Norway’s government has announced plans to phase out the VAT exemption on electric vehicle purchases, stating that the country’s EV adoption goals have largely been achieved.

According to the Norwegian Road Federation, electric vehicles accounted for over 95 percent of new car sales in the country, a 23.5 percent increase compared to last year.

The Ministry of Finance has proposed reducing the VAT-free threshold for electric vehicles from 500,000 Kroner to 300,000 Kroner in 2026, with the full exemption expected to be removed by 2027.

Finance Minister Jens Stoltenberg explained, “The gradual phase-out of EV benefits will allow us to reduce other taxes and fees, in line with the government’s fiscal commitment that any increase in certain taxes will be offset by reductions elsewhere.”

The incentive scheme, introduced roughly two decades ago, has cost the country an estimated 17.5 billion Norwegian Kroner.