German electric vehicle and employment regulations

Germany has introduced new regulations affecting the use and administration of electric vehicles (EVs) and private vehicle usage in professional contexts.

In employment law, new rules effective January 1, 2026, dictate how employers reimburse employees for electricity costs incurred while using company-provided electric or plug-in hybrid vehicles. The previous flat-rate allowance for home charging is no longer permitted; instead, employees must document specific electricity usage and multiply it by their individual contract rates for tax-free reimbursement. Additionally, employers cannot unilaterally mandate the use of private vehicles for business trips without explicit contractual agreements.

Regarding environmental access, the German Bundesrat approved a regulation that will waive the requirement for vehicles with an ‘E’ license plate—including electric vehicles and certain plug-in hybrids—to display a green environmental sticker to enter environmental zones. The ‘E’ designation will serve as sufficient proof of eligibility, a change expected to save owners and administrative bodies over six million euros annually. Implementation is slated for late 2026 or early 2027, depending on the publication date in the Federal Law Gazette.