From January 1, 2025, Danish diesel car owners will no longer have to pay equalization tax. However, there are many indications that this is only temporary.
From January 1, 2025, the government will remove the equalization tax, which is currently part of the semi-annual owner tax for private diesel cars in Denmark.
The equalization tax acts as a compensation for lower energy taxes on diesel compared to gasoline. But now the tax is taking a turn. At the same time, other taxes on both diesel and gasoline will increase, which overall still makes it more expensive to be a car owner,
The upcoming tax changes will be particularly noticeable for diesel drivers. The energy tax on diesel will increase by 4 percent, equivalent to 15 ore per liter.
And an additional 65 cents in tax per liter will be added. This will finance an agreement on the so-called 'green space'.
In addition, the requirements for CO2 displacement in diesel are being tightened, which according to calculations from FDM could lead to a further increase of 25 ore per liter. Overall, this means that diesel will become around 1.05 kroner more expensive per liter.
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However, the removal of the equalization tax will provide some financial relief for diesel drivers, especially those who drive shorter distances.
According to FDM's calculations, diesel drivers who drive less than 10,000 kilometers per year will experience a lower overall cost than today. Conversely, drivers who drive longer distances, for example 30,000 kilometers per year, will have to pay around 2,000 kroner more in 2025.
Gasoline drivers will also experience tax increases. Although to a lesser extent. The energy tax on gasoline will increase by 23 cents per liter, which for an average gasoline driver who drives 20,000 kilometers per year will result in an additional annual expense of approximately 288 kroner.
While fuel prices are adjusted upwards, the electricity tax is reduced by 4 ore per kWh. However, this will only provide marginal relief for electric car owners. And especially for those who do not have a charging box at home that refunds the tax.
Overall, it is FDM's assessment that the tax changes make it more expensive to own both gasoline and diesel cars, while the government keeps its hand over people in electric cars.
The government's decision to drop the equalization tax may, however, provide an economic benefit to certain diesel drivers depending on their driving patterns. It is also reported that the equalization tax will return as early as 2027.
