Bulgaria’s Ministry of Finance has sparked a public backlash and a hasty retreat after proposing an excise tax on high-powered motor vehicles under the banner of tax fairness. The draft amendment to the Excise Duties and Tax Warehouses Act aimed to tax luxury goods by targeting engine power, drawing immediate criticism for employing an outdated criterion that penalizes modern family electric vehicles while sparing expensive gasoline-powered luxury cars.
The proposed legislation, open for public consultation until October 24, would levy a one-time tax upon the import or first registration in Bulgaria for any vehicle with an engine power equal to or exceeding 250 kilowatts, or 340 horsepower. Following widespread public criticism, Deputy Minister of Finance Lyudmila Petkova announced that the ministry plans to remove the provisions, though the text remains unchanged in the current draft pending final approval of the texts in the excise law.
Flawed Criteria Target Family Electric Vehicles
The 250-kilowatt threshold bears no direct correlation to a vehicle’s price or market value. Electric vehicles currently account for approximately 5% of new car sales in Bulgaria, and due to the inherent design of electric motors, mainstream models easily exceed the proposed power limit.
Popular electric crossovers such as the Tesla Model Y and Hyundai Ioniq, alongside various Chinese and European imports, cross the 250 kW threshold despite serving as standard family transportation. Conversely, high-end internal combustion luxury vehicles with slightly lower power outputs escape the tax entirely.
Tax Burden Comparison: Electric Crossover vs. Luxury Sedan
Under the Ministry of Finance’s proposed formula, new vehicles exceeding the power limit would face a base excise tax of €10,000 plus an additional €10 for every kilowatt above 250 kW. Used vehicles would face a base of €5,000 plus €8 per excess kilowatt. This excise is applied prior to calculating value-added tax, compounding the financial impact for buyers.
- Hyundai Ioniq 5 N: A new high-performance electric family vehicle with a 478 kW (650 hp) output costs roughly €76,500. Under the ministry’s formula, it would incur a €10,000 base excise plus a €2,280 kilowatt surcharge, totaling €12,280 in excise tax. Factoring in VAT on the tax adds another €2,456, raising the total additional cost to €14,736.
- Porsche Panamera 4: A new gasoline-powered luxury sedan equipped with a 2.9-liter V6 Twin-Turbo engine producing 243 kW (330 hp) falls just under the 250 kW limit. Despite carrying a market price of 110,000-130,000 евро depending on optional equipment, this high-end luxury vehicle would owe zero excise tax under the draft rules.
The disparity has exposed a fundamental disconnect in how the finance ministry defines luxury in a shifting automotive market dominated by high-output battery electric powertrains.
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