Final agreement on the level of the new CO2 tax on cars in use in Germany has been reached.


The new tax comes into force on 1 July 2009 and was originally announced earlier this month as part of the government’s second economic recovery package, that also includes scrapping incentives for owners of old cars.


Owners of cars that emit less than 120g/km CO2 will not pay any ownership tax under the new scheme. For cars that emit more than this, a charge of EUR2 per gram will be made. To encourage the automotive industry to reduce CO2 emissions further, the threshold will be lowered to 110g/km in 2012 and 95g/km in 2014.


There will also continue to be a charge linked to engine size. Petrol car owners will pay EUR2 for every 100cc; for diesel cars it’s EUR9.50. A ceiling had originally been proposed, which would have benefited high polluting vehicles but there is none in the final scheme.


The new tax will apply only to new cars and the levels have been set so that they are comparable with charges under the current system. For example, the owner of a six litre Audi Quattro Q7 currently pays EUR926 a year and will pay exactly the same amount under the new scheme. Had the ceiling been set, the charge would have paid EUR300 less under the new scheme.

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Owners of low polluting cars will pay less. A Smart Fortwo that emits 112g/km CO2 will attract an annual charge of just EUR20 under the new system compared to EUR67 now.