Concept and Legal Foundations of the Scrappage Premium
Die Scrappage premium is a colloquial term for various government-initiated subsidy programs that provided financial incentives for replacing old vehicles with new, more environmentally friendly ones. The primary aim of such measures is to improve the environmental quality of the vehicle fleet, and additionally to stimulate the automotive industry. The scrappage premium was originally introduced in Germany in 2009 by the governing coalition and quickly became a significant term in the context of environmental and economic policy subsidy instruments.
Background and Objectives
The introduction of the scrappage premium was based on the idea of increasing the sales of environmentally friendly and more fuel-efficient vehicles, while at the same time permanently removing old vehicles—often with high pollutant emissions—from circulation. This not only pursued climate protection goals, but also contributed to strengthening the automotive and supplier industries during times of economic recession.
Statutory Regulation of the Scrappage Premium in Germany
Regulations of the 2009 Environmental Premium
The best-known model of the scrappage premium is the so-called Environmental premium (UG-Environmental Premium Act), which was introduced by the German federal government in January 2009. The legal basis for payment was formed by administrative guidelines issued by the Federal Office for Economic Affairs and Export Control (BAFA). A specific law was not passed; instead, the payouts were made on the basis of the federal budget act and the authorizations contained therein.
Requirements for Claiming the Premium
The following legal requirements had to be met to receive the premium:
- The vehicle to be returned had to be at least nine years old (first registration at least nine years before application) and must have been registered to the applicant for at least one year.
- The old vehicle had to be scrapped by an authorized dismantler, with a proper certificate of destruction issued in accordance with the End-of-Life Vehicles Ordinance (AltfahrzeugV).
- The new vehicle (either a brand-new or annual car) had to comply with at least Euro 4 emission standards and be registered in Germany.
- An application had to be submitted to BAFA on time, along with all required documentation.
Amount of the Environmental Premium
The premium amounted to 2,500 euros and was paid directly to the applicant.
Tax Aspects
With regards to the taxation of the environmental premium, the Federal Ministry of Finance clarified that it constituted tax-free state aid (§ 3 No. 11 of the Income Tax Act (EStG)). It was not subject to income tax or VAT.
Environmental and Waste Law Provisions
In connection with the scrappage premium, the provisions of the End-of-Life Vehicles Ordinance (implementation of EU Directive 2000/53/EC) apply. This ordinance stipulates environmentally sound recycling and a documentation process for proper scrapping. Certification of businesses is carried out by accredited experts, and the scrapping process must be documented with a certificate of recovery. The final withdrawal of the vehicle from traffic occurs with its permanent de-registration at the vehicle registration authority.
European Law References and State Aid Law
The introduction of environmental and economic policy subsidy programs such as the scrappage premium is generally relevant to state aid law. According to Art. 107 of the Treaty on the Functioning of the European Union (TFEU), state aid is generally subject to notification requirements and must be approved by the European Commission. The environmental premium was approved by the Commission as a crisis measure, as it served as a temporary measure to reduce overcapacity and promote environmentally friendly technologies.
Effects of the Scrappage Premium and Legal Consequences
In the aftermath of the environmental premium, numerous legal issues arose, such as the eligibility of applications for used car purchases, the recognition of scrapping certificates, and the question of repayment rights in cases of abuse or non-fulfillment of requirements.
Controls and Sanctions
BAFA reserved the right to comprehensive audits and recoupment if the information in the application was incorrect or it transpired that requirements had not been met. Abuse of the scrappage premium was prosecuted as subsidy fraud under § 264 of the Criminal Code (StGB).
Successor Regulations and Developments
Even after the end of the premium in 2009, similar subsidy models continued—such as environmental bonus programs for electric and hybrid vehicles. Legally, comparable requirements and obligations for evidence apply, particularly with regard to environmental effects and the withdrawal of old vehicles.
International Comparisons
Germany was not the only country with a government scrappage premium. Comparable programs exist or existed in other EU countries as well as, for example, in the USA, each with its own legal requirements regarding environmental standards and documentation procedures.
Case Law on the Scrappage Premium
Several administrative and civil courts have dealt with individual questions regarding the environmental premium, especially the right to payment and the interpretation of subsidy conditions. The administrative courts generally confirmed the strict adherence to the formalized criteria set by the legislator.
Literature and Further Links
- End-of-Life Vehicles Ordinance (AltfahrzeugV)
- Notice of the Federal Ministry for Economic Affairs and Technology on the Environmental Premium (2009)
- EU Directive 2000/53/EC on End-of-Life Vehicles
- § 264 StGB – Subsidy Fraud
- § 3 No. 11 EStG – Tax Exemption of Grants
In summary the scrappage premium is a central concept of environmental and subsidy law, encompassing civil, administrative, tax, and European law aspects. Its legal structure serves as a model for government support of ecologically sustainable business practices, while also exemplifying the challenge of securely combining economic and environmental objectives under the law.
Frequently Asked Questions
Who is legally entitled to the scrappage premium?
The scrappage premium is generally available to private individuals as well as companies, associations, or organizations that have an old vehicle scrapped and simultaneously acquire a new or at least lower-emission vehicle. From a legal standpoint, it must be noted that at the time of scrapping and purchasing the new vehicle, the applicant must usually be listed as the registered keeper of the old vehicle in the registration certificate. It is also necessary that both the old and the new vehicle meet certain requirements stipulated by the relevant subsidy guideline (e.g., permitted emission classes, minimum holding period of the old vehicle). In most cases, the old vehicle must not have been transferred to another owner for a certain period before the application in order to prevent abuse through targeted changes of owner. The precise group of eligible applicants and the requirements for evidence are stipulated in the relevant statutory provisions or subsidy guidelines issued by the federal government, federal states, or manufacturers and may vary in detail.
What legal requirements must the vehicle to be scrapped fulfill?
At the time of application, the vehicle to be scrapped must usually meet certain legal minimum requirements: it must have been registered continuously to the applicant for at least a certain period, usually six to twelve months, before being permanently deregistered and scrapped. In addition, it must be a roadworthy motor vehicle registered for use on public roads; ‘scrap vehicles’ or vehicles already taken out of service are generally excluded. The age and type of the vehicle must also meet certain criteria—such as a minimum age or belonging to a specified emission class (for example, Euro-1 to Euro-4 vehicles). The proper scrapping must be performed by a certified dismantler in accordance with § 5 para. 3 of the End-of-Life Vehicles Ordinance, and must be documented by an official certificate of destruction. This certificate must be submitted together with the application for the scrappage premium.
What statutory proof obligations exist as part of the application process?
Extensive documentation is required when applying for the scrappage premium. The core requirement is the certificate of destruction in accordance with § 15 FZV (‘Vehicle Registration Regulation’), which must be issued by an authorized dismantler. In addition, the permanent de-registration of the vehicle according to § 14 FZV must usually be proven—this is typically done by presenting the de-registration certificate from the registration office. With regard to the new vehicle, the purchase contract must be submitted, often supplemented by evidence of initial registration in the applicant’s name. At the same time, bank statements or proof of payment for the purchase price and receipt of the premium must be kept to preclude later recoupment. Incomplete or late documentation will result in loss of claim; additionally, misrepresentation (e.g., by forgery of evidence) may have criminal consequences.
What are the legal consequences of faulty or abusive applications?
If false information is provided—either intentionally or negligently—when applying for the scrappage premium, or if required documents are forged or manipulated, this may have significant legal consequences. In addition to forfeiture of the premium and the obligation to repay subsidies already received, there may be civil law claims and criminal investigations, e.g., for subsidy fraud (§ 264 StGB). The competent approval authority is legally obliged to report any suspected fraud to law enforcement authorities. Even negligently completed forms or incomplete documentation are regularly rejected and can result in repayment claims. In addition, the authority has a public law right to reclaim the premium if it was unwarrantedly received.
Are there statutory deadlines that must be observed in the application and implementation process?
The statutory deadlines vary depending on the specific structure of the premium and the relevant funding guidelines. As a rule, the time between scrapping the old vehicle and registering the replacement vehicle is regulated by law—in many cases, a maximum of six months is permitted between these two processes. Furthermore, the application must often be submitted within a specific period of registering the new vehicle (e.g., no later than six months after purchase). If the applicant misses these deadlines, the claim will be forfeited without recourse. Likewise, all original documents and evidence regarding vehicle ownership, scrapping, and purchase of the new vehicle must be submitted within the statutory time limits to the competent authority. Exceptions or extensions of deadlines are usually only possible in cases of force majeure or particularly justified individual cases.
What role do state or manufacturer-specific guidelines play in the legal context?
In addition to government regulations (federal or state funding guidelines), there are often additional, usually manufacturer-specific premium programs with their own legal requirements and procedures. State premiums are subject to the administrative procedures and sanctions of the relevant authorities and are governed by administrative law; manufacturer premiums, by contrast, are based on private law conditions within the purchase contract, but also require binding compliance with regulations relating to the registration, scrapping, and documentary evidence for vehicles. Receiving both state and manufacturer-specific premiums in parallel is often limited or excluded. In the case of doubt, the interpretation of the relevant set of rules is decisive.
Can claims arising from the scrappage premium be inherited or transferred?
Legally, the claim to the scrappage premium is a highly personal right of the applicant and is generally non-transferable. If the applicant dies after scrapping but before payment of the premium, the claim does not automatically become part of the estate—exceptions may apply depending on the rules and key dates of the relevant subsidy program, but must be expressly regulated. Transfer of the claim by gift or sale is not provided for by law and usually leads to rejection of the application. Only in cases of business succession can a claim transfer be possible under certain conditions, such as when an entire business is transferred to a legal successor.
Are there legal remedies or the possibility to appeal in case of rejection?
If a negative decision is issued by the competent authority regarding the scrappage premium, the applicant has the right to file a formal objection (§ 68 et seq. VwGO—Administrative Court Procedure Code). This objection must generally be made in writing within one month of notification of the decision. If the authority rejects the objection, legal action can be taken within a further four weeks by filing suit at the competent administrative court. Prospects of success exist only if factual or formal errors occurred during the administrative procedure, such as incorrect interpretation of the law or overlooked documentation. For manufacturer premiums, civil law recourse is available via a claim for performance of the contractual entitlement.
