The draft bill proposes extending tax incentives for zero-emission vehicles, including a one-year deferral of higher registration taxes and exemption from periodic duties for commercial passenger vehicles, to encourage adoption and formalise existing practices.
Denmark’s Ministry of Taxation has released a draft legislation (2025/1 LSF 79) on 19 November 2025, proposing multiple changes to various tax and duty laws, focusing primarily on environmental and transportation policy.
The draft bill includes proposals for amending the Registration Tax Act, the Fuel Consumption Tax Act, the Act on Tax on Natural Gas and Town Gas, and various other acts.
Key proposals include the one-year deferral of higher registration taxes for zero-emission vehicles (including cars and motorcycles), aiming to encourage their continued adoption by extending favourable tax treatment until 2026.
Additionally, the bill proposes exempting zero-emission vehicles used for commercial passenger transport (such as taxis) from periodic duties, formalising the current administrative practice with effect from January 2016.
The proposal implements elements of the Agreement on the Finance Law for 2026, addresses three main areas of tax changes that impact the economy and the climate: delaying higher registration taxes for zero-emission vehicles, formalising the exemption for zero-emission taxis, and reducing the tax on energy used for Carbon Capture and Storage (CCS).
1. Delay in phase-in of higher registration tax for zero-emission vehicles
This is the primary measure affecting vehicle costs, government revenue, and general climate outcomes. The delay is intended to reduce the financial burden on buyers, thereby supporting the continued widespread adoption of zero-emission vehicles. The measure is estimated to increase the sale of zero-emission vehicles by approximately 4,000 cars in 2030.
For a zero-emission car worth DKK 400,000 (excluding tax), the registration tax relief compared to previous legislation is estimated at approximately DKK 24,300 in 2026.
The delay involves extending the current favourable conditions by one year. The calculation of the registration tax for zero-emission vehicles (cars, electric/fuel cell motorcycles) as 40% of the calculated tax for equivalent fossil-fueled vehicles is extended through 31 December 2026 (instead of ending in 2025). The full imposition of the registration tax (100% of the calculated tax) is postponed to 2036 (instead of 2035).
Additionally, the tax-free threshold for zero-emission passenger cars will remain at approximately DKK 419,300 in 2026 (the same level as 2025), and the effective rate above this threshold will remain at 60%.
2. Favourable tax treatment for zero-emission taxis
The law proposes amending the Fuel Consumption Tax Act to change the phrasing “gasoline-powered passenger cars” to passenger cars. This amendment ensures that all passenger cars used for commercial passenger transport (regardless of engine type, including zero-emission vehicles) are legally exempt from periodic taxes such as the CO2 ownership tax and the green ownership tax. This exemption for zero-emission vehicles is proposed to have a retroactive effect from 1 January 2016.
3. Lower tax rate for energy used in CO2 capture and storage (CCS)
This structural change targets energy use in the industrial and power sectors to support the adoption of new climate technologies. The purpose is to create clarity regarding the taxation of energy used for CO2 capture, thereby helping to facilitate the widespread adoption of CCS (Carbon Capture and Storage) in Denmark.
The proposal suggests expanding the list of “process purposes” (activities eligible for a lower energy tax rate) in the Gas Tax Law, the Coal Tax Law, and the Mineral Oil Tax Law.
The tax applies to heat and goods used for CO2 capture intended for subsequent geological storage. CO2 capture is the collection of CO2 from flue gases at point sources that would otherwise be released. By treating this energy use as a process purpose, companies conducting CO2 capture can receive full reimbursement of the energy tax, subject only to the reduced process tax rate.
