Is Vehicle Tax Included in German Car Insurance?

One of the most frequently asked questions I receive is: “Is vehicle tax included in German car insurance?” The short answer is no. However, understanding why this is the case and what each cost covers is essential for every car owner in Germany. 

Whether you are a long-term resident or new to the country, understanding the separation of these costs will save you time, money, and unnecessary confusion.

Understanding Vehicle Tax (Kfz-Steuer) in Germany

Vehicle tax in Germany, known as Kraftfahrzeugsteuer (Kfz-Steuer), is a mandatory tax levied by the Federal Customs Service (Zollamt). It is separate from your car insurance and must be paid annually. The cost is calculated based on several factors, including:

• Engine size (in cubic centimeters)
• CO2 emissions
• Fuel type (diesel or petrol)
• Date of first registration

For instance, a petrol-powered car emitting less CO2 will attract a lower tax rate than a diesel vehicle with higher emissions. On average, vehicle tax ranges between €100 and €500 annually, depending on your car’s specifications.

What Does German Car Insurance Cover?

Car insurance in Germany is also mandatory, but it covers different aspects of vehicle ownership. There are three main types:

1. Haftpflichtversicherung (Third-Party Liability Insurance): This is the minimum legal requirement. It covers damages you cause to others, including bodily injury and property damage.
2. Teilkasko (Partial Coverage): This covers theft, fire, glass damage, and natural events like storms or hail.
3. Vollkasko (Comprehensive Coverage): Includes everything in Teilkasko plus damage to your own vehicle, even if the accident is your fault.

Each insurance policy is priced based on your vehicle type, driving history, age, location, and how much you drive annually. For example, comprehensive insurance for a BMW 3 Series may cost between €800 and €1,500 annually, while liability-only insurance for a used VW Golf might be as low as €300.

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Why Vehicle Tax and Insurance Are Separate

Vehicle tax is a government levy intended to promote environmental responsibility and road upkeep. Car insurance, on the other hand, is provided by private companies and is meant to manage financial risks associated with accidents and other incidents.

The payment process for vehicle tax and insurance also differs:

• Vehicle tax is collected via SEPA direct debit by the customs office.
• Insurance premiums are paid directly to your insurer, monthly or annually.

Although they are linked during vehicle registration, they are separate obligations. If you fail to pay your vehicle tax, you risk losing your registration, even if your insurance is up to date.

Registering a Car in Germany

Registering a car in Germany involves several steps and associated costs. Here’s how you can do it:

1. Obtain car insurance: Before anything else, get your eVB number (electronic insurance confirmation).
2. Visit the Kfz-Zulassungsstelle (registration office).
3. Submit documents:
   • Valid ID or passport
   • Proof of residence
   • Vehicle title and registration certificate (parts I & II)
   • TÜV (vehicle inspection) certificate
   • eVB number
4. Pay registration fees (usually €30 to €50).
5. Pay vehicle tax.
6. Receive your license plates and stickers.

Altogether, expect to spend €100 to €200 during the registration process, excluding insurance and tax.

Average Car Insurance and Tax Costs in Germany

Low-Emission Zones and Green Stickers

Germany has strict environmental laws, particularly in large cities. Low-emission zones (Umweltzonen) are designated areas where only vehicles meeting certain emission standards can enter. To comply, your vehicle must display a Feinstaubplakette (fine dust sticker).

The cost of the sticker is around €5 to €10, and it is issued based on your vehicle’s emission class. If your car doesn’t meet the standard, you may not be allowed to drive in these zones, regardless of your insurance status.

Electric vehicles are exempt from vehicle tax for 10 years from the date of registration, making them an attractive option for city dwellers and environmentally conscious drivers.

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Real-Life Case Study: Helping a German-American Family

A client of mine—an American family relocating to Berlin—recently faced a lot of confusion while importing their SUV. They assumed their U.S. insurance would cover them in Germany, and they also believed that paying for insurance included all necessary government taxes.

I guided them through the correct process, which included obtaining a local insurance policy, registering the car, paying the vehicle tax, and obtaining the appropriate green sticker. Within two weeks, their car was fully legal, and they were able to explore the city stress-free.

How to Know Your Vehicle Tax Amount

You can easily calculate your tax using the official Zoll website. You’ll need details like engine size and CO2 emissions. Your vehicle tax is calculated yearly, and payment is automatic via the SEPA mandate you provide at registration.

If you’re unsure about your vehicle’s environmental classification, the TÜV report or your manufacturer’s documentation will have the necessary details.

Additional Tips for Expats

• Always budget for both vehicle tax and insurance.
• Use comparison sites like Verivox or Check24 to find the best insurance rates.
• Ask your insurer if they offer bundled coverage for multiple vehicles or family members.
• Update your address with the registration office if you move, or your car tax notice might get lost.

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Final Thoughts

To answer the original question clearly: No, vehicle tax is not included in German car insurance. These are two separate legal obligations that serve different purposes.

German car insurance protects your finances in case of accidents or damage, while vehicle tax supports environmental initiatives and road infrastructure. As someone who’s spent years helping both locals and expats understand these systems, my advice is to treat them as equally important.

Understanding this distinction helps avoid legal issues, penalties, or unnecessary stress. So, whether you’re buying your first car in Germany or managing a fleet of vehicles for your family, being informed is your best asset.

If you’re an expat or a German resident and need help navigating your insurance options, feel free to reach out. The road to being a confident, compliant car owner in Germany starts with knowledge, and I’m here to help every step of the way. Send an email today to [email protected].