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29 February 2012

Amendment of the Law on Registration Duty

Amendment of the Law on Registration Duty

Yesterday, 28 February 2012, a new bill amending the Law on Registration Duty was introduced.

The amendment entails increasing the tax base of leasing companies for most cars because the vehicle value liable to duty must be equal to the car purchase price. In other words, the registration duty shall be calculated on the basis of the invoice price of the car.

Since there has been some negative press coverage about leasing, we note that pursuant to the “comments on the bill”, “the leasing rules by themselves are not a problem”.
It is also evident that the objective of the amendment is that “in principle, the duty paid for a vehicle shall be based on the general price of the vehicle when it is sold to a customer here in Denmark, which is equal to the price paid by an independent customer”. Hence, the leasing companies have been following the existing legislative framework, but by the bill, the government wants to place everyone on equal footing with regard to the purchase or leasing of new cars.

By introducing the bill the government also wants to achieve more transparency concerning the tax base applicable to newly registered cars. Based on this, SKAT will, i.a. publish the tax base for all new cars online.

According to the bill, the Law shall apply for vehicles registered after 28 February 2012. If a written purchase or a leasing agreement was entered into with the customer by 27 February 2012, the previously applicable taxation rules can be applied for cars registered by 31 July 2012.

We expect the bill to be adopted in the presented wording since there should be a majority in the Parliament.

What does it mean?

First and foremost, the lease payments and the consumers' tax base will increase for new cars. At the moment, we are unable to provide any details about the economic consequences because we are waiting for the car importers’ new price lists.

Until we have received them, we will continue to make calculations but they will be based on the prices applicable as of 27 February 2012 and changes will be made afterwards.

When we receive all prices, we will contact you regarding an update of the company car policy.

Current Orders

All orders that we have received by 23:59 on 27 February 2012 will be sent to the dealer and will be subject to the previous legislative framework. If the car can be registered by 31 July 2012, the company and its customers can benefit from the previous legislative framework.

Orders received by LeasePlan on 28 February 2012 or later will be subject to the new legislative framework. As far as these orders are concerned, we will contact you in order to further discuss whether you wish to cancel or confirm your order.

Should you need any additional information, do not hesitate to contact us.