Norway will begin scaling back its long-standing value-added tax (VAT) exemption on electric car purchases from 2026 after a budget compromise stopped the government’s earlier plan for an abrupt removal, as the country’s electric vehicle market reached record levels.
Under the proposal maintained in the October budget, VAT will be applied to the portion of an electric car’s purchase price exceeding 300,000 Norwegian kroner ($25,500) from Jan. 1, 2026, down from the current exemption threshold of 500,000 kroner. The standard Norwegian VAT rate is 25%. A separate plan to abolish the exemption entirely in 2027 was dropped, with lawmakers agreeing instead to lower the threshold further to 150,000 kroner in 2027 before ending the exemption fully in 2028.
The revised framework means that many affordable electric cars will still qualify for partial tax relief in 2026, but far fewer models are expected to qualify from 2027. At the 150,000-kroner threshold, most new battery-electric vehicles would no longer fall within the VAT-free range, potentially limiting the incentive’s practical impact.
The Norwegian Electric Car Association welcomed the slower phase-out. “We are relieved and happy. It is crucial for the electric car initiative that VAT is introduced more gradually than originally planned by the government,” said Christina Bu, secretary general of the association. “This will help reduce emissions further.”
The budget deal was supported by the Socialist Left Party (SV), which said it pushed for affordability to be preserved during the transition. “We have worked to ensure that newly sold cars remain emission-free,” SV leader Kirsti Bergstø said. “It is essential that electric cars remain affordable so that people with average incomes can still buy a car.”
The policy debate comes as Norway’s electric vehicle market continues to set global benchmarks. New battery-electric car registrations jumped to 19,427 units in November, boosting the EV share of total new passenger car sales to 97.6%, data from the Norwegian Road Traffic Information Council (OFV) showed. Total registrations reached 19,899 vehicles, leaving only a few hundred non-electric cars sold during the month.
Tesla led the market with 6,215 registrations in November, giving the U.S. automaker a 31.2% market share. Tesla’s cumulative 2025 registrations have already surpassed its previous national record. Volkswagen, Volvo and BMW followed in monthly rankings, while Chinese brands including BYD, MG and Xpeng continued to post strong year-to-date growth, especially in the mid-size SUV segment.
By model, the Tesla Model Y remained Norway’s best-selling car, followed by the Model 3, Volvo EX40 and Volkswagen ID.4. OFV said high registration activity is likely to continue into December as buyers seek to secure deliveries ahead of expected tax changes.