Road tax — known as Vehicle Excise Duty (VED) in the UK, Kfz-Steuer in Germany, and taxe sur les véhicules in France — is an annual levy that funds road infrastructure and incentivizes lower-emission vehicles. Each country uses a different formula. The UK bases VED entirely on CO2 emissions, with first-year rates ranging from £0 for zero-emission vehicles to over £2,745 for cars emitting above 255 g/km. Germany combines engine displacement (€2 per 100cc for petrol, €9.50 per 100cc for diesel) with a CO2 surcharge of €2.00 per g/km above the 95 g/km threshold. France applies a one-time malus écologique at registration, which can exceed €50,000 for high-emission vehicles. In the United States, road tax varies by state and is typically based on vehicle weight, value, or a flat fee. As governments push toward electrification, many are restructuring road tax to replace lost fuel duty revenue from EVs, making it increasingly important for car buyers to understand how these taxes will affect total ownership cost over the vehicle's lifetime.
Total cost of ownership matters
Road tax is one of several recurring vehicle costs alongside fuel, insurance, depreciation, and maintenance. For high-emission vehicles, road tax can exceed €1,000-€2,000 per year — easily 10-20% of total annual ownership cost. Always factor it in when comparing two vehicles, especially when choosing between petrol/diesel/hybrid/EV options.