets for the car fleets of large companies, proposing an EU-wide average of 45 per cent of their new cars to be electric in 2030. It proposed Member States, not companies, be responsible to meet them.

Stef Cornelis, fleets and freight director at T&E, said: “At a time when the EU wants to cut oil dependency, governments of the EU's largest car markets are failing to incentivise companies to go electric. The EU fleets regulation is the catalyst needed to break this inertia. The EU Council and EU Parliament should inject more ambition into the Commission’s proposal to ensure Europe can reduce oil imports rapidly.”

Almost half (13) of EU member states still give a financial subsidy to companies running a petrol car. In Germany, where 28 per cent of all EU new fossil-fuel corporate cars are registered, companies get a net €10,000 subsidy. That’s more than double what they receive in any other country. However, in France petrol cars registered by companies pay €25,000 in taxes, while in Denmark – which tops the ‘tax gap’ ranking – they pay €37,000 in taxes.

As a result, several large car markets are still driving the bloc’s dependency on oil supplies. While Germany gives a subsidy equivalent to €0.50 for every litre of petrol its company cars burn, France gets a revenue equivalent to €10.30 per litre.

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