Heads up! Circulation tax, registration tax and diesel are about to undergo major changes

Circulation tax, registration tax and even fuels such as diesel will undergo changes, as the Government has presented its economic recovery plan in Brussels. The document outlines several measures aimed at boosting the economy after the pandemic. Among them are the introduction of a pay-per-use system for motorways and expressways, and a commitment to undertake tax reform with changes to diesel and to circulation and registration taxes.

The Recovery, Transformation and Resilience Plan published by the Executive led by Pedro Sánchez involves reviewing, during the first quarter of 2022, the main taxes related to vehicle use. The hydrocarbon tax, circulation tax and registration tax will be reviewed. In this economic recovery plan, the Government commits to the European Union to revise the charges that regulate the purchase and use of vehicles with the aim of “adapting them to the new and increasingly demanding environmental standards”.

Hydrocarbon, registration and circulation taxes could rise next year

During the first quarter of 2022, the period for assessing the various proposals will open. The one gaining the most traction is the one aimed at unifying circulation tax and registration tax. This is not new, as it is an old request from the sector, which calls for the new tax to be focused “on vehicle use rather than acquisition”.

Manufacturers and dealers also favour a reduction in VAT for less polluting models, with the focus on plug-in hybrids, but they also advocate removing VAT for electric cars. The Executive also plans to raise the diesel tax, as it argues that since diesel emits more than petrol, it should be cheaper than petrol. This forms part of the economic recovery plan but has been rejected several times.