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Breaking up private lease electric car contract because of road tax: is that allowed?

September 7, 2023

What is private lease?

Private lease, what exactly is that? Explain! Private lease is actually a rental product that allows you to use a car for a set period of time for a fixed monthly fee. You do not become an owner of the car. The monthly fee includes most costs such as road tax, insurance, maintenance, repairs and tires. At the end of the contract, you return the car.

Road tax expense still missing from BEVs

The road tax component applies only to cars with a conventional internal combustion engine on board. This includes mild-hybrids, hybrids and plug-in hybrids. Road tax you don’t pay for an electric car yet. That cost is missing from current private lease contracts for an electric car for that reason.

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Road tax electric car in 2025

Starting in early 2025, you will also start paying road taxes for battery-electric cars. There will be a quarter rate, so a BEV will have a 75 percent discount on road tax. That privilege disappears as early as 2026. Exact details are still missing, but so there will be an additional cost. Private lease providers are prepared for this.

General Terms and Conditions of Private Lease Certification

Anyone who enters into a private lease contract with an authorized provider – whether from a car brand itself or a major leasing company – automatically comes into contact with the document
General Terms and Conditions for Private Lease
. This document – consisting of 18 pages – lays out all the terms and conditions, including the so-called fine print. Chapter H is particularly relevant in this matter.

Chapter H – titled “The Term Amount, Change of Term Amount, Multiple Mileage and Deposit” contains crucial information about breaking open a current contract. In particular, component 14 of chapter H provides clarity. Section 14 answers the following question: may the leasing company change the installment amount after signing the lease?

Three scenarios

What seems? The leasing company may change the installment amount after the lease is established only in three scenarios.

Scenario 1: If after signing the lease contract, taxes or fees related to the possession or use of the vehicle are changed. Examples of these taxes include motor vehicle tax, VAT and insurance tax. These increases in the installment amount can also occur within three months of signing the lease contract.

Scenario 2: If new taxes or charges related to the ownership or use of the car are introduced after the lease is signed. These increases can also take place within three months of signing the lease contract.

Scenario 3: If between the signing of the lease contract and the delivery of the vehicle, the purchase price of the vehicle is increased. If the installment amount is increased on this ground, you may terminate the lease agreement in writing without further charges within 14 days after the leasing company notifies you of the increase. This increase can also occur within three months of signing the lease contract.

The consequences

Those driving an electric car now via Private Lease with a term beyond 2025 will face a higher monthly charge anyway. The amount of that monthly charge depends on the leasing company and the amount of road tax for the specific model. The heavier the car, the higher the monthly rate will be.

Private Lease electric car and road tax