Electric before 2027: does 100% deductibility justify replacing your car early?

The end of the year is approaching, and one piece of advice keeps circulating: order your electric car before 31 December 2026, otherwise you will lose the 100% deductibility. In principle, that is correct. But is that enough of a reason to rush into a purchase? Rarely. Before allowing the tax calendar to make the decision for you, it is worth comparing what those few percentage points are actually worth with the cost of replacing a vehicle earlier than planned. The result is often counter-intuitive.

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What changes on January 1st, 2027

A fully electric car ordered before January 1st,2027 retains 100% tax deductibility throughout its entire period of use. That rate is locked in for the lifetime of the vehicle.

For an electric car ordered from 2027 onwards, deductibility gradually decreases:

• 95% in 2027
• 90% in 2028
• 82.5% in 2029
• 75% in 2030
• 67.5% from 2031 onwards

The decline is gradual, but real. This naturally creates an incentive to bring a purchase forward in order to lock in the full deduction rate.

Five percentage points of deductibility: what are they really worth?

The best way to decide is to quantify the issue rather than assume that it is decisive. The difference between 100% and 95% only concerns five percentage points of the deductibility of vehicle-related costs. Over one year of use, this represents a relatively modest amount, which needs to be compared with the cost of disposing of a vehicle earlier than originally planned.

THE NUMBERS BEHIND THE DECISION

Assumptions
An electric car costing €50,000, depreciated over five years, with approximately €3,500 of additional annual costs such as maintenance, insurance, taxes and charging. The taxpayer is a self-employed individual taxed at the marginal rate, including social security contributions.

What the five percentage points cost
Ordering the vehicle in 2027 rather than in 2026 means that 5% of the annual cost becomes non-deductible, or around €675. The resulting additional tax burden is approximately €350 to €400 per year, or around €1,800 to €2,000 over five years.

What replacing the vehicle early costs
Replacing a vehicle that is still in good condition means crystallising its depreciation sooner. On a relatively recent vehicle worth €30,000, this depreciation can amount to between €3,000 and €4,500 per year.

The conclusion
Giving up several thousand euros in vehicle value in order to save €1,800 to €2,000 in tax over five years is a poor trade-off. The tax advantage does not compensate for the loss in value.

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The real question: were you going to change your car anyway?

The decision can ultimately be reduced to one question.

If you were already planning to replace your car in the near future, advancing the order by a few weeks in order to secure the full deduction rate can make sense. You do not lose anything extra, and you lock in those five additional percentage points for the life of the vehicle.

If your current car can still be used for another two or three years, however, tax considerations should not determine the timing. Replacing it too early will cost more than the tax benefit you preserve.

A tax advantage can reduce the cost of a useful investment. It does not make an unnecessary purchase worthwhile.

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Is an electric car suited to your actual use?

The deduction rate does not tell you what a car will really cost.

What matters is the total cost of ownership:

• purchase price or monthly payments
• financing
• insurance
• maintenance
• taxes
• energy costs
• charging infrastructure, if required
• residual value

This also needs to be assessed in light of your actual professional use. How many kilometres do you drive? Can you charge at home or at work? Do you mainly drive in urban areas, or do you regularly cover long distances?

For most users, electric vehicles remain competitive, thanks both to taxation and to lower energy and maintenance costs. However, for someone who drives long distances every day without regular access to charging, another type of powertrain may still be more suitable. The most tax-efficient vehicle is not always the one that leaves the most money in your bank account.

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Sole trader or company, and the case of plug-in hybrids

The end-of-2026 deadline now mainly concerns zero-emission vehicles.

For combustion-engine cars and plug-in hybrids acquired through a company, the key deadline has already passed: any acquisition from 1 January 2026 onwards is subject to 0% deductibility.

A self-employed individual operating as a sole trader who chooses a plug-in hybrid, however, benefits from a specific regime.

Electricity may be deducted at the rate applicable to zero-emission vehicles, fossil fuel is no longer deductible, and the other costs remain subject to a formula linked to CO2 emissions.

Before making any change, it is also worth checking whether your current vehicle still benefits from a more favourable regime.

A combustion-engine vehicle ordered before 1 July 2023 continues to benefit from the former CO2 formula, while replacing it with a new combustion-engine vehicle would reduce deductibility to 0%.

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If you decide to act: do not sign the wrong document

Once the decision has been made, the 2026 regime still needs to be secured correctly, because one timing detail can change everything.

For a standard purchase, a firm purchase order dated and signed by both parties before 1 January 2027 is sufficient.

The vehicle may be delivered, invoiced and registered in 2027 without losing the full deduction rate.

For leasing or renting, however, the key date is different.

What matters is not the date on which the vehicle is ordered from the dealership, but the date on which the financing agreement is signed.

Ordering an electric car in December 2026 but only signing the lease agreement in January 2027 would therefore place the vehicle under the 2027 regime.

The same caution applies to an existing agreement.

An extension is in principle treated as a new contract and may therefore trigger a new deductibility rate, unless the possibility of extension was already provided for in the original agreement.

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THE DECISION TO PREPARE

‍Do not let those five percentage points of deductibility determine your timing on their own. Start with the real question: were you already planning to replace your car in the near future? If yes, bring the order forward before 1 January 2027 to lock in the full deduction rate. If not, keep tax considerations out of the decision, because the depreciation caused by an early replacement will usually exceed the tax saving. Also check the tax regime applicable to your current vehicle, make sure an electric car actually suits your use, and if you decide to proceed, secure the relevant date: signed purchase order for a standard purchase, financing agreement date for leasing

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In 30 seconds

✅ Electric vehicle ordered before 1 January 2027: 100% deductibility, locked in for the lifetime of the vehicle

✅ From 2027 onwards: 95%, followed by 90%, 82.5%, 75% and 67.5% in the following years

✅ For a self-employed individual, those five percentage points are worth roughly €350 to €400 per year, or around €1,800 to €2,000 over five years

✅ Replacing a vehicle that is still in good condition crystallises its depreciation earlier: often several thousand euros per year

✅ The right question is: were you going to change your car soon anyway? If not, tax considerations should not determine the timing

✅ In leasing, the financing agreement date determines the applicable regime, not the order placed with the dealership

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