Japan's EV purchase subsidy is not "money you receive and forget." The national CEV subsidy comes with a mandatory holding obligation of, in principle, 4 years from the registration date (3 years for some vehicle types) — the "disposal restriction period." If you sell, trade in or scrap the vehicle within that period, the rule is to apply for approval before disposing of it and repay the subsidy for the remaining period. Sell without telling anyone, and you may be ordered to repay the full amount. Under the FY2025 (Reiwa 7) supplementary budget, the EV subsidy cap has been raised to as much as 1.3 million yen — which means the amount you might have to give back has grown too. How many years do you have to wait, what are the procedures and the repayment formula if you let the car go early, what exceptions apply for total-loss accidents, how do local-government subsidies such as Tokyo's follow separate rules, and what should used-EV buyers watch out for? We sort it all out using primary sources from the Next Generation Vehicle Promotion Center (NeV).
How long is the disposal restriction period: 4 years for passenger cars and kei cars
A vehicle that received the CEV subsidy (Clean Energy Vehicle Promotion Subsidy) is treated as "acquired property" under the grant rules and implementation guidelines, and a disposal restriction period is set for each vehicle type. Under the application guidelines for the FY2025 (Reiwa 7) supplementary budget (Appendix 6), privately used vehicles (white plates) are as follows.
| Type (private use) | Disposal restriction period |
|---|---|
| Passenger cars (standard and small vehicles) | 4 years |
| Cargo vehicles (regardless of load capacity) | 4 years |
| Kei cars (light EVs etc.) | 4 years |
| Motorcycles with sidecar | 3 years |
| Minicars (class-1 motorized bicycles) | 3 years |
| Class-2 mopeds | 3 years |
- The clock starts on the vehicle's registration date ("3 or 4 years from the registration date") — not the date the subsidy was paid into your account
- For rental-car business vehicles, the period is shortened to 3 years for passenger cars with engine displacement of 2 liters or less, cargo vehicles with load capacity of 2 tons or less, kei cars and the like. Leased vehicles are not treated as rental cars — they follow the private-use periods
- The disposal restriction period and application forms differ depending on the fiscal year in which you received the subsidy. To find out which rule applies to your car, check the application guidelines and forms for the year you received it (NeV's property disposal page lists forms by year)
"Disposal" does not mean sale alone. Six acts are defined as property disposal: (1) use contrary to the purpose, (2) transfer (including sale and trade-in), (3) exchange, (4) lending, (5) scrapping, and (6) offering the vehicle as collateral. Re-registering the car in a family member's name, or pledging it as security outside your auto loan, can also fall under these.
Letting the car go within the period: the property disposal approval process
If you have no choice but to sell or scrap the vehicle within the period, the principle is to obtain approval before the disposal, not to report it afterwards. The procedure is handled by mail and runs as follows.
- Submit a property disposal approval application: download the form matching the year you received the subsidy from NeV's website, fill it in and mail it (if you do not know your grant decision number, attach a copy of the vehicle inspection certificate)
- NeV sends you a disposal approval notice and a report form
- Dispose of the vehicle (sale, trade-in, scrapping, etc.)
- Submit the property disposal report: report the details of the disposal (timing, sale price, etc.)
- Pay when the repayment notice arrives: the deadline is 20 days after the notice
Especially important if you plan to replace your car
If you dispose of a car still within its restriction period and buy a new subsidy-eligible vehicle, no subsidy will be paid for the new car until the repayment for the previous car is complete. The procedure takes time, so once you decide to replace the car, it is safest to file the approval application immediately.
How much you repay: a monthly pro-rata of the remaining period
For vehicles subsidized under the FY2022 (Reiwa 4) supplementary budget or later, the repayment is prorated according to the "remaining portion" of the disposal restriction period. The price you sold the car for is irrelevant.
Repayment = subsidy amount x remaining months / disposal restriction period
Remaining months = months in the restriction period (4 years = 48 months) - elapsed months
Note: elapsed months are counted including both the registration month and the disposal month
[NeV's published example] Subsidy of 550,000 yen, registered February 2025 (Reiwa 7), disposed November 2025 (Reiwa 7), 4-year restriction period
-> 550,000 yen x (48 - 10) / 48 = 435,416 yen
For a car with a 550,000-yen subsidy under the 4-year rule, approximate repayment amounts by disposal timing look like this.
| Disposal timing (elapsed months) | Remaining months | Approximate repayment |
|---|---|---|
| About 1 year (12 months elapsed) | 36 months | 412,500 yen |
| About 2 years (24 months elapsed) | 24 months | 275,000 yen |
| About 3 years (36 months elapsed) | 12 months | 137,500 yen |
| After 4 years | 0 months | No repayment, no procedure needed |
If your car received the raised cap under the FY2025 (Reiwa 7) supplementary budget (up to 1.3 million yen for an EV), the same formula means selling in the first year could require repaying roughly 1 million yen. Unless you judge the deal by the net proceeds — sale price minus repayment — a "great sale price" can easily turn into a loss.
Vehicles subsidized in FY2022 (Reiwa 4) or earlier use a different calculation. In principle it is "sale price x subsidy ratio (subsidy amount / vehicle purchase cost)," and if the sale price falls below the equivalent residual book value, the residual book value is used instead (the FY2020 third supplementary budget, Ministry of the Environment portion, uses the pro-rata method above). Check NeV's guidance for the method that applies to your year.
What happens if you sell without telling: penalties for unauthorized disposal
"Surely nobody watches for 4 whole years" does not work. NeV periodically surveys the ownership status of subsidized vehicles, and disposals show up in the registration records.
- If a disposal within the restriction period is discovered without prior approval, you may be ordered to repay the full subsidy amount (the full amount — not the pro-rata)
- If the disposal is judged to have been carried out by improper means, a surcharge of 10.95% per year may be added on top of the repayment under the grant rules
What would have been a pro-rata repayment for the remaining period with a prior application can become full repayment plus surcharge without one — whether you follow the procedure makes an enormous difference to the burden.
Total-loss accidents, disasters, theft: exceptions where no repayment is required
For unavoidable circumstances that are not the owner's fault, a no-repayment treatment is available. The application guidelines for the FY2025 (Reiwa 7) supplementary budget list the following three cases.
- The vehicle became unable to run due to a natural disaster or similar and was deregistered (scrapped)
- The vehicle became unable to run due to an accident with no negligence on your part and was deregistered
- Other cases NeV specifically recognizes
Even when no repayment is required, however, you still must submit the property disposal approval application with supporting documents and obtain NeV's approval. Quietly scrapping the car is indistinguishable from an unauthorized disposal. Theft is not explicitly listed as an exception, but it may fall under "other cases NeV specifically recognizes," so gather documents such as the police report (receipt number) and consult NeV. Note that a total loss from an accident where you were at fault, or a sale for financial reasons, does not qualify as an exception — the normal pro-rata repayment applies.
Local-government subsidies such as Tokyo's follow separate rules and procedures
The national CEV subsidy and prefectural or municipal subsidies are independent programs. Repaying the national subsidy does not settle the local one.
- Tokyo: the ZEV vehicle purchase subsidy also has a disposal restriction — you submit an "acquired property disposal approval application" before disposing and calculate the repayment with a dedicated calculation sheet. Beyond sale and scrapping, moving out of Tokyo or relocating the vehicle's base of use outside Tokyo can also count as disposal, so be careful if a move is on the horizon. Always check the details of the period and covered acts in the Cool Net Tokyo guidance. For the overall Tokyo program, see our Tokyo EV subsidy guide
- Other prefectures and municipalities: holding-period lengths (3 to 5 years, etc.) and whether repayment is required differ by local government. Grant outlines normally contain a "restriction on property disposal" clause, so check with the office and outline of the local government that paid you. You can look up each region's program from our round-up of EV subsidies in all 47 prefectures
If you stacked national + Tokyo + municipal subsidies, remember that letting the car go may require procedures at all three places.
Notes for used-EV buyers and trade-in sellers
- The repayment obligation rests with the person who received the subsidy. Buying a used car that is still within its restriction period does not transfer the repayment obligation to the buyer
- Trade-ins and sales to buy-out dealers also count as "transfer" and hence property disposal. Dealers often guide you through the paperwork, but the applicant is always the subsidy recipient. Before negotiating, calculate "how much subsidy will I have to repay" and weigh it against the sale price
- The national CEV subsidy covers new vehicles only — used-car purchases are not eligible. Some local governments, however, subsidize used EVs, so if you are buying used, it is worth checking your prefecture's program
- Used-EV market prices tend to bake in the fact that the original buyer received a subsidy. For buyers, that is a reason prices look cheap; for sellers, it is the reality that "you cannot sell for the subsidy-inflated price." Keep it in mind together with the repayment rules and you will not misjudge the economics
- For taxes while you own the car (the exemption and heavier-rate treatment of the automobile tax by classification, etc.), see EV taxes and the 2026 automobile tax reform
What to do today
What to do today
- Check the registration date on your vehicle inspection certificate and put the end date of the disposal restriction period (in principle 4 years) on your calendar (sell after it ends and neither procedure nor repayment is needed)
- If selling within the period becomes a possibility, estimate the repayment with "subsidy amount x remaining months / 48" and compare it with the sale price before negotiating
- If you also received prefectural or municipal subsidies, check each grant outline's "property disposal" clause and the office to apply to
FAQ
Q. Once the 4 years (disposal restriction period) have passed, can I sell freely?
A. Yes. The disposal restriction period runs from the vehicle's registration date, and no approval application or repayment is needed for a sale or scrapping after it ends. The period differs by vehicle type and subsidy year (private passenger cars and kei cars are 4 years under the FY2025 supplementary budget; minicars, class-2 mopeds and the like are 3 years), so check the application guidelines and forms for your year.
Q. Do a dealer trade-in or a transfer to a family member also count as "disposal"?
A. Yes. Property disposal includes transfer (including sale and trade-in), exchange, lending, scrapping, offering as collateral and use contrary to the purpose. A change of owner through inheritance is handled individually via the property disposal procedure (or a plan change if before the subsidy payment), so consult NeV in advance.
Q. Do I have to repay if the car is a total loss in an accident or is stolen?
A. If the vehicle became unable to run due to a natural disaster or a no-fault accident and was deregistered, no repayment is required once you complete the approval procedure. Theft is not explicitly listed as an exception, but it may fall under "other cases NeV specifically recognizes," so gather documents such as the police report and consult NeV. A sale for personal reasons or an at-fault accident means the normal pro-rata repayment.
Q. What happens if I sell without obtaining approval?
A. NeV periodically surveys the ownership status of subsidized vehicles, and if an unauthorized disposal is discovered, you may be ordered to repay the full subsidy amount. For improper disposals, a surcharge of 10.95% per year may be added. With a prior approval application you only repay the pro-rata for the remaining period, so always complete the procedure before disposing.
References (sources)
* This article is general information based on materials published as of August 2026. The disposal restriction period, forms and repayment calculation differ by the year the subsidy was received. For individual decisions, consult the Next Generation Vehicle Promotion Center, your local government office, or a professional such as a tax accountant.