Conditions for granting the car scrapping bonus to be clarified

The Government is proposing an urgent revision of legislation on car scrapping bonuses to ensure that a subsidy granted for scrapping one old car is used in purchasing one new low-emission passenger motor vehicle, electric bicycle or right to use public transport. This is a technical revision ensuring that provisions correspond more closely to the original purpose of the legislation.

The Car Scrapping Bonus Act for 2020 and 2021 took effect on 1 December 2020. The scrapping bonus is EUR 2,000 when used for purchasing a new low-emission passenger motor vehicle, such as an electric car. A scrapping bonus not exceeding EUR 1,000 may instead be used for purchasing a new electric bicycle, a season ticket for public transport, or a mobility service that includes the right to travel by public transport.

An end to undesirable bundling of bonuses

It became clear after the new law took effect that it failed to specify with sufficient clarity the maximum bonus that could be used for each new car purchase, with the legislation imposing no clear prohibition on using more than one scrapping bonus to purchase one car.

The primary purpose of the law is to reduce traffic emissions and modernise the stock of motor vehicles used in Finland. The scrapping bonus is one of the measures included in the Ministry of Transport and Communications roadmap for fossil-free transport.

The Act also seeks to boost car sales, which have declined due to the Covid-19 pandemic. The change in the law would ensure that no individual could reap an unreasonable benefit by using multiple scrapping bonuses to purchase one new car. Limiting the number of scrapping bonuses to one would also ensure that more new vehicle purchases are motivated by the central government funds budgeted for scrapping bonuses.

The Finnish Transport and Communications Agency Traficom is responsible for granting the scrapping bonus and general oversight of the associated system. Applications for a scrapping bonus must be submitted by no later than 31 December 2021.

What next?

The Government proposed an amendment to the Car Scrapping Bonus Act for 2020-2021 on 14 January 2021.

A submission debate on the Government Bill will be held on a date to be announced on the website of Parliament (future plenary sessions).

The Bill will then be referred to a parliamentary committee and reconsidered in a plenary session after the committee reports its findings.

The amendment is intended to take effect at the earliest opportunity after parliamentary consideration, and would only be applied after its entry into force. The amended Act would remain in force until 31 March 2022.

The proposed amendment to the Car Scrapping Bonus Act for 2020 and 2021 is of technical character, and no other substantive amendment is proposed to the Act. No formal public consultation will accordingly be arranged on this subject.

For further details, please contact:

Ministerial Adviser Eleonoora Eilittä, tel. +358 50 309 9189