German Car Tax (Kfz-Steuer): How Engine Size and CO₂ Set Your Bill

Quick answer: For a German car first registered from 2021 onward, the annual Kfz-Steuer (motor-vehicle tax) is the sum of two parts: a displacement charge based on engine size (Hubraum), €2.00 per started 100 ccm for petrol, €9.50 for diesel, plus a CO₂ charge that is zero for the first 95 g/km and then rises in tiers from €2.00 up to €4.00 per gram. A 1.6-litre petrol emitting 120 g/km pays roughly €83 a year; a 2.0-litre diesel at 140 g/km pays about €286.50. Pure electric cars first registered up to 31 December 2025 are exempt for a period. You find the two input figures in your Zulassungsbescheinigung Teil I: field P.1 (displacement) and field V.7 (CO₂).

What determines your car tax

German car tax is deliberately built to reward small, efficient engines and to penalise thirsty, high-emission ones. Since the reform that applies to cars first registered on or after 1 January 2021, the calculation rests on exactly two technical values that are printed on your vehicle's registration certificate:

• Hubraum (displacement), the physical size of the engine in cubic centimetres (ccm), shown in field P.1.
• CO₂ emissions, the certified figure in grams per kilometre, shown in field V.7 (WLTP figure for newer cars).

The fuel type matters too, because petrol and diesel engines are charged at very different rates for the displacement part. Everything is collected annually by the Hauptzollamt (the German customs authority), not by your local town hall, and the bill arrives once a year based on your registration date.

This article explains each component, walks through two full worked examples with euro figures, and shows where to read the numbers off your own papers so you can estimate the tax before you buy a car. The figures below are estimates for illustration and are based on the rules for registrations from 2021; older vehicles use earlier thresholds.

The displacement part (Hubraum)

The engine-size charge is the simplest piece. You take the displacement in ccm, divide by 100, and round up to the next whole unit, the law charges "per started 100 ccm", so even 1 ccm into a new block counts as a full block. Then you multiply by the fuel-specific rate:

Example: a 1,598 ccm petrol engine → 1,598 ÷ 100 = 15.98 → rounded up to 16 units → 16 × €2.00 = €32.00. The exact same 1,598 ccm block as a diesel would cost 16 × €9.50 = €152.00.

Why diesel is dearer in tax but often cheaper to run

The near-fivefold gap looks unfair until you remember the trade-off Germany built into the system. Diesel fuel is taxed less at the pump than petrol (a lower energy-tax rate), so diesel drivers save at every fill-up. To claw some of that back, the state charges diesel cars a much higher displacement rate in the annual Kfz-Steuer. The rough logic: diesel = lower fuel cost per kilometre, higher fixed annual tax; petrol = the reverse. For a high-mileage driver the fuel saving usually outweighs the higher tax; for someone doing 8,000 km a year, the extra tax can wipe out the pump saving entirely. That break-even is the single most important number to work out before choosing diesel.

The CO₂ part

The second component targets emissions directly. The first 95 g/km are free. Every gram above 95 is charged, and the price per gram climbs the higher your emissions go. Crucially the tiers are marginal: like income tax, each band only applies to the grams that fall inside it, not to your whole figure.

So a car emitting 120 g/km is charged: 20 g in the 96-115 band × €2.00 = €40.00, plus 5 g in the 116-135 band × €2.20 = €11.00 → €51.00 of CO₂ tax. Note the reward for staying at or below 95 g/km: an efficient hybrid at exactly 95 g pays nothing for CO₂ and only the small displacement charge.

Worked example: petrol vs diesel

Let's put both parts together for two realistic mid-size cars, both registered in 2021 or later. All figures are estimates for illustration.

The diesel costs about €203.50 more per year in tax, almost entirely because of the €9.50 displacement rate, not the emissions. Over a typical ownership period of, say, eight years that is roughly €1,600 in extra tax alone. Whether the diesel still makes sense depends on how many kilometres you drive and the price gap at the pump.

Electric cars and hybrids

Pure battery-electric vehicles (BEVs) first registered up to 31 December 2025 are exempt from Kfz-Steuer for a defined period (the exemption is time-limited and, when it ends, the vehicle moves to a reduced rate rather than the full weight-based rate). This is a major running-cost advantage: an EV owner pays €0 in car tax where a comparable petrol car pays €80-€150 and a diesel several hundred. The exemption is tied to the first registration date, so it follows the car even if you buy it used within the exemption window.

Plug-in and mild hybrids get no special exemption, they are taxed as their combustion engine dictates: displacement charge on the petrol or diesel engine plus the CO₂ charge on their (usually low) certified emissions. Because many plug-in hybrids certify at 30-50 g/km on the WLTP cycle, their CO₂ component is often €0 and they pay only the modest displacement charge, which is one reason they became popular company cars.

As with all combustion vehicles, EV and hybrid tax is administered by the Hauptzollamt. Always confirm the current status of the EV exemption for your registration year, as the end date and the follow-on reduced rate are set by legislation that can change.

Where to find P.1 and V.7

You don't need to guess any of these numbers, they are printed on your Zulassungsbescheinigung Teil I (Part I of the registration certificate, the document you keep in the car):

• Field P.1, Hubraum (displacement) in ccm. This is your engine-size figure.
• Field V.7, CO₂ emissions in g/km. Use this exact value in the tier table.
• Field P.3, fuel type (Kraftstoff/Energiequelle), so you know whether the €2.00 or €9.50 rate applies.

If you are looking at a used-car listing, ask the seller for a photo of Teil I, or read the values off the Fahrzeugschein. With P.1, V.7 and the fuel type you can calculate the exact annual tax in under a minute.

Buying tips: check the tax before you buy

Car tax is a fixed annual cost for as long as you own the vehicle, so it belongs in your buying decision alongside fuel, insurance and depreciation. A few practical pointers:

• Watch the band edges. Because the CO₂ tiers are marginal, jumping from 115 to 116 g/km only costs a couple of euros, but a big engine pushes the displacement charge up in €2.00 (petrol) or €9.50 (diesel) steps per 100 ccm, so a 2.0 L versus a 1.6 L diesel is €38/year before you even look at emissions.
• Do the diesel break-even. Take the annual tax difference (often €150-€250) and divide by your fuel saving per kilometre to see how many kilometres a year justify the diesel.
• Confirm the registration date for EVs. The tax exemption depends on first registration up to 31 Dec 2025, verify it on Teil I before assuming €0 tax.
• Older cars use older rules. Cars first registered before 2021 fall under earlier CO₂ thresholds, and pre-2009 vehicles may still use displacement-and-emission-class rules. Don't apply the table above to a 2015 car.

Comparison table: petrol vs diesel vs EV

Estimated annual Kfz-Steuer for three comparable cars, registrations from 2021. Figures are illustrative estimates.

Sources

• Kraftfahrzeugsteuergesetz (KraftStG), the German motor-vehicle tax law setting the €2.00/€9.50 displacement rates and the CO₂ tier structure for registrations from 2021.
• Bundesministerium der Finanzen / Generalzolldirektion (Zoll), administration of Kfz-Steuer by the Hauptzollamt and the electric-vehicle exemption for first registrations up to 31 December 2025.
• Zulassungsbescheinigung Teil I field definitions (P.1 displacement, P.3 fuel, V.7 CO₂), per EU registration-certificate standards.

Frequently asked questions

Is the CO₂ tax charged on my whole emissions figure or only the excess?

Only the excess above 95 g/km, and even then in marginal tiers. A car at 120 g/km is not charged €2.20 on all 120 grams, it pays €0 on the first 95 g, €2.00 on grams 96-115, and €2.20 only on grams 116-120.

Why is my diesel's tax so much higher than a petrol of the same size?

The displacement rate for diesel is €9.50 per started 100 ccm versus €2.00 for petrol, nearly five times as much. It offsets the lower fuel tax diesel drivers pay at the pump. The CO₂ part is calculated identically for both fuels.

Do I really pay €0 tax on an electric car?

Pure electric cars first registered up to 31 December 2025 are exempt for a defined period. When that period ends the car moves to a reduced rate rather than the full tax. Always confirm the current exemption terms for your registration year.

Where exactly do I read the displacement and CO₂ from?

From Zulassungsbescheinigung Teil I: field P.1 for displacement in ccm and field V.7 for CO₂ in g/km. Field P.3 tells you the fuel type so you know which displacement rate applies.

My car is from 2018, do these tiers apply?

No. The €0-up-to-95-g and the tier table above apply to cars first registered from 1 January 2021. Cars registered before then use earlier CO₂ thresholds, and pre-2009 vehicles may follow older displacement-and-emission-class rules. Use a calculator that asks for your first-registration date.

Reviewer's note: This article was written by Lukas Weber (Steuerberater) and reviewed by Markus Weber for factual accuracy against the current Kraftfahrzeugsteuergesetz rules for registrations from 2021. All euro figures are illustrative estimates to explain the method; your actual assessment comes from the Hauptzollamt. This is general information, not individual tax advice, for your specific situation consult a qualified Steuerberater.