The current VAT, or MVA, exemption for electric cars will be replaced with a subsidy scheme, the Norwegian government announced when unveiling its revised national budget. 

Under the new subsidy scheme, consumers will be required to pay VAT on all-electric cars that cost more than 500,000 kroner. The VAT charges will be introduced from January 1st 2023. 

“All-electric cars receive support at the bottom (of the price range), but the more expensive electric car you buy, the more VAT you have to pay,” Minister of Finance Trygve Slagsvold Vedum said of the announcement. 

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Cars purchased between now and the end of the year will be exempt from VAT, regardless of price. 

Under the new subsidy scheme, buying an electric car with a sticker price of more than 600,000 kroner would become 25,000 kroner. 

Electric cars over 1 million kroner will become 12.5 percent more expensive due to the VAT charges. 

Norway’s Electric Car Association has said criticised the introduction of VAT. 

“The entire electric car policy is at stake. It’s an incomprehensibly bad idea,” Christina Bu, general secretary of the association, told public broadcaster NRK.

Generous tax incentives have contributed to more than half of new cars sold in Norway being electric vehicles.